Managing Churn in a SaaS Business

  • 8 July 2020
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lila_meyer
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Mark Roberge of Stage 2 Capital, and Jake Tauscher from G2VP, recently interviewed ~50 leaders at mid-sized SaaS companies, to identify decisions they made that did or did not affect churn. Specifically, they focused on decisions concerning the ‘Customer Success’ function. 

In the process, they learned:

  • For over 2/3 of the companies interviewed, churn was a key performance metric for a frontline Customer Success Manager.
  • High-growth SaaS businesses have lower churn.
  • Companies that served larger customers ($50M+ in revenue) with larger contracts ($75K+ annually) experienced lower revenue churn. 
  • Charging for customer success did not predict churn.

Curious to read more of their analysis. Click here for their complete blog post.

Lila Meyer, Dir. Global Education Services

1 reply

J

What type of product or service do you offer? If you offer a subscription service or something else where a single customer pays you on a regular basis, churn is fairly easy to track. Otherwise, not so much - and how 'churn' is measured is becoming increasingly important.

I am a data scientist/statistician by trade, and I use time-to-event statistical and machine learning models (search for survival analysis) to help my clients understand the why and when of customer churn. You can use a similar strategy to figure out why they're leaving based on your product or industry. You can also use this information to devise strategies for regaining them.

Speaking of strategies, offering a discount is a good place to start, but you can do better. Understanding why they are leaving is critical to understanding what you can offer them to keep them. It's probably fine to solicit feedback. Make sure they understand it's anonymous.

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