How to think about churn

From Jason Lemkin, in Jason Lemkin: The Right Sales Metrics for Your SaaS Startup:

Churn is not an absolute. Just because your SaaS service churns at 3% and mine churns at 4% doesn’t mean you have a better product than me. These statistics are almost nonsense. Let’s talk about the funnel – the easier you make it to get into your funnel, the more people will go into your funnel. The harder you make it to go into your funnel, the fewer people will sign up, but your conversion rate is going to go up. You’re going to end up with an organic churn rate that is inherent to your product. The most important thing is measure it and then drive it down. That’s what I did.

We set a goal at Echosign to decrease churn 20% year over year. You need to measure it and force the team to own a metric. The job of your customer success team – period – is to drive churn down, or drive revenue from the install base up.

Notes:
(1) See How to reduce churn.
(2) Thank you Andrew Fine for the tip.

One thought on “How to think about churn

  1. Pingback: A simple metric to measure the quality of your user growth | A Founder's Notebook

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