Switching to competitors’ products/services is also rising under the impact of digitization, especially using price comparisons. In this uncertain economic climate, their utmost priority is to keep customers from churning.
Winning new customers is more costly and retaining long-term customers with long-term subscription plans can be much more valuable. Fortunately, today’s companies have b2b SaaS churn rate benchmarks such as robust customer retention strategies and acquiring a new tool to help them keep old users and acquire new ones: Churnfree.
Churnfree uses automated algorithm-driven methods to drill down data of individual customers based on their behavior patterns. Hence, businesses can control their customer base more strongly and control churn. Churnfree helps you evaluate marketing effectiveness, improve your bottom line, and double down on your customer retention strategies.
Let’s dive into everything you need about b2b SaaS churn rate benchmarks. As churn experts at Churnfree—we enable you to understand why your users cancel their subscriptions and assist you in retaining them with personalized onboarding experiences—Collect a pack of tips, b2b benchmarks, and guidance to improve your churn rates.
SaaS Churn Rate: Definition & how to calculate it
Knowing the deep-down definition of churn rate and how it can become subtly uncertain to affect your business strategies is imperative.
First, let’s explain what we mean by “churn rate.”
The churn rate estimates the number of users who cancel their subscriptions within a specific period. It is a beneficial practice to calculate revenue lost from churned users.
SaaS churn rates are critical for a business’s long-term undertakings and overall performance.
Calculating SaaS Churn Rate
SaaS churn rate focuses on the number of users that leave your services monthly or annually. To measure the SaaS churn rate, you can divide the total number of churned users via the total number of users:
b2b SaaS churn rate benchmarks
For example, if your business has 1000 customers and 80 ended their subscriptions last month, your customer churn rate is 8%. The SaaS churn rate is also understood as “logo churn.”
Net SaaS Churn Rate
To get more accurate measurements, there’s the net SaaS churn rate, which evaluates the number of new users your business gained over a specific period.
To measure it, you need to divide the total number of left users by the number of new users gained over a period via the total number of users.
b2b SaaS churn rate benchmarks
For example, if your company has 1000 customers, 80 of them canceled their subscription last month, while your business gained 2 new users, your net SaaS churn rate would be 6%.
Nevertheless, customer retention is a tremendous metric to evaluate your customer base and product experience. Still, it does not offer real insights into the revenue affected by the churned users—it’s usually connected with the revenue churn rate. The real insight is gained by the tool that measures your Net SaaS churn rate and helps you define your users’ behavior patterns.
Revenue Churn Rate
The revenue SaaS churn rate calculates the ratio of lost revenue due to some reasons, such as downgrades, cancellations, payment failures, and other bottlenecks. To measure it, you can divide the total churned revenue over a specific period with the total revenue at the beginning.
b2b SaaS churn rate benchmarks
For instance, if your total revenue is $2,000 and your churned revenue is $300, your revenue churn rate will be 15%. The revenue churn rate helps set different pricing tiers for subscription pricing plans, which do not fall under the category of SaaS churn rate.
Read more originally posted: B2B SaaS Churn Rate Benchmarks
Top comments (0)