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Mathematically, the SaaS MRR churn rate is an extension of the SaaS customer churn rate calculated by substituting monthly recurring revenue in place of the number of customers. The simple answer to this question is money. SaaS customer churn rate is important, particularly if you run a B2C SaaS business where revenue is generated by monetizing users through advertising or such. However, B2B SaaS companies generate revenue from direct subscription sales.
The slightly more complex answer is that MRR metrics tell you if SaaS customer churn is leaning more toward larger customers or smaller customers. IN addition MRR metrics highlight two very important SaaS revenue drivers that customer metrics do not: upgrades and downgrades. In the example above, the MRR churn rate was double the customer churn rate, indicating that larger customers are churning.
This quality of the SaaS MRR churn rate becomes more apparent when we expand the above formula to show off its individual components. The MRR churn rate is 7. The main difference is in the interpretation of the results as recurring revenue weighted versions of the originals. Most importantly, MRR metrics provide the ability to separate the impact of downgrades and upgrades on changes to MRR from the impact of customer churn and growth, respectively.
A shout out to the Meltwater finance team for turning me on to this nice MRR churn visual.
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