Embed Size (px)
Citation preview
MRR Churn: Calculating and Optimizing
Price Intelligently’s SaaS Metric Mondays
SaaS MRR ChurnPrice Intelligently
Let’s talk about MRR Churn
MRR Churn
Your SaaS company’s silent killer.
SaaS MRR ChurnPrice Intelligently
MRR = Monthly Recurring
Revenue
Churn = A measure of attrition or
lossSaaS MRR ChurnPrice
Intelligently
MRR Churn =The monthly erosion of your SaaS monthly recurring revenue. You can define the metric as an absolute
dollar amount ($40,256) or as a percentage (-6.34%) which is more actionable to track over time.
MRR Churn
Want To See What Your MRR Churn Is Right Now?
SaaS MRR Churn
Get your free ProfitWell account – 1-click SaaS Metrics >>
Price Intelligently
MRR Churn
Here’s How You Breakdown MRR Churn Visually(image taken from ProfitWell – free SaaS Metrics dashboard)
SaaS MRR ChurnPrice Intelligently
All that stuff is great but…why should you even care?
MRR ChurnSaaS MRR ChurnPrice Intelligently
“Not tracking MRR Churn is like flying a plane with your fuel
tank on fire”
MRR ChurnSaaS MRR ChurnPrice Intelligently
More specifically…
MRR Churn
Understanding your MRR Churn can help
Identify which aspect of your product is causing
churn
ProductImprove projections and
financial planning models to account for lost MRR
FinanceMarketingIdentify channels
bringing in crappy/happy
customers
SaaS MRR Churn
See the breakdown of your MRR Churn with ProfitWell >>
Price Intelligently
Lets go even deeper and calculate MRR churn like a #boss
MRR ChurnSaaS MRR ChurnPrice Intelligently
It’s all about the money leaving your business
Always remember – with MRR Churn look at the Cancellations not upgrades or downgrades
MRR ChurnSaaS MRR Churn
MRR Churn Criteria BreakdownItems to Include Items to ExcludeActive Cancellations Upgrades
Delinquent Charges Downgrades
Price Intelligently
MRR Churn
MRR Churn = ∑ MRR Cancellation + ∑ MRR Delinquent
OVERALL EQUATION:
MRR Churn =
MRR CANCELLATION
1+ MRR
CANCELLATION2
MRR CANCELLATION
n…
MRRDELINQUENT
1
MRRDELINQUENT
2
MRR nDELINQUENT
n…+
BREAKDOWN:
$1,000 (MRR Churn) = $800 (MRR Cancellations) + $200 (MRR Delinquent)
EXAMPLE:
+
SaaS MRR Churn
Talk SaaS nerdy to me…
Price Intelligently
MRR Churn
Once you know how to calculate like a #boss you can optimize like an even bigger #SaaS superstar
SaaS MRR ChurnPrice Intelligently
MRR Churn
Here’s how to eliminate as much MRR Churn as possible:
1. Recover delinquent credit cards2. Increase your active users3. Fix your pricing strategy
4. Run churn loss surveys
SaaS MRR ChurnPrice Intelligently
MRR Churn
Delinquent credit cards are the biggest piece of low hanging fruit (~20-40% of MRR Churn). Put in a system that can
recover those numbers ASAP.
Key Optimization #1Recover Delinquent Credit Cards
SaaS MRR ChurnPrice Intelligently
MRR Churn
This is much easier said than done, but a lot of active cancellations come from individuals who don’t get hooked
into habitually using your product. Obsess over active users.
Key Optimization #2Optimize Your Active Users
SaaS MRR ChurnPrice Intelligently
MRR Churn
Improper pricing can heavily influence your MRR churn, especially if you don’t have a proper value metric or your
customers just don’t match your product’s value with your price.
Key Optimization #3Fix Your Pricing Strategy
SaaS MRR ChurnPrice Intelligently
MRR Churn
You’re likely missing the true reasons folks are leaving your product. Running proper customer loss surveys that force respondents to
choose the biggest reason(s) their leaving will help you identify these reasons real quick.
Key Optimization #4Run Churn Loss Surveys
SaaS MRR ChurnPrice Intelligently
MRR Churn
Boom. You’re now an MRR Churn rock star*.
SaaS MRR Churn
*…or just a normal SaaS aficionado that’s more informed and hopefully learned something useful.
Price Intelligently
MRR Churn
Want real time SaaS Metrics (including MRR Churn)?
Know and understand your SaaS Metrics with ProfitWell for free - the
most accurate metrics on the market.
SaaS MRR Churn
Click here to get your free ProfitWell account >>
Price Intelligently
