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The No-BS Guide to Understanding (and Calculating) Churn

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The No-BS Guide to Understanding (and Calculating) Churn

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Founders: Are you being honest about your churn rates? Really, really honest?
Probably not. At best, you track your customer churn and neglect the other, more important churn rates.
Do you know your revenue churn? Your monthly subscription churn? What about your net churn? If you don't, you need to. In startups, ignorance isn't bliss; it's death.
Use our No-BS Guide to learn about the four most important churn rates, what they mean, and how to calculate them.
Check out our free, automatic churn calculator at the end!

Founders: Are you being honest about your churn rates? Really, really honest?
Probably not. At best, you track your customer churn and neglect the other, more important churn rates.
Do you know your revenue churn? Your monthly subscription churn? What about your net churn? If you don't, you need to. In startups, ignorance isn't bliss; it's death.
Use our No-BS Guide to learn about the four most important churn rates, what they mean, and how to calculate them.
Check out our free, automatic churn calculator at the end!

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The No-BS Guide to Understanding (and Calculating) Churn

  1. 1. The no-BS guide to Understanding Churn
  2. 2. First things first: WHAT THE &#%! IS CHURN?
  3. 3. “… measures the ultimate failure in SaaS—all of the customers who tried out your product and decided it isn’t worth paying for” CHURN… Steli Efti | Co-founder & CEO, Close.io
  4. 4. The only way to solve churn is BRUTAL HONESTY
  5. 5. Instead of looking at the facts, they … manipulate the data … and pretend the problem isn’t there
  6. 6. BE LIKE THEM DON’T
  7. 7. Most startups only measure Customer Churn
  8. 8. Say you sell SaaS software to 100 restaurants and two accounts churn this month
  9. 9. is a small downtown cafe ONE
  10. 10. A 1,000-franchise chain The other?
  11. 11. At 2%, your churn rate looks great but you just lost 25% of your revenue
  12. 12. It’s time for a NEW APPROACHto churn
  13. 13. There are four types of churn you need to measure
  14. 14. CUSTOMER#1: Customer churn measures how many customers you lost over a period of time.
  15. 15. FORMULA:THE Churned customers Total customers
  16. 16. EXAMPLE:FOR • January 1st, 2015: 1,000 customers • January 1st, 2016: 950 customers
  17. 17. EXAMPLE:FOR 50 churned customers 1,000 total customers = 5% customer churn
  18. 18. REVENUE#2: Revenue churn measures how much annual recurring revenue (ARR) you lost due to churning customers.
  19. 19. FORMULA:THE Churned ARR Total ARR
  20. 20. EXAMPLE:FOR • January 1st, 2015: $50,000 ARR • January 1st, 2016: $40,000 ARR
  21. 21. EXAMPLE:FOR $10,000 ARR $50,000 ARR = 20% revenue churn
  22. 22. Sign up for our FREE SALES SUCCESS COURSE Because there’s more to startup sales success than managing churn SIGN ME UP!
  23. 23. Monthly Sub#3: Monthly subscription churn isolates and measures the rate at which your monthly subscribers are churning, separate from your annual subscribers
  24. 24. FORMULA:THE Churned monthly subscriptions Total monthly subscriptions
  25. 25. EXAMPLE:FOR • January 1st, 2015: 50 monthly users, 50 yearly users • February 1st, 2015: 43 monthly users, 53 yearly users
  26. 26. EXAMPLE:FOR 7 churned monthly subscribers 50 total monthly subscribers = 14% monthly sub churn
  27. 27. Net#4: Net churn measures monthly churn and growth to give you a clear look at the actual health of your startup.
  28. 28. FORMULA:THE (Churned MRR − New MRR) Total MRR
  29. 29. EXAMPLE:FOR • January 1st, 2015: $100,000 MRR • January 18th, 2015: Lost $5,000 MRR • February 1st, 2015, Gained $10,000 MRR
  30. 30. EXAMPLE:FOR ($5,000 churned MRR − $10,000 new MRR) 100,000 total MRR = -5% net churn
  31. 31. THE WHOLE One churn rate can’t tell STORY
  32. 32. The CRM made by salespeople, for salespeople
  33. 33. Customer churn: Churned customers Total customers Revenue churn: Churned ARR Total ARR Monthly Subscription churn: Net churn: Churned monthly subscriptions Total monthly subscriptions (Churned MRR − New MRR) Total MRR
  34. 34. Want more? Check out the original video and learn how to improve your churn rates!
  35. 35. Tweet to DOWNLOAD

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