Why Your SaaS Customer Churn Metrics Are Probably Wrong

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iconsive.comIf recurring revenue is the lifeblood of a SaaS business, then high customer churn is its death knell, the red flag that things are about to go seriously wrong. Lost customers eat away at your growth, undermine the stability of your business, and are a serious warning sign to potential investors. If left unchecked, customer churn can become a big problem.

As Joel York of Chaotic Flow explains:

‘SaaS churn increases with the size of the customer base, so it is essentially negative virality, and as such is incredibly difficult to overcome. Graphically, SaaS churn tends to follow what is called a negative exponential distribution (shown below, it is the opposite of the positive exponential distribution associated with viral growth).’

Read more about how companies are miscalculating churn and how to avoid it at iconsive.com

 

photo CC by David Goehring

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