Customer health score

A churn signal is a pattern in support contacts that predicts a customer is about to leave, such as repeated escalations, cancellation questions, or a sharp drop in usage alongside unresolved complaints. Identifying these patterns early lets retention teams intervene while the relationship is still recoverable.

Churn rate is the percentage of customers who stop doing business with a company during a set period. It’s calculated as customers lost during the period divided by customers at the start of the period. Logo churn counts customer accounts. Revenue churn measures dollars lost. The two figures can diverge if the customers who left were smaller than average. Churn also splits by cause: voluntary churn, where customers choose to leave, and involuntary churn, caused by failed payments or expired cards. A monthly subscription and an annual contract produce structurally different churn math, so comparisons only hold within the same industry and billing cycle.

Customer lifetime value is the total gross margin a business expects to earn from a customer across the full relationship. It is not the revenue that customer generates. A workable formula is average purchase value multiplied by purchase frequency, multiplied by average customer lifespan, multiplied by gross margin. Historic CLV sums the margin a customer or cohort has already delivered. Predictive CLV forecasts future margin and discounts it to present value. The most common error is substituting revenue for margin. That substitution inflates CLV and leads teams to justify acquisition spending that a true margin-based figure would not support.

Net revenue retention (NRR) is the percentage of recurring revenue a company keeps from its existing customer base over a set period. It includes expansion, contraction, and churn, but excludes revenue from new customers. The formula: starting recurring revenue plus expansion minus contraction minus churn, divided by starting recurring revenue, times 100. NRR above 100% means upsells and expansions outpaced downgrades and cancellations, so the existing base grew without adding a new logo. NRR below 100% signals that churn and contraction outweighed expansion. Companies typically measure NRR over a trailing 12-month window, tracked release over release to see whether retention is improving or slipping.