Churn Prevention: A Product Manager’s Guide

Churn prevention is all about hanging on to the happy customers you have, and doing your damnedest to change the minds of the unhappy ones. It should be at the front of the mind of any product manager who’s trying to keep their SaaS product, or any other subscription-based service, on the menu.

Understanding, tracking, and preventing churn really should be a cornerstone of your strategy – if all of your best earners are dropping you like a hot potato, you’ll find it harder and harder to replace them.

For the record, you can never completely eliminate churn – some customers will have to leave for reasons beyond your control. But, you should never get complacent and shrug all your churn off as ‘not the product’s fault’. 

You need to get your head around why your departing customers have left you, otherwise, you’re not going to be able to learn from those mistakes, and you’ll never plug that hole.

What is churn?

If you already know what churn is, then feel free to skip to the next section. For everyone else: there are two types of churn – customer churn, and revenue churn.

Customer churn (also known as logo churn or customer attrition) is the measure of how many of your customers are no longer paying for your product. It is represented as a percentage and is calculated like this:

Churn Rate = (Total number of churned customers / total number of customers) x 100

There are then two ways to calculate and track revenue churn. Those are:

Gross Monthly Recurring Revenue (MRR) churn is the measure of how much money you have lost from customers leaving or downgrading their service. It’s calculated like this:

Gross MRR Churn Rate = MRR Lost from Churn / Starting MRR x 100

Net MRR churn takes into account how new customers and people upgrading have counterbalanced the negative impact your Gross churn has had on your revenue stream, and is calculated like this:

Net MRR Churn Rate = (MRR Lost from Churn and Downgrades – MRR Gained from Upgrades and Add-ons) / Starting MRR x 100 

If you really want to get to grips with these metrics, and the other product metrics you’ll want to be tracking to get the best from your product, download our free eBook, The Complete List of Product Management KPIs.

What is churn prevention?

Churn prevention is like a secret recipe that you use to keep your customers happy and keep them sticking around. It’s all about understanding what makes those customers tick. You need to address any problems that crop up before they get big enough to make them want to drop your product.

Think of it as more than just keeping people from leaving, though. It’s about building a real bond with your customers. You’ve got to look at everything from the product itself to how they feel when they call for help, and make sure that you’re staying on top of what they want as it changes.

It’s like mixing all the different ingredients of a complex recipe together to make sure you get the perfect dish that keeps your customers smiling. To do it right, you’ve got to dive deep into your customer data.

Watch out for any signs that someone might be thinking of waving goodbye. That’s your chance to jump in with solutions before it’s too late. Or to sweeten the pot to keep them around long enough for you to make the fix they’re looking for.

Again, it’s not just about holding onto customers, no matter what. It’s about keeping your product or service as cool as a cucumber, as hot as a chili, and matching what your customers want in their product bellies. It’s about staying in tune with what they need and making sure you’re delivering the goods.

In the end, churn prevention isn’t just some business mumbo-jumbo. It’s the key to making your business last. It’s about knowing your customers inside out, staying ahead of the game, and always changing with the times. Give it the priority it deserves, and you’ll be building lasting relationships, making your brand shine, and setting yourself up for success.

Who is responsible for churn prevention?

Customer Success

Let’s be real: the entire team has a spoon in the churn pot. It’s one of those things that’s everyone’s business. But usually, it’s the Customer Success squad that’s on the front lines, building those vital connections with your customers once they’ve hopped on board. They’re the ones making sure your customers are digging what you’re dishing out.

Being there in the trenches (or is that trenchers, to continue the food metaphor?), Customer Success is usually the first to spot the signs – like when someone’s app usage is dropping off, or if they’ve started grumbling. But hey, if someone does decide to jump ship, remember, it’s not all on Customer Success’ shoulders. We’re all in this churn battle together!

Marketing

Marketing can contribute to keeping churn low by making sure they reel in the right kind of folks to begin with. Those who’ll really get a kick out of what you’re offering. No sketchy sales tactics, no promising haute cuisine then serving up a hot dog. Just honest-to-goodness value.

Product marketing, who usually own customer comms, can also help keep your users engaged and happy through supporting a multi-touch communication strategy. While the Customer Success people will be hands-on and often one-to-one with customers, Product (or Customer) Marketing will be responsible for the mass communications and ongoing nurture emails that can help your entire customer base feel like they’re in the loop. 

Sales

Sales also have to make sure they’re not promising champagne and delivering Mountain Dew. They’ve got to match the right product to the right people. Otherwise, those customers are out the door quicker than you can say “Wait, what’s churn again?”.

Product & Development

Then there’s the tech folks, the Product and Development crew. They’re the guardians of the product kingdom, making sure there’s no hair in the food, and that service is glitch-free. Can’t have a wonky product scaring off your precious customers!

Support 

Of course, you need Support to swoop in, flag bugs, and make sure your customers feel the love when they reach out.

