Key takeaways:
There are multiple different churn metrics, each of which can help you understand two different things. Today, we’re going to look specifically at customer churn and revenue churn, which can tell us the following: :
Customer churn = customers lost. Revenue churn = money lost.
But which of these churn metrics should you use? This article will cover everything you need to know about customer churn vs. revenue churn.
Track churn metrics with greater precision with Baremetrics, the powerful metrics dashboard for data-driven subscription and SaaS businesses everywhere. Get started for free.
Customer churn measures the number of delinquent customers over a specific period. In most contexts, delinquent customers are customers who:
Example: Your company has 100 customers who pay for subscriptions, but 10 customers cancel their subscriptions in the last 30 days. Your customer churn rate is 10 percent.
There are steps you can take to more effectively retain clients by re-engaging customers, improving customer success programs, and identifying users who are at-risk for churn.
You can, for example, flag users who may fail to make an upcoming payment due to a canceled or expired card, resulting in involuntary churn. Using a dunning management solution can help you identify and reach out to these users to prevent the churn before it happens.
Read more: What is Negative Churn? (And How to Achieve It)
Revenue churn measures the amount of lost gross revenue over a specific period. In most contexts, revenue means Monthly Recurring Revenue (MRR) — the revenue your business expects to receive over 30 days.
Example: Your company has 90 customers who pay $1 a month for a subscription and 10 customers who pay $100 a month for a subscription. (Your MRR is $1,090)
Are you concerned about accurately analyzing your churn metrics? Baremetrics is the leading metrics dashboard for data-driven SaaS businesses, offering valuable churn insights to inform your next decisions.
Calculating customer churn vs. revenue churn lets subscription and SaaS companies like yours compare churn from month to month.
Keep in mind you can also track both gross and net revenue churn, too.
You can also compare customer churn every year.
There are multiple churn metrics— these are just a few. Calculating churn is different depending on the metric, and it’s also important to know how to use different metrics like LTV to assess churn.
Read more: What is Net Revenue Churn? (And How Does It Impact Your Business?)
Understanding customer and revenue churn is critical because both metrics provide value.
Simply put, using both metrics tells you how many customers have left your business and how much money these customers took with them.
You can prevent churn by identifying key insights you need to make profitable decisions that propel the business forward. Baremetrics generates daily, weekly, or monthly email reports with the following metric benchmarks:
Tracking subscription and SaaS metrics helps you:
In particular, Recover by Baremetrics keeps track of when customers’ credit cards are due to expire so you can contact customers and encourage them to update their card details. This way, customers never miss a payment.
Recover from Baremetrics is a simple way to prevent customers on monthly and annual subscription plans from churning, making it an invaluable tool for your business. Try it free.
Tracking customer churn and revenue churn provides your business unparalleled insights into how your customer base behaves. Using both metrics tells you:
Daily, weekly, and monthly reports and Recover from Baremetrics are two features of many that help prevent customers from churning in the first place.
Identify what’s happening today and make changes that promote growth with Baremetrics, the leading metrics dashboard for your subscription or SaaS business. Start your free trial today!
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