Getting your arms around Churn

What type of churn should you track? How? Then what?


Thanks to Ari Klein and Nick Mehta for sharing Ajay Agarwal & Ben Vonwiller's TechCrunch article on the affect gross churn can have on SaaS growth. So, this week's post will have a nod to Halloween and the spookiness of churn.

According to the post, McKinsey's database of pre-IPO SaaS companies find gross churn (how effectively companies keep existing customers) is the most impactful metric.

How is gross churn different from net churn?

Gross Churn: the stability of current revenue from existing customers.

Net Churn: combination of gross churn + expansion revenue (up-sell/cross-sell)

It's also important to note that in high growth environment, revenue matters and gross churn takes priority over logo churn.

" Losing any kind of customer will feel painful, but as a SaaS CEO, you have to be okay with some set of your “off spec” customers churning while you double down on your most important “sweet spot” customers."

If you liked this post, you might also like Successful Land & Expand Strategies.