Churn is the enemy.
Churn is the sickness that will kill your SaaS company.
Redpoint VC Tomasz Tunguz showed us just how damaging churn is to the MRR of SaaS companies and how an adjustment of just 5% can make a massive impact.
Churn is the rate your customers are cancelling their subscriptions to your product.
One of the key outcomes of any customer success strategy is to reduce churn by helping disenfranchised customers continue to get value from what you’re offering them.
The pricing model of SaaS lends itself well to being extremely profitable. But as David Skok says in his post about achieving negative churn, there are massive risks.
The nature of subscriptions mean that your customers are paying you regularly which brings in recurring revenue, but also puts you in a precarious position.
Every time your customers get the bill for your product through on their statement, they’re asking the question: This month, did this product save me more money than it cost me?
Over the past two weeks, I’ve answered two questions: What is Customer Success? And Why is Customer Success Important? Today I’m going to answer the question ‘What is churn?’. It all boils down to one thing. Customer success teams and strategies are in place to stop customers cancelling.
They exist to reduce churn.
Let’s look at this in more detail.