Your Uncohorted Retention Rate is a blended metric across your customer base that measures the share of recurring revenue a business retains (or loses) over a specified period. It allows you to bridge the gap between two periods in your ARR Build. Because it’s a single blended metric, Uncohorted Retention can also be used to easily compare churn across different periods and assess how churn impacts your overall growth.
Uncohorted Retention is easy to operationalize due to its simplicity. It’s the basis for most churn benchmarks and is used to calculate downstream metrics like Customer Lifetime Value (LTV) and Lifetime Revenue (LTR).
It also allows you to set clear revenue goals. For example, if you need to grow 15% next month but your Uncohorted Churn Rate is ~5%, you know you’ll need to grow 20% across Gross New and Expansion revenue to make up for it.
The downside of using Uncohorted Retention is that it is a lower-fidelity measure of churn that is essentially a blended rate across all cohorts. As a result, it can be hard to tease apart the source of churn — for example, is churn up across the board or just for more recently acquired customers?
When interpreting Uncohorted Retention, you’ll also want to contextualize where the business is in its growth trajectory. Churn tends to be worse early in the customer lifecycle, then plateaus as you’re left with a long tail of loyal customers. If your business is in growth mode, you’ll tend to have more cohorts in the earlier stages of their lifecycle, and, as a result, Uncohorted Retention will look “bad”. This is why, to really understand your churn dynamics, you’ll need to cohort retention.
Your Uncohorted Retention Rate is the inverse of your Churn Rate:
For example, if your Churn Rate is 4%, your Uncohorted Retention Rate would be 96%.
Knowing this, let’s unpack a few ways to look at Uncohorted Churn.
Gross Revenue Churn (also known as Gross Dollar Churn) assesses the percentage of total revenue churned that month relative to the last period’s total recurring revenue:
By extension, Gross Logo Churn refers to the percentage of customer logos associated with your churned revenue that period:
Comparing your Gross Revenue and Gross Logo Churn will give you insight into whether churn is happening in the lower or higher end of your customer base.
If Gross Revenue Churn is higher than Gross Logo Churn, you can infer that larger, higher-value customers are leaving. Conversely, if Gross Revenue Churn is lower than Gross Logo Churn, you know you’re losing your smaller customers. Understanding this dynamic is essential for effectively targeting (and rightsizing) retention efforts.
| Gross Logo Churn < Gross Revenue Churn | Large, high-value customers are churning. While fewer customers are churning overall, those that do leave are significantly impacting your revenue. |
| Gross Logo Churn = Gross Revenue Churn | Uniform churn across all customer segments, meaning that the revenue impact is proportional to customer churn. |
| Gross Logo Churn > Gross Revenue Churn | Smaller customers are churning in greater numbers. Though more customers are leaving, their lower revenue contribution lessens the overall revenue impact. |
On the other hand, Net Revenue Churn (also known as Net Dollar Churn) reflects the net change in recurring revenue from existing customers over a specific period after accounting for losses (churns and downgrades) and gains (expansions and upgrades). It allows you to assess whether the business gained or lost money on its existing customer base during a period.
Ideally, you want to see a negative Net Revenue Churn rate, where the sum of losses (contractions and churn) is more than offset by gains (expansions and upgrades). This is the opposite of a leaky bucket — if you were to stop all acquisition efforts tomorrow, your business would continue to grow because your existing customer base continues to spend more than you lose in a given period. Investors love to see net negative churn, as this dynamic can drive exponential revenue growth as the revenue gains from customer expansions compound over time. As Mr Burns would say, “excellent”.
The best way to avoid churn is to establish the right habits early on. Set up consistent customer feedback loops — customer health dashboards, success check-ins, and the like — to identify and address pain points that could drive churn down the line. Refer here for a detailed breakdown of tactics to address churn.