Winning clients in a startup is definitely hard work. So fighting with churn is as crucial as winning new clients. At Open Loyalty, we work with many startups, helping them make their clients more loyal, and prevent churn. So I decided to collect all our great ideas and share them in one place.

Just look at this chart below. This shows us how your growth might look like according to different churn levels.


A whitepaper by Frederick Reichheld of Bain & Company found that increasing customer retention by 5% can increase profits by 25% to 95%.

Huge difference, right?

Why does churn occur?

Churn describes the number or percentage of clients that resign from further usage in a given time period.

Why does churn happen?

  • Customer can’t afford to continue using your service
  • Customer can’t see the value of your products
  • Your product doesn’t meet customer expectations
  • Customer Support or additional services are below accepted level
  • Your competitor is stealing your clients
  • Something changed inside of your client organization and they can’t use your product anymore

What’s an acceptable Churn Rate?

Before you start optimizing your churn, it is good to know what an average churn level is, and what you can achieve.

Many studies says that churn rate depends on your target customer and your company’s phase of development. The general rule is – your churn rate should drop over time.

If you are selling to Small and Medium Business Owners, your churn rate could be around 3-5% monthly or less than 10% annually. Still, many businesses selling to this group achieve a negative churn.

For Enterprise Level clients with an 5-digit monthly ARPU, your churn should be under 1%, or even lower.

Some time ago, the guys from ProfitWell compiled the largest SaaS MRR churn dataset in the world, in order to help you answer that ever crucial question: “What should our churn look like?” You can learn more about this study from their recent youtube video.

OK, so I did some research – asking successful SaaS companies about their anti-churn methods. Here is a quite complex list of ideas you should try.

Analyze why churn occurs

The first lesson here is that, for every company, churn can be caused by different factors. It’s a good idea to call lost customers and just ask them why they left.

The main reasons why customers resign are shown in the Customer Experience Impact Report by Oracle.

  • 58 percent of consumers noted that their expectations were not met because a company was unavailable by phone and e-mail.
  • 56 percent said companies are slow to resolve issues.
  • 57 percent said companies are clueless; it sometimes feels like the consumer knows more about the company than the customer service agent.
  • 51 percent said companies are impersonal; sometimes they can’t even get the customer’s name right.
  • 34 percent said companies are forgetful; they don’t even remember a customer who has recently talked to a customer service agent.
  • 16 percent said companies are antisocial; they are nowhere to be found on social networking sites.

Our approach to churn is very data-based. We constantly analyze both our active and churned customers and search for red flags. This way, we can find out about potential churn before it happens and try to prevent it. Our top 3 red flags are: when there is a decrease in the number of logins, a change in the number of keywords or mentions (when the customer doesn’t use all their keywords, even though they’re paying for them), as well as a decrease in engagement. We message those customers and try to re-engage them. We’ve created separate segments for these red flags and we keep an eye on those segments every day. Emilia Harabień, Customer Success Manager, Brand24.

Define your Most Valuable Customers

This sounds too easy but this can be true. Especially for typical B2B companies. Finding the most valuable customers is quite easy and can be the starting point for building a super-strong relationship with them.

There is even an interesting Paper with the theory that you shouldn’t fight with churn in general, just focus on the best clients and make them loyal.

The authors say:

Profit from targeting a customer depends on not only a customer’s propensity to churn but also on her spend or value, her probability of responding to retention offers, as well as the cost of these offers. Overall profit of the firm also depends on the number of customers the firm decides to target for its retention campaign. We propose a predictive model that accounts for all these elements. Our optimization algorithm uses stochastic gradient boosting, a state-of-the-art numerical algorithm based on stage-wise gradient descent. It also determines the optimal number of customers to target. – Aurélie Lemmens & Sunil Gupta.

Whatever your strategy will be, knowing the best customers sounds like a reasonable first step as they comprise the most important group when it comes to preventing churn.

Take care of onboarding new users

Groove reduced churn 71% using the red-flag metric and helping clients with the onboarding problem.

When we looked at the numbers, there were two metrics that seemed to be the most significant in the first 30 days after a user signs up – length of first session and frequency of logins. – Alex Turnbull, Groove.

I wrote a dedicated post about onboarding. A good, complex onboarding process is the first step of churn prevention.

Define a roadmap for your new customers

This is also part of good onboarding process but just to stress this – you should prepare a roadmap for new clients. This roadmap’s goal is to make clients familiar with crucial features and make you sure that they will not leave until they know the product better.

Crucial Time

I’ve heard many times that the majority of customers churn within the first three months.

Companies like Hubspot used to offer an intense customer success program to assist customers during that period.

ContentKing keeps a full history of all tracked changes. That means that the longer you’re using ContentKing, the more valuable your account is.” – Vincent van Scherpenseel, CEO, ContentKing.

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Tomasz Karwatka

Supervisory Board Member at Divante. Leading industry voice who believes eCommerce can improve our world. Co-founder of Vue Storefront and Open Loyalty, angel investor, and founder of Tech To The Rescue. CEO at Divante eCommerce Technology Company | LinkedIn | Twitter

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