Convert Monthly To Annual Churn: Calculator, Formula, Benchmarks
High monthly churn is devastating. Monthly churn rates above 10% lead to annual churn rates over 70%, which would be catastrophic for most businesses.
The Formula To Convert
To convert monthly churn to annual churn:
Annual Churn Rate = 1 – (1 – Monthly Churn Rate)^12
To convert annual churn to a monthly churn rate:
Monthly Churn Rate = 1 – (1 – Annual Churn Rate)^(1/12)
Monthly to Annual Churn Conversion Table
High monthly churn is devastating. Monthly churn rates above 10% lead to annual churn rates over 70%, which would be catastrophic for most businesses.
| Monthly Rate | Annual Rate |
|---|---|
| 1% | 11.36% |
| 2% | 21.53% |
| 3% | 30.62% |
| 4% | 38.73% |
| 5% | 45.96% |
| 6% | 52.41% |
| 7% | 58.14% |
| 8% | 63.23% |
| 9% | 67.75% |
| 10% | 71.76% |
| 11% | 75.30% |
| 12% | 78.43% |
| 13% | 81.20% |
| 14% | 83.63% |
| 15% | 85.78% |
| 16% | 87.66% |
| 17% | 89.31% |
| 18% | 90.76% |
| 19% | 92.02% |
| 20% | 93.13% |
| 21% | 94.09% |
| 22% | 94.93% |
| 23% | 95.66% |
| 24% | 96.29% |
| 25% | 96.83% |
| 26% | 97.30% |
| 27% | 97.71% |
| 28% | 98.06% |
| 29% | 98.36% |
Monthly To Annual Churn Calculator
The most impactful way to reduce monthly churn is with Churnkey's cancel flows and failed payment recovery products. Failed payment recovery focuses on involuntary churn and requires no coding to set up. That means, you can start reducing churn in as little as 15 minutes. You can sign up right away or book a demo to learn more.
Monthly To Annual Churn Chart
Even, small changes in monthly churn can have significant impacts annually. For example, increasing monthly churn from 1% to 2% nearly doubles the annual churn from 11.36% to 21.53%.
If we flip the x and the y axis, you'd notice that the annual churn rate grows more slowly as the monthly rate increases. This is because churn compounds over time, and there's a diminishing pool of customers to lose each month.
For example, if you start with 100 customers and have a 5% monthly churn rate, you lose 5 customers in the first month, leaving you with 95. In the second month, you lose 5% of 95, and so on. The churn process is similar to exponential decay, where the rate of loss is proportional to the current amount.
Churn Can Make Or Break Your Business
The data underscores the importance of customer retention. Even a seemingly low monthly churn of 5% results in losing nearly half (45.96%) of customers annually.
There's a "flattening" effect at higher churn rates. The difference in annual impact between 28% and 29% monthly churn is minimal (98.06% vs 98.36% annually).
A rough estimate is that the annual churn rate is about 12 times the monthly rate for low churn rates (1-3%). This multiplier decreases as the rate increases.
For sustainable growth, businesses should aim for very low monthly churn rates, ideally below 2-3%. Anything above 5% monthly would require significant customer acquisition to maintain, let alone grow, the customer base.
Reduce High Monthly Churn With Churnkey
Churnkey offers support for both voluntary and involuntary churn prevention as well as deep analytics so you can understand the root causes of your customer churn.
On average, our customers retain 20-40% of the revenue that they would have otherwise lost to churn. You can sign up right away or book a demo to learn more.
Additional Reading
- Involuntary Vs Voluntary Churn
- Churn Rate Benchmarks
- State of Retention Report 2024
- Gross Vs Net Churn
- Retention Cohort Analysis
- and more on the blog
Thanks for reading!
