How a company that sells on orders rather than subscriptions measures churn from its ledger: the definition of a lost customer from its own order cadence, churned revenue as the run rate before the silence, the churn rate by segment and by rep, the identity that ties churned plus retained plus new to the two periods' revenue, and why a fixed 12-month rule counts the wrong customers as lost.
A subscription business knows its churn from cancellations. A distributor, a manufacturer or a broker knows it from silence, and silence has no date. The ledger has every order, and each customer's own cadence says when silence became loss. This guide sets out churn from the ledger, the run-rate valuation, the rates by segment and rep, and the identity.
Per customer:
Cadence = median days between orders, trailing year Lost if days since last order > ceiling multiple × cadence, or an absolute ceiling Churned revenue = run rate in the window before the silence began
Per period, per segment, per rep:
Customer churn = customers lost in the period ÷ customers active at the start Revenue churn = churned run rate ÷ revenue at the start
Customer identifiers only.
ending revenue = starting revenue − churned + change at retained + new + reactivated
Every customer is in exactly one state for the period: retained, churned, new or reactivated. A customer in two fails it and is listed.
One year, one segment.
| State | Customers | Revenue effect |
|---|---|---|
| Starting | 620 | $18.4m |
| Churned | 58 | −$1.9m at run rate |
| Retained, change | 562 | +$0.7m |
| New | 71 | +$1.6m |
| Reactivated | 9 | +$0.2m |
| Ending | 642 | $19.0m |
Customer churn 9.4 percent; revenue churn 10.3 percent. Revenue grew and the company lost a tenth of its starting book, which the growth figure alone would not have said.
| Rep | Starting customers | Churned | Rate | Churned run rate |
|---|---|---|---|---|
| R-04 | 62 | 11 | 18% | $610,000 |
| R-11 | 44 | 3 | 7% | $90,000 |
| R-17 | 18 | 1 | 6% | $20,000 |
Rep R-04 lost a fifth of the book. Coverage per rep, beside it, usually says why.
Fixed rule. The wrong customers on both sides.
Churn valued at last order. One small final order understates the loss. Use the run rate before the silence.
Reactivations rewriting history. Last year's churn rate changes every month. Report reactivations forward.
Company rate only. The rep at 18 percent is inside the 9.
Identity unchecked. Churned plus retained plus new does not reach ending, and nobody knows which state has the missing customers.
Mapped once, the orders and the customer master produce the cadences, the states, the churn rates by segment and rep, and the identity every month. Covirage builds this from the exports as they are. The dormant threshold guide covers the cadence rule that churn is the end state of, and the run rate guide covers the valuation.
Because a weekly buyer that has been silent for four months is lost and a fixed rule says it is fine, while an annual buyer silent for eleven months is on schedule and the rule says the same. Each customer's own cadence is the only fair test, and the ceiling stops seasonal buyers being flagged wrongly.
A customer counted as lost that orders again is a reactivation, and it is reported as such in the period it returns, not by rewriting the earlier churn. The churn figure is what was true at the time; the reactivation is its own line.
Starting revenue, less churned run rate, plus or minus the change at retained customers, plus new customers' revenue, equals ending revenue. If it does not, a customer is in two states or none, and the failed identity lists it.