How to Improve Churn Rate

I'm not sure how concerned I would be about churn "rate" in particular. Your approach is practical and reasonable because you ultimately want to use that number to compute your average lifetime value and your customer acquisition cost. If your lifetime value is greater than your customer acquisition cost, fantastic! If not, there's some work to be done.

As with many statistics, looking at the average is just one part of the picture. If you can look at the distribution, it may tell a different story. Do a lot of users churn in the first month and then many users stay 6-12 months?

As far as decreasing churn, you'll need to understand why users are leaving. Something in their mental calculation of the value prop isn't working out for them. Maybe the product didn't live up to the marketing. Maybe the product is missing some features. Low cost way is to just reach out and find out why.

In answer to your specific question, a churn rate of ~30% would leave you with half the customers you started with after 3 months. That is, if you lost 30% of your customers each month, your average customer lifespan would in fact be that length.

As you've noted, that is not a good churn rate. Good would look a lot more like 3-5%.

How to fix it is hard to answer without plugging my product (linked in my profile), which I built as a way to fix the churn rate for another of my products. Basically, you need to start collecting data about everything your users do in your product so that you can establish patterns and get an idea of what things a "successful" customer does vs. what a "failing" customer does.

If you collect this data (either with my thing or something as basic and clumsy as Mixpanel), chances are you'll notice some obvious low-hanging fruit sort of things you can do to fix the worst problems. From there, it's a matter of optimizing every bit of customer lifecycle, from trial onboarding through to keeping them happy and engaged once subscribed.

I've written more about how to do this (including implementation details in case you prefer rolling your own solution) here:

https://www.expatsoftware.com/articles/saas-onboarding-metrics-for-developers.html

This comment was deleted 7 years ago

This comment was deleted 7 years ago