Software Growth

Logo churn

Logo churn is the percentage of customer accounts you lose in a period, counted by account and not by dollar value. It is customer churn, with the big-account angle.

Logo churn counts customers as logos on a slide: each account is one, whatever it pays. The term comes from enterprise sales, where a lost customer is a logo you can no longer show. In practice it is the same calculation as customer churn, and the label is used when someone wants to contrast it with revenue churn.

How to calculate logo churn

A product has 250 paying accounts on January 1 and 10 cancel by the end of the quarter. Quarterly logo churn is 10 / 250 = 4%. If it runs at that pace, annual logo churn is 1 - 0.96^4, about 15.1%, not 16%. The compounding formula is on the churn rate page.

Logo churn vs revenue churn

The two diverge when customers differ in size. Say 10 of those 250 accounts leave, but all 10 were on the $19 plan while your average account pays $120. Logo churn is 4%. Revenue churn might be under 1%. The reverse case, one $2,000 account leaving, is 0.4% logo churn and could be several percent of revenue.

Jason Cohen, in his Max MRR piece, argues that high cancellation rates cap how far a business can grow. Whichever way you measure it, if logo churn stays high you are paying again and again to acquire the same kind of customer.

When to use it

  • When most accounts pay similar amounts, such as a single flat plan. Then logo and revenue churn are close and logo churn is simpler to explain.
  • When you want to know whether the product fits small accounts. A pile of small logos leaving is a signal about product fit even if revenue looks fine.
  • When talking to enterprise buyers, who care about reference customers and brand names.

Where it misleads

Logo churn treats a downgrade from $500 to $20 as no loss, because the account is still there. It also ignores expansion, so a company with 8% annual logo churn and 115% net revenue retention is growing from its base, and logo churn alone cannot show that. Use it next to a revenue measure, not instead of one.

For a small SaaS, a practical habit is to report both numbers in the same line each month: logo churn and gross revenue churn. A big gap in either direction tells you which customers you are really losing.

Sources

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