How To Do Churn Analysis - Deepstash

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# How To Do Churn Analysis

Before starting your churn analysis, it's important to ask yourself: what problem am I trying to solve? This will help guide the analysis process and avoid wasting time on doing random searches in the data.

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### Gross Revenue Retention Rate Vs Net Revenue Retention Rate

Net revenue retention rate (NRR), also known as net dollar retention, is expressed as a percentage. It incorporates several types of customer activity, including upgrades, downgrades and churn.

NRR tells you how much monthly or annual recurring revenue you’ve retained from current customer...

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### Monthly Recurring Revenue (MRR)

Customer cancellations directly affect your MRR. To clarify this, you can calculate a metric called churn MRR rate , which provides a percentage for the impact of churn on your business.

First add up the MRR of lost customers over a given time period, then divide this number by MRR for th...

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### 6 Ways To Analyze Churn: Payment methods

Your business’s approach to taking payments and optimizing for payment acceptance is a vital aspect of driving overall revenue. Even the world’s best sales team can’t overcome a poor payment acceptance workflow.

Your payment acceptance rate is the proportion of successful payments out of ...

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Customer retention rate is the proportion of customers you've retained over a specific time period.

It's the direct opposite of churn rate. For example, if your retention rate is 80%, your churn rate will be 20%.

Here’s how to calculate customer retention rate:

Custome...

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### 6 ways to analyze churn: Be Cohort

Analyzing churn by cohort is a good way to begin your churn analysis. In cohort reports, you segment your customer base according to a specific time period.

Cohort reports are useful because they produce numbers which are not influenced by new customer acquisition.

They also allow ...

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### 6 Ways To Analyze Churn: By Customer Age

In this approach, you group your customers according to the length of time they’ve been with your company. Analyzing churn by age is invaluable for identifying patterns across your entire customer base without getting bogged down by too many cohorts.

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### Why Analyzing Churn Is So Important For Saas Businesses

Churn should be viewed as a prime opportunity to learn and improve.

Churn analysis allows you to evaluate strengths and weaknesses in your existing processes, while improving your ability to deal with, and prevent, future churn.

Losing a few customers may seem insignificant at firs...

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The cost of attracting a new customer is always more than maintaining an existing one. LTV is the total value of your customer over the entire length of their relationship with your company.

It's common for new SaaS companies to focus too heavily on acquiring new customers rather than kee...

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### Customer Acquisition Cost (CAC)

This metric tells you how much you need to spend to acquire a new customer. As we already learned, it typically costs more to acquire a new one than maintain an existing one.

A high churn rate means you’ll have to spend more money on acquiring new customers, which pushes up your CAC.

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### The Importance Of Cross-Referencing Metrics

To truly understand the nuances of churn and calculate its impact on your business, it's vital to take a holistic approach that considers all the metrics mentioned above.

Customer retention is especially important, as it’s the flipside of customer churn. Improving retention rates not ...

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### The Importance Of Churn Analysis

• A good churn analysis provides a set of detailed insights on the factors affecting your churn rate.
• Churn analysis should deliver a full picture of your customers’ needs and evaluate whether your company is meeting them.
• The cost of getting new customers can be five times ...

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### How To Calculate Churn

The basic formula to calculate churn rate is very simple:

Number of customers cancelling their subscription per time interval / Number of customers at the beginning of that interval x 100

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### Churn: The Reality Of Any SaaS Company

Defined as the percentage of customers that cancel their subscriptions in any given time period, churn rate is an essential metric that can make, or break, the success of your SaaS business.

That's why it's so critical to master churn analysis. No SaaS company can hang on to all its custo...

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### 6 Ways To Analyze Churn: By Geography

You can gain important context by examining your customers’ locations. For example, local tax regulations, payment processing methods, and payment gateways vary according to country. It’s essential for SaaS businesses to comply with these rules.

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### Net Negative MRR Churn

Unlike regular churn, this metric is one to aspire to. Net negative churn means that total revenue from your existing customers surpasses the revenue lost to churn.

Basically, your existing customers are spending enough extra money to offset the losses from those who churned. You can reac...

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### 6 Ways To Analyze Churn: By Customer Behaviour

Analyzing churn by behavior can reveal important patterns related to certain features of your product. Perhaps customers churn right after they use a specific feature. In that case, your product and engineering teams should dig in further to identify the issue and create a fix.

On the oth...

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### 6 Ways To Analyze Churn: Voluntary Vs Involuntary Churn

There’s a critical difference between voluntary and involuntary churn. Voluntary churn happens when a customer deliberately cancels or downgrades their subscription.

Involuntary churn is often due to expired or declined payment cards, lack of funds, incorrect payment information, or poor p...

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### Calculating NRR And GRR

NRR(Net Revenue Retention Rate) can be calculated as:

NRR= Starting MRR-Contraction MRR - Churn MRR + Expansion MRR/Starting MRR x 100

GRR(Gross Revenue Retention Rate) can be calculated as:

GRR=(Starting MRR-Downsell-Churn/Starting MRR

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