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Hiding Churn Using NRR?

This week:

 

23 Ways to Reduce Churn: #11 Schedule the Kickoff Before Closing


🚩Time is CRITICAL to customer success.


📈 Our benchmark data shows that customers who get started within the first few days of closing have significantly higher retention.


I've found that the key to starting quickly is to:

👉 Schedule the kickoff with the customer BEFORE closing when they are most motivated. 👈


 

Download the Free eBook: 23 Ways to Reduce Churn in 2023

Proven Methods for Rapidly Increasing Customer Retention Backed by Real-World Data

By: Greg Daines, CEO ChurnRX




 

Churn Cheats #8: Hiding Churn with Net Retention (NRR)


Net Retention (NRR) is a vital financial metric. But it is NOT a valid customer churn metric because it HIDES CHURN!🫣


WHY? There are two reasons:


⓵ It prevents us from seeing how much actual churn (gross churn) occurred by including expansion revenue. While this is useful for financial management, it's terrible for churn management because it hides how much actual churn occurred.


⓶ NRR is also distorted by the reality that high-value customers churn less often than low-value customers. This is a problem with all dollar-based churn metrics which I've discussed previously.


The consequences of this are significant →


⚠️ Whenever we can't see how much actual churn we are experiencing, we weaken the power of churn to serve as a guide for improvement.


As I like to say: CHURN IS THE TRUTH!


📶 It's the purest signal of WHAT and WHO we are really for!


When we blend it with expansion, we lose the power and clarity of the signal. We don't hear the TRUTH as clearly, which impacts our ability to fix what doesn't work and improve the results our best customers actually value us for.


Expansion is the *most important* ultimate driver of growth in recurring revenue businesses. BUT REMEMBER ►


👉 You can't expand an account you no longer have. 👈


That's why gross account retention is such a vital early predictor of long-term growth.


The Lesson is Clear:


✅ In addition to NET and Dollar-based churn or retention metrics, make sure you also regularly measure and report GROSS Account Churn and Retention.


 

QUOTE OF THE WEEK:


You can't expand a customer you no longer have.


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