Churn rate (customer attrition or customer turnover) is a metric that measures what percentage of customers or revenue a company loses over a given period. It's the opposite of retention and is a critical indicator of business health—especially in subscription-based business models.
For sales organizations, churn is relevant because it directly impacts company growth, and in many cases, also affects salespeople's compensation through clawbacks or reduction in residual commission.
The percentage of customers who cancel:
Customer churn = (Lost customers in period / Customers at period start) × 100
The percentage of revenue lost:
Revenue churn = (Lost MRR in period / MRR at period start) × 100
Accounts for expansion from existing customers:
Net revenue churn = (Lost MRR - Expansion MRR) / Starting MRR × 100
| Element | Value |
|---|---|
| Customers at month start | 500 |
| Customers who canceled | 15 |
| Customer churn rate | 3% |
| Element | Value |
|---|---|
| MRR at start | $300,000 |
| Lost MRR (cancellations) | $12,000 |
| Lost MRR (downgrades) | $3,000 |
| Total lost MRR | $15,000 |
| Gross revenue churn | 5% |
| Element | Value |
|---|---|
| MRR at start | $300,000 |
| Lost MRR | $15,000 |
| Expansion MRR (upsells) | $22,500 |
| Net MRR change | +$7,500 |
| Net revenue churn | -2.5% |
A negative net revenue churn means expansion exceeds losses—a sign of a healthy business.
Many commission plans include clawback clauses where the salesperson must repay commission if the customer churns early:
| Churn Timing | Clawback |
|---|---|
| 0-3 months | 100% of commission |
| 3-6 months | 50% of commission |
| 6-12 months | 25% of commission |
| 12+ months | 0% |
Some organizations reduce commission rates for salespeople with high customer churn:
| Rep's Churn Rate | Commission Adjustment |
|---|---|
| Under 5% | 100% of standard |
| 5-10% | 90% of standard |
| 10-15% | 75% of standard |
| Over 15% | 50% of standard |
With residual commission, payments naturally stop when the customer churns:
| Segment | Good Monthly Churn | Annual Churn |
|---|---|---|
| Enterprise SaaS | < 0.5% | < 6% |
| Mid-market SaaS | < 1% | < 12% |
| SMB SaaS | < 2% | < 24% |
| Consumer subscription | < 5% | < 50% |
Only sell to customers who match your Ideal Customer Profile (ICP).
Avoid over-promising to close deals.
Ensure new customers get value quickly.
Formalize the transition from sales to customer success.
Identify at-risk customers before they churn.
Some organizations include churn in salespeople's targets:
Salesperson is credited for new sales minus churn from previous customers:
| Element | Value |
|---|---|
| New sales in quarter | $75,000 |
| Churn from own customers | $11,250 |
| Net quota attainment | $63,750 |
Churn rate is one of the most important metrics for subscription-based businesses. For sales organizations, churn affects both company growth and individual salespeople's compensation through clawbacks and residual commission.
By focusing on customer selection, realistic expectations, and good onboarding, salespeople can reduce churn and protect their own earnings.
Want to track churn and adjust commission automatically? Prowi handles clawbacks and churn-adjusted commission automatically. Book a demo to see how we can simplify your commission administration.