How To Think About Churn & Why It’s Killing Your Business

And it goes like this:

How much is it?

- It’s not that bad…

Look, it’s simple. Just give me a number. OK?

- It’s 20% — not that bad, right? 

WOW… Your churn is 20% monthly?

*issues a small prayer to all the SaaS gods*

The above is a conversation I recently had with a potential coaching client… GOOSEBUMPS!

Let me put this into perspective…

If your churn rate is at 20% and for one reason or another you fail to add any new customers… in just 5 months… you will churn through all of your existing customers and be left with nothing — simple math.

The worse part, it pulls down your Lifetime Value of a Customer so it makes it really tough to invest in growth and is usually the reason startups fail.

You should always know exactly where you’re standing on your churn levels and you should be doing the best you can to fight these levels back and get that MRR up!

You should make sure you UNDERSTAND CHURN!

In this episode of the SaaS Growth Stacking Show, I give you the 4 things you should pay attention to and stay on top of to make sure you stop the bleeding and SCALE-UP!

Exclusive Download: Revenue Retention Cheatsheet? (AKA Churn Buster Cheatsheet)  — Stop The Bleeding & Scale Your Marketing With Confidence

At a high level, these are the 4 things you need to keep in mind:

1. Churn Flatline
2. Maximum Viable Churn
3. Moment of Churn
4. Fight the Impact

Where does it all begin? It starts with answering one simple question… What does churn mean?

If you cannot define it — you cannot measure it… and you absolutely need to define it!

You don’t want to find yourself in a situation where your customer success team is measuring something else entirely that skews your data.

Start with something simple. Usually, there are 2 types of Churn — one is Cancellations and the other is Involuntary Churn.

Involuntary Churn can be 20%-40% of your Churn and a lot of times is quite easily fixable.

There will be times where it is caused by simple payment failures and these ones, as frustrating as they are, can be tackled with great tools such as ProfitWell or FlexPay.

Cancellation Churn’s moment, on the other hand, is well defined — it’s when a client doesn’t renew their subscription.

Between the notice and the renew date, there is a period of time that you can really engage with the customer and save the account.

If you implement a strong cancellation process you can save 30%-40% of these clients. A lot of times it’s up to downgrading, showing the solution, talking about their problems — SIMPLE, RIGHT?

You have to sit down and define the moment of churn with your team. Get aligned. There are things you can always do and improve and this is one of them. You need it to blast into space!

Don’t worry, it’s a solvable problem and I give you the strategy in my Revenue Retention Cheatsheet (AKA Churn Buster Cheatsheet). I provide 9 strategies that you can deploy today to help you reduce your churn.

If you cannot find the solution for your business there — write a comment below with your question and let’s get the answer your business needs together.

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Dan Martell has advised more startups than his hometown has people and teaches startup founders like you how to scale. (Get the free 3 videos to grow your business here.) He previously created, raised venture funding for and successfully exited two tech startups: Flowtown and Clarity.fm. You should follow him on twitter @danmartell for tweets that are actually awesome.

Originally published at https://www.danmartell.com on August 5, 2019.