Churn, when applied to a customer base, refers to the proportion of contractual customers or subscribers who leave a supplier during a given time period. It is a possible indicator of customer dissatisfaction, cheaper and/or better offers from the competition, more successful sales and/or marketing by the competition, or reasons having to do with the customer life cycle.
In a subscription-based service or a SaaS company, the number of customers fluctuates on a monthly or annual basis. The objective is to reduce customer churn and to increase subscription renewals. The ability to forecast churn helps organizations take appropriate steps proactively! Most businesses focus on attracting new customers and miss out on retaining the existing ones.
SaaS businesses need to be aware of the different types of customers, churn rate calculations, types of churn, etc. to be better equipped to handle churn effectively.