Calculating user churn rates is essential if you want to maintain a continuous growth strategy. Whether it’s for the primary stakeholders, upper management of external investors: Knowing your churn rate is essential especially when you’re running a SaaS product when your revenue ties directly to the quantity of your user base.
Simply put, churn is customers you’ve lost in a specific period of time. Tracking this metric forces you to re-evaluate your product strategy (and possibly do a reset). If churn is high, something about your product is turning away users. The churn itself is of course expressed in obvious numbers from your BI team – But it’s the relative metric user churn rate which
Churn itself is of course expressed in obvious numbers from your BI team – But it’s the relative metric user churn rate which lets you compare your churn rate against forecast and competitors.
This is why I’ve created a calculation sheet which I want to share with you. It focusses on the acquisition/user base side of churn. It provides the calculation base for 12 months and exposes your monthly and overall churn rates.
As always, if you have any suggestions for modifications in the sheet, either send me an email or leave a comment in the file itself.
Sometime over the coming weeks, I’ll also create a sheet specifically for calculating payer churn – Useful when managing a freemium product. While it’s then more about your payer base instead of the overall user base, thinking in cohorts is also beneficial when e.g. evaluating upsell mechanisms within your product or upsell focused marketing campaigns.