Gross MRR Churn as a SaaS KPI

In the Software as a Service (SaaS) industry, the Gross Monthly Recurring Revenue (MRR) Churn Rate is a vital Key Performance Indicator (KPI). This specific metric measures the total loss in MRR due to customer cancellations or downgrades during a given period.

For SaaS businesses operating on a subscription-based model, minimizing churn (i.e., customer attrition) is paramount. The Gross MRR Churn Rate provides a clear picture of the revenue lost due to customer attrition without factoring in the compensating effect of expansion revenue from upsells or cross-sells. This makes it a critical metric for understanding customer loss trends and prioritizing customer retention strategies.

Calculating Gross MRR Churn Rate

The Gross MRR Churn Rate is calculated by dividing the MRR lost through churn in a particular period by the total MRR at the beginning of that period. The result is typically expressed as a percentage. Here's the mathematical formula:

Gross MRR Churn Rate = (MRR Churn / Total MRR at the beginning of the period) * 100

In this formula:

• MRR Churn refers to the monthly recurring revenue lost as a result of customers cancelling their subscription or downgrading their plans within a specific period.
• Total MRR at the beginning of the period represents the total monthly recurring revenue at the start of the period under consideration.

Regularly tracking the Gross MRR Churn Rate can help SaaS companies evaluate the efficiency of their customer retention strategies, identify areas for improvement, and implement measures to reduce churn. By doing so, they can secure their revenue base and achieve sustainable business growth.