Churn measures the ultimate failure in SaaS—all of the customers who tried out your product and decided it isn’t worth paying for.
Nobody’s dumb enough to ignore churn point-blank, but a lot of founders have a tendency to calculate churn in a way that makes their company look best. That way, when they get together in a room, they each can brag about how great their churn looks.
More often than not, these comparisons don’t actually mean anything—they confuse apples with oranges. They’re basically bullshit. Are we talking about net churn? Gross? Month-to-month subscription? There’s a lot of different ways to calculate churn, and they each tell a different story about your business.
Don’t approach churn by trying to put lipstick on a pig. Churn is one of the most serious, persistent problems that startups face, and the only way to deal with it is through brutal honesty. You need to narrow in on an understanding of churn that accurately portrays your company, ruthlessly sniff out your retention issues, and fix them before they become full-blown disasters.
CT for the details. Be conservative about churn…very conservative!