Good churn, bad churn

Not all churn is created equal.

Good churn, bad churn

As a SaaS founder, it's easy to look at your churn rate and make assumptions about the state of your business.

In reality, not all churn is created equal.

Customers churn for an almost endless variety of reasons but ultimately all churn falls into two categories: inevitable churn and preventable churn.

Learning to differentiate between these two types of churn is one of the best skills you can have as a SaaS founder.

Inevitable churn is due to unforeseen and unpreventable circumstances,  like a complete change of strategy that doesn’t require your product  anymore or your customer’s company going out of business.

Preventable churn comes from people you could (and indeed should) have  retained. These are people who have stopped getting value from your  product or found a better alternative.

No single metric tells you the whole story about your business but  churn rate is especially misleading because that number is likely  inflated by customers you should not be worried about anyway. As a SaaS  founder, especially if early stage, you can't afford to spend time on  unimportant things.

Inevitable churn is just a distraction. And more importantly, not  actionable. How does knowing that someone has churned because their  company closed down help you?

Instead, by analysing preventable churn you get insights about how  people use (or don’t use) your product, your pricing, your onboarding,  the value they get over time and much more.

Spend more time investigating your churn and only focus on preventable churn.

You will not just create a better product; when you focus on what  really matters and ignore the noise, your mental health will thank you  too.