Churn. It's the bane of every SaaS company. No single metric creates more anxiety and lost sleep among software founders than their product's churn rate. And rightly so—losing too many customers is a pretty solid indicator that something in your business is failing—and not just your revenue. Speaking of which, what may seem like a small increase in churn can quickly cut your revenue and valuation in half. This is a chart showing the impact of customer churn on revenue and valuation. There are two scenarios shown, one in which there is high churn and a low valuation, another with a low churn and high valuation. High churn rates are never something to celebrate. But is all churn bad? Or at least, as bad as it's cut out to be? Actually, no...
<p>Churn refers to the loss of customers who are subscribed to or use a service. Churn rate is an important component of growth because it is tied to the retention of users of a service. When more users churn, retention rates are lower. When churn rate is high, it is harder to grow a product or service because more new users are required to offset the users who churned from the service. Churn is particularly important in SaaS businesses and other businesses where users pay a recurring subscription fee. These businesses creaet profit from long customer retention spans and a high customer lifetime value. When churn is high, businesses can't capture the full expected lifetime value. These are the best articles on how to reduce churn and improve customer lifetime value. From how to reduce churn, how to generate negative churn, how to use customer success to lower churn rates and hacks to reduce churn, you'll find tactics to improve retention and growth for your business.</p>
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