SaaS Churn Rate Guide: Running a Health Check on Your SaaS Business
What is Churn Rate?
Why is it an important SaaS metric?
How to calculate the SaaS Churn Rate? (formula+example)
SaaS Churn Rate: What's Reasonable?
3 Types of Churn
Bad from the beginning and unhappy end
In this scenario, your customer buys your product and problems start arising throughout his/her first interaction with you. Probably they don’t understand your product’s full potential, maybe fail to achieve customer success or face other challenges that are out of your control.
Good from the beginning and unhappy end
In this scenario, your customers manage to get a grasp of your software and use it for some period but again something goes wrong. Maybe their interaction with you doesn’t satisfy them, your software lacks specific features or the needs of their company change.
Happy end for your customer, unhappy for you
In this scenario, your customers churn not because of internal or external problems but because their company achieves the final result they wanted to with your software.
Your customers are happy and satisfied but they already don’t feel the need to continue with you. For you, it’s still unhappy as you lose a paying customer.
8 factors that result in churn...

External factors that result in churn:
- Your customer’s company stops feeling the need in your product
- Your customer’s company suffers financial problems
- Your customer’s company stops existing at all
Internal factors that result in churn:
- You promise more than you can give
- You don’t improve your software features
- You don’t educate how to use your software
- You don’t build a relationship with your customers
- Your customer success/support team works at a low level
Leading and lagging indicators of SaaS churn: What are they all about?
- Your customer didn’t finish the onboarding process and a bunch of software usage-related questions remain unclear.
- Your customer hasn’t been active for X time and consequently hasn’t seen actual results from your software.
- Your customer writes a negative comment on your website or social networks and shows dissatisfaction regarding your services.
- Your customer’s NPS (Net Promoter Score) is quite low and he/she belongs to the group of detractors – the ones who rate your company under 6 score and are neither happy nor will recommend you to others.
- Your customer has visited the cancellation page in order to understand what the “goodbye” process will look like.
The second group includes:
- Your customer suffers from cash flow decrease and is in a financially unstable situation.
- Your customer was affected by negative word-of-mouth as someone told him/her you are not the right company to work with.Your customer hasn’t been active for X time and consequently hasn’t seen actual results from your software.
7 steps to reduce SaaS churn rate

Identify MAR (Member-at-risk)
Dan Martell, a SaaS growth specialist, an investor says that you should permanently follow the activities of your customers. When you see that they have not logged in for a long time, contact them to ask if they need your assistance.
Ask for feedback
If you tried every single method and couldn’t retain them, at least try to understand why they left you. Ask what is the reason not to continue with you and what complaints they have. You will be able to learn from your mistakes and prevent similar churns in the future.
Engage your customers
Engagement is provided beyond the borders of social media. Ask them to subscribe to your newsletter and send them interesting updates, offer special discounts or invite them to participate in your upcoming webinar.
Create a positive onboarding experience
This is the root of your success or failure. If a company doesn’t know what range of problems they can solve with your software or how to leverage it, the rest is not even important. Find time to create both written (guides, user manuals) and visual (screenshots, videos) content to help them use your software more easily.
Have a responsive and attentive customer support team
Even when everything is crystal clear on the guides and tutorials, people may have additional questions or face technical issues. Be ready to not only answer their questions/complaints but ask for clarifications, initiate conversion and offer the best and fastest solutions.
Demonstrate your product with its whole potential
Introducing your product’s features and benefits in the right way is super important but benefits play a much more significant role. Show your customers what your software does and don’t forget to add how it will facilitate your customer’s daily efforts.
Follow the latest market trends
Imagine that new companies enter the market with a similar product like yours. If their version offers more advanced features, answers more questions, then you should consider reviewing your existing software. Always think about updating your product so it continues to provide value.
What is SaaS churn prediction and how to predict SaaS churn with tools?
Mixpanel – Product and User Behavioral Analytics
With Mixpanel’s free plan, you can track 1.000 users monthly, have access to 5 employee accounts and 90-day data history. Core features that are available in all plans include reports on user behavior, automatic monitoring, and alerts. Paid plans with more advanced features are also offered.
Churnly – Customer Success Software
Designed especially for SaaS, Churnly helps predict which customers have the likelihood to churn and how much revenue will probably soon be lost. Features include monitoring customer engagement and activities too, providing 90%+ accuracy.
InnerTrends – Customer Engagement Scoring Software
Having only paid plans, InnerTrends aims at improving customer onboarding, engagement, and retention. Plans include custom tracking, customer engagement scoring, user onboarding insights, retention insights and more valuable features that will provide you with correct data.
Natero – Customer Success Software
With products called Customer success platform and Customer data integrations, you will be able to monitor customer health, analyze their behavior and scale customer success operations. You can see the comparison between Natero and other similar tools like Gainsight and Totango.
Have a responsive and attentive customer support team
Even when everything is crystal clear on the guides and tutorials, people may have additional questions or face technical issues. Be ready to not only answer their questions/complaints but ask for clarifications, initiate conversion and offer the best and fastest solutions.