Why boards care about churn
Growth gets headlines. Churn determines compounding.
A company growing 50% annually with 90% gross retention will be 3x its current size in 5 years. The same growth rate with 80% gross retention? Barely 2x.
Your board knows this. They've seen companies grow their way into a wall because the bucket leaked faster than they could fill it. They're not asking about churn because they want a number. They're asking because churn is the single best predictor of whether your growth is durable or fragile.
The metrics your board expects
Net Revenue Retention (NRR)
Formula: (Beginning ARR + Expansion - Contraction - Churn) / Beginning ARR
What "good" looks like:
- Series A: 100-105%
- Series B: 105-115%
- Series C+: 110-120%
Gross Revenue Retention (GRR)
Formula: (Beginning ARR - Contraction - Churn) / Beginning ARR
What "good" looks like:
- SMB: 80-85%
- Mid-Market: 88-92%
- Enterprise: 92-97%
Logo Retention
What percentage of customers (not revenue) renewed. Important because it tells you if churn is concentrated in small accounts or spread across your base.
Churn by Cohort
Are newer cohorts retaining better or worse than older ones? This tells your board whether your product-market fit is strengthening or eroding over time.
Five questions your board will ask
1. "What's driving churn?"
Bad answer: "We lost 12 customers last quarter."
Good answer: "We lost 12 customers. The primary drivers were: poor onboarding completion (4 accounts), champion departure without re-engagement (3 accounts), product gaps vs. competitors (3 accounts), and budget cuts (2 accounts). The first two are addressable."
Your board wants to know that you understand the root causes, not just the outcome. And they want to know which causes are fixable.
2. "Can you predict it?"
Bad answer: "We're working on it."
Good answer: "We score every account monthly based on usage, support, engagement, and billing signals. Last quarter, our scoring model identified 8 of 12 churned accounts as high-risk 60+ days before cancellation. We're improving coverage on champion departure signals."
Boards want to see a system, not heroics. A predictive model — even an imperfect one — shows operational maturity.
3. "What are you doing about it?"
Bad answer: "Our CSM team is focused on retention."
Good answer: "High-risk accounts trigger an automated playbook: CSM escalation within 48 hours, executive sponsor outreach within a week, and a recovery plan within two weeks. Last quarter, we saved 5 of 15 at-risk accounts, representing $380K ARR."
Show the process, show the results. Boards want to see that risk translates to action and action translates to outcomes.
4. "Is this getting better or worse?"
Bad answer: "Our churn rate was 2.1% this quarter vs. 1.8% last quarter."
Good answer: "Logo churn increased from 1.8% to 2.1%, driven primarily by our SMB segment. Our mid-market and enterprise GRR actually improved from 91% to 93%. We're tightening our SMB ICP to address the segment-specific issue."
Context matters. A number without a trend, a segment, and a driver is just noise.
5. "How does this compare to benchmarks?"
Bad answer: "Industry average is around 90% GRR, so we're above average."
Good answer: "For our stage (Series B) and ACV ($25K), median GRR is 90% and top quartile is 95%. We're at 92%, up from 89% two quarters ago. Our gap to top quartile is primarily in our oldest cohort, where product fit is weakest."
Show that you know where you stand, where the gap is, and what's causing it.
How to present churn to your board
Lead with the headline
Start with NRR and GRR. Are they up, down, or stable? One sentence.
Break down the components
| Component | Last Quarter | This Quarter | Trend |
|---|---|---|---|
| Gross Retention | 91% | 92% | Improving |
| Expansion | 14% | 12% | Declining |
| Contraction | 4% | 5% | Worsening |
| Net Revenue Retention | 101% | 99% | Declining |
Show segmentation
Break NRR/GRR by segment (SMB, Mid-Market, Enterprise), by cohort (year of acquisition), and by ACV band. This shows you understand where the problem lives.
Explain the "why"
For each major churn or contraction event, provide the root cause. Aggregate where possible: "3 accounts churned due to champion departure" is more useful than three separate stories.
Show the response
What are you doing about it? Show the system: risk scoring, playbooks, save rates, process improvements.
The founder's churn checklist
Before your next board meeting, make sure you can answer these 10 questions:
- What is your NRR and GRR, and how have they trended over the last 4 quarters?
- What are the top 3 root causes of churn in the last 2 quarters?
- Which customer segment has the worst retention? Why?
- Are newer cohorts retaining better or worse than older ones?
- Do you have a scoring system that identifies at-risk accounts before they cancel?
- How much lead time does your system give you before churn happens?
- What is your save rate for accounts flagged as at-risk?
- What percentage of expansion revenue comes from existing customers?
- How does your retention compare to stage-appropriate benchmarks?
- What specific actions are you taking to improve retention this quarter?
The bottom line
Your board doesn't expect zero churn. They expect you to understand it, predict it, and have a system for managing it.
The difference between a founder who inspires confidence and one who doesn't isn't the churn number — it's the level of understanding behind it. Can you explain why customers leave? Can you see it coming? Can you show a system that's improving over time?
That's what your board actually wants to know.
See which accounts are at risk before your next board meeting.
Book a churn audit →