Dear SaaStr: How Do I Best Prevent Churn?
You don’t. Instead, you drive it down. Each quarter.
You can’t eliminate churn. It’s a fact of business life in selling a product with recurring revenue and thus recurring sales. You can hide churn (e.g., by signing multiyear contracts). And you can drive it down. But you can’t eliminate it.
My top suggestion is:
- Measure churn carefully, and consistently.
- Then segment it. Usually into Small, Medium and Large customers. Usually, your smallest customers will churn at the highest rate.
- Then set quarterly and annual goals per segment.
- And set a big annual goal to drive churn down say 20%.
Assign owners to those goals, and make driving down churn in the aggregate a Top 5 company goal.
This drives churn down, almost always.
A bit more here: If Nothing Else – Segment Churn – SaaStr
