[one-more-minute]

That formula is more correct, but only assuming you don't replace any churned customers – or at least, replace them all at once at the end of the year, which seems like a pretty unreasonable assumption to me.

If you replace customers every month then the number leaving per month is constant, so you end up churning 0.05×12 = 60% of your userbase per year.

Edit: The 12x model is also pretty coarse, but you can take the limit of continuous replacement, and you end up churning

    -12log(1-x) = 0.616

× your customer base per year.

[meesterdude]

ya'll are total nerds. Have some upvotes!

edit: subtle sexism