My SaaS company (2 years old) has just enterered its first churn cycle. How have other successful SaaS companies thought about their churn rate at this phase (net, gross, and logo/brand churn, in particular)?
What’s most important is:
- Segment it. You’re already alluding to this. But generally, between Small, Medium and Larger customers because they will churn at different rates.
- Net (including upsell / account growth) and Gross Churn.
- Drive Churn down per segment from whatever level it is, and drive net retention up!
Don’t beat yourself up too much on the absolute numbers. What’s more important is to measure them, and then each quarter, drive churn down and net dollar retention up. Set those as 2 of your core company goals and magic will happen.
And importantly, you also need to measure customer happiness, because churn, especially with annual contracts, is a lagging indication. Measure NPS in particular. If your NPS is low (e.g., 0–20) and your churn is also low, don’t let yourself off the hook for churn. It’s coming. It’s just latent.