Key reasons for churn you need to look out for –\u00a0<\/p>\n\n\n\n
- Your customer can\u2019t see\/get the value proposition of your product anymore;<\/li>
- Your product or service doesn\u2019t meet the expectation or lacks quality\/features;<\/li>
- Your product is good but customer service is not;<\/li>
- Your customer has chosen to change your product to a competitor\u2019s product; amongst others.\u00a0iagram<\/li><\/ol>\n\n\n\n
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David Skok wrote about how to unlock the path to negative churn. His recommendation\u00a0<\/p>\n\n\n\n
- Expand revenue from your current product. <\/li>
- Up-Sell<\/li>
- Cross-sell <\/li><\/ul>\n\n\n\n
Even a -2.5% negative churn can have huge impact on your MRR. It has a impact on your valuation as well – a 2% increase in retention leads to 20% higher multiple and an incremental 2% increase in up-sell leads to a 28% higher multiple. Although this may not be feasible for all types of SAAS. Also managing Churn is harder if you are selling to Very Small or Small Businesses.\u00a0<\/p>\n\n\n\n
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Lincoln Murphy (Sixteen Ventures ) says acceptable churn should be between 5-7% annually (this translates less than 0.5 % monthly) and advocates proactive customer retention. A KeyBanc survey of Private SAAS companies reported that 70% companies have a churn lesser than 10%.\u00a0Further he calculates that a 5% monthly churn rate translates to 46% annual churn – which is disaster.\u00a0<\/p>\n\n\n\n
How do you reduce churn? – ensure that your customers continue to realise value from your service.\u00a0<\/p>\n\n\n\n
Links to all articles below. <\/p>\n\n\n\n
Unlocking the Path to Negative Churn \/ David Skok\/ https:\/\/www.forentrepreneurs.com\/why-churn-is-critical-in-saas\/<\/a><\/p>\n\n\n\n
Churn – What is it? How to calculate it? https:\/\/saasmetrics.co\/churn\/<\/a><\/p>\n\n\n\n
SaaS Churn Rate: What\u2019s Acceptable? \/ Lincoln Murphy \/ https:\/\/sixteenventures.com\/saas-churn-rate<\/a><\/p>\n\n\n\n
Photo by Cassie Matias<\/a> on Unsplash<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"
If you are running a SAAS company you are part of the Subscription economy. One killer datapoint we often ignore is \u2018Churn\u2019. Normally we are so focused on the customer acquisition part – with marketing initiatives and events and advertising and campaigns we overlook at what rate we are loosing customers. Churn impact both the […]<\/p>\n<\/p>