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The Silent Killer of Churn

This week:

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ARE FREE TRIALS THE 'SILENT KILLER' DRIVING YOUR CHURN?


In our latest study, we analyzed companies that offer customers both a paid and a free trial option to find out if free trials drive churn. The results are absolutely clear:


๐Ÿ“ˆ Customers who start with a free trial stay LESS THAN HALF AS LONG as customers who pay to start!


โš ๏ธ WHY DO FREE TRIALS CONSISTENTLY DRIVE CHURN?


The key is understanding that customer results are the fundamental driver of retention. So the relevant question is:

๐Ÿ’ญ How do free trials impact customer results?


๐Ÿ‘‰ Customers who start with a free trial do not put in as much effort as customers who pay from the start. ๐Ÿ‘ˆ


Customers who pay have "skin in the game." They are anxious to ensure their money isn't wasted, so they try harder to make it work.


Customers who start with a free trial do not have the same incentive; the inevitable outcome is that these lower-effort customers don't get nearly as good results.


โ–บ Anything that reduces customer results increases churn.


This tells us that free trials are a reliable way to acquire low-effort customers.




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THERE'S A BETTER WAY TO MEASURE CHURN

There's a much more effective way to measure and manage your REAL churn. I'll gladly show you how to do it with a FREE CHURN ANALYSIS of your real data! (click the link below โ†“)


Get your Free Churn Analysis and start measuring your churn accurately with the ultimate Churn Dashboard!

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CHURN CHEAT #3: Focusing on "Dollar Churn"

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It has become common for companies to rely on lost revenue as their primary churn KPI.


But this is a really bad idea because...


๐Ÿ“ˆ High-value customers consistently retain at a much higher rate, so dollar churn ALWAYS looks much better than account churn.


WHY IS THIS DODGY?


โ˜’ It makes retention look better than it really is - temporarily.


โ˜’ It obscures the relationship between account churn and long-term growth.


โ˜’ It perniciously incentivizes efforts to resist customer down-sells, which ironically drives more customer churn! https://lnkd.in/gWdPhX3P


โ›”๏ธ HERE'S THE PROBLEM โ†’


๐Ÿ‘‰ In SaaS, growth is ultimately founded on account expansion, and you can't expand accounts you no longer have! ๐Ÿ‘ˆ


That's why account churn is a much better predictor of long-term financial performance than revenue churn.


3 REASONS TO USE ACCOUNT CHURN:


โœ… Your executives and your board need to compare BOTH Revenue Churn AND Account Churn to understand short-term and long-term financial performance correctly.


โœ… Account churn is invaluable to improvement because it reveals the most important factors that drive and impede customer results.


โœ… Account churn restrains the tendency for the entire company to become "captured" by the perspective of only the biggest accounts, a form of myopia that has proven to be disastrous to many businesses.




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Download your copy of the 2023 Customer Churn Benchmark Report

Learn what benchmarks impact customer churn, such as Customer Satisfaction, Customer Size, Sales Discounts, and more!


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QUOTE OF THE WEEK:


Companies buy more customer churn than they make.





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