How much churn is normal, and is mine bad?

Gives per-industry churn thresholds so you can answer 'is my churn bad' with a number instead of a feeling. Software sits around 6 percent, which surprises a lot of first-time founders.

Churn Benchmarks: Enhancing Customer Retention

From Chargebee by Shaoli Paul 8 min read

• Per-industry churn thresholds: over 6 percent is high for software, over 5 percent for technology.
• Monthly churn rate = churned customers divided by customers at the start of the month, times 100.
• Worked example: 1,000 customers, 30 lost and 20 gained, gives a net churn rate of 2 percent.

The benchmark study everyone quotes: good and great net revenue retention by business type, built from 20 growth experts plus real public company numbers. It stops the 'is 105 percent good' argument in one page.

What is good retention?

From Lenny's Newsletter by Lenny Rachitsky 15 min read

• Benchmarks differ by business type, so compare yourself only to your own category.
• Enterprise SaaS net revenue retention: about 110 percent is good, about 130 percent is great.
• Bottom-up SaaS: 100 percent revenue retention is good and 120 percent great, with Slack at 135 to 155 percent.
• Warns startups rarely move retention much after launch, so weak early numbers are a hard signal.

Involuntary churn is 20 to 40 percent of total churn for most subscription businesses and nobody owns it. This is the most concrete tactical list we found, organised by where in the payment lifecycle you intervene.

23 Ways to Reduce Involuntary Churn

From Chargebee by Zaid Assadi 15 min read

• Involuntary churn from failed payments and expired cards is typically 20 to 40 percent of total churn.
• Direct debit fails on only 0.5 percent of collections, making it the most reliable recurring payment method.
• Maps fixes to six moments: payment due, first failure, retries, dunning messages, post-dunning, and invoicing.

Unfashionable and effective: name an owner per customer, segment CS by customer size, do not close deals you cannot support, make it easy to leave well. Also the clearest statement of when churn starts capping growth.

11 Basic Tips to Lower Your Churn Rate

From SaaStr by Jason Lemkin 8 min read

• You barely notice high churn up to 2 to 3 million ARR; at 10 million it stops growth; at 20 million it can end the company.
• Concrete habits: answer all tickets in under 5 minutes, do 6 customer calls a week, run a weekly webinar.
• Selling deals you cannot service is worse than not closing them at all.

An Indian VC talking about what churn and retention numbers actually mean at an early stage, and how much of the variance is segment rather than product. That framing is what stops you comparing your SMB churn to an enterprise headline.

Decoding Metrics For Early Stage Startups with Gaurav Ranjan VP Investments Prime Venture Partners

On Prime Venture Partners by Gaurav Ranjan 24 min