Customer churn counts departures: customers lost in a month divided by customers at the start of it. Revenue churn measures the money that left, which can differ sharply if the customers leaving are much larger or smaller than average. Both are worth tracking. A business can lose 5% of its customers and 1% of its revenue, which is an entirely different situation from the reverse.
Churn deserves attention because it compounds quietly and it caps growth. At 5% monthly churn, you lose about 46% of your customer base over a year, so nearly half of everything you acquire is spent standing still. It also silently sets your lifetime value: halving churn does more for LTV than most pricing changes and costs less than most acquisition campaigns. The practical move is to talk to the people who leave. Five honest cancellation conversations usually reveal more than a quarter of dashboard analysis.
A concrete example: you begin the month with 200 customers and 9 cancel, so customer churn is 4.5%. But two of those nine were on your $400 enterprise tier while the rest paid $50. You lost $1,150 of $12,000 in MRR — roughly 9.6% revenue churn, more than double the customer figure. The customer number says a small problem; the revenue number says your largest accounts are leaving, which is the one you act on this week.