SaaS metrics
Churn rate
Churn rate is the share of paying customers who cancel in a set period, usually one month.
If you start the month with 50 customers and 2 cancel, your monthly churn rate is 4%. Some teams also measure lost MRR or ARR instead of lost customers. High churn means you must keep adding customers just to stay the same size. Low churn is one sign of product-market fit.
With 2 or 3 customers, one cancel looks like a huge rate, so talk to people instead of reading percentages. Call every customer who cancels and ask why. Often the cause is weak onboarding or a low activation rate. Then reduce churn by fixing the most common reason first.
Go deeper
- How to reduce SaaS churnSaaSReduce SaaS churn when you have only a handful of customers: turn on failed-payment retries, card emails and cancellation reasons in your billing tool today, ask everyone who cancels why within 24 hours, message every customer who goes quiet for 7 days, offer a yearly plan in month 2 or 3, and fix the top reason people leave every Sunday.
- How to get feedback from your first usersGet feedback from your first users: email every user and customer one question today, ask every new user or buyer one question within 24 hours, put a one-question survey on the page where visitors leave, hold every 15-minute call you can book, ask everyone who leaves why, and every Sunday fix the problem 3 or more of the right people raised and tell them.
- How to improve activation rateSaaSImprove your activation rate when signups look around once and leave: write down the one action that shows a new user got value, set up a free PostHog funnel, cut every step before it, watch every first session, offer a 15-minute setup call, and fix one step every Sunday.
What links here
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