So, just like getting a fine meal from fridge to table, and making sure no one pukes it up and writes you a terrible review… it’s a team effort. We’re all in the business of crafting an amazing customer experience together. At any moment, a sour taste can send customers packing. I really should have had lunch before writing this!

How to prevent churn as a product manager

Ok, so now you know what everyone else is doing to keep your churn under control, what can you as a product manager do to tie all of their efforts together?

Keep your eyes on your ICP

Right from the get-go, you have to know who your dream customers are. That’s your Ideal Customer Profile (ICP). Get that down pat, and you’ll be drawing in the right crowd, the ones who’ll stick around. Because trying to fix a poorly conceived ICP later is like trying to unscramble an egg.

If you’ve got a bunch of folks signing up but scratching their heads, wondering what they signed up for, that’s a problem. You have to know who you’re building your product for, aim for customers that’ll stick around for the long haul. They’re the ones who’ll keep that revenue gravy train chugging along.

That’s why it’s so important to know your ICP like the back of your hand. Shout it from the rooftops! Understand who your buyer persona is and work closely with your Sales and Marketing teams to make sure everyone’s on the same page. That means clear messaging, killer sales pitches, and marketing strategies that draw in the perfect match for your product. Quality of leads over quantity is the name of the game here.

Get them onboard, then make sure they stay there

Then comes the onboarding – not just a one-time deal, my friends. It’s a continuous journey, making sure your customers feel supported long after day one. Your Product and UX teams need to work their magic, ensuring customers see the value they were promised. And, of course, Customer Success is right there, reinforcing that message every step of the way.

You see, it’s not just about getting them on board. Churn prevention’s about keeping them jazzed up about your product. After all, the opposite of churn is repeat business more engagement – retaining customers and their continued payments. If you can get 95 happy diners to come back for more, they’ll make up for the 5 who decided to go for a McDonald’s next time. That’s how you build a rock-solid cohort of customers. That’s the secret sauce.

Get to grips with churn indicators

Read between the lines of your customer data. Dive deep into the usage stats of those who’ve churned. Look out for any signs of decreased activity, neglected features, or a sudden surge (or indeed fall) in support calls. These are just some of the red flags that could be your early warnings.

However, no two products have the same churn indicators – so you’ll have to do the analysis for yourself and work out what the unique signs are that your users are losing interest.  Catch them and work your magic with the Customer Success team to win those wavering hearts back.

On a practical level, once you’ve determined what those churn indicators are in your usage data, make sure you’ve set up alerts that shout at you if a customer starts to display these patterns. It’s no good knowing how churning customers behave in the run-up to canceling if you don’t use that intel to pre-empt churn and work to mitigate it! 

Get ahead of the game

It’s all about pipping churn to the post. Use the insights shared by your most dedicated users and the churn indicators you’re tracking to create a special radar for those who are slowly slipping away. Reach out with tailored solutions, show them some extra love, and watch as those churn risks get handled before they even realize they’re thinking of leaving.

Plus, once you find out a reason for your customer churn, share that insight across the business! One way we do that here at ProdPad is with a regular cross-functional meeting. We look through all the churn reasons that have come up lately, to discuss what (if anything) needs to be done to stop it being a problem in the future.

Price it right to prevent churn

Sometimes it’s not about the product, it’s about the price tag. During these wallet-tightening times, you can be the hero with flexible pricing options and sweet discounts. But you’ll need to keep an eye on the long game – you want happy customers and a thriving business, not just a quick fix that’ll leave you in the red down the line.

You’ll need to box clever, though, because pricing is a tricky one! You don’t want to devalue your product, or rush in and cut prices if you’re not certain that is definitely the reason for your churn. No one likes leaving money on the table.

Be the feedback whisperer

Listen, really listen, to what your customers have to say. Their gripes, their suggestions, their praises – take it all in. Then, roll up your sleeves and get to work. Show them you care by acting on their feedback.

Never forget to close the loop – make sure you have that baked into your process. Whenever a customer submits feedback, respond to it. Then come back and inform them of the solution to their problem whenever a related feature or improvement ships. Trust me, a little TLC goes a long way in keeping those hungry churn wolves from the door.

Map out a clear path ahead

Let your customers peek into the kitchen – show ’em what’s cooking with a clearly presented public roadmap. Lay out the plans, the fixes, the shiny new features and solutions you’re bringing to the table.

It’s all about building that trust, showing them you’re always hustling to make their experience top-notch. When they see you’ve got their backs, they’ll stick around for the long haul.

What are the best ways to reduce customer churn? 

If your churn prevention attempts aren’t landing, then you need to start minimizing your losses. When your customers start bailing on you, you’ve got to dig deep and find out why. Don’t be shy! Give them a ring, and ask straight up – why the sudden goodbye?

Get to the bottom of it. Sometimes, it might be a glitch in your system that needs fixing, or maybe you just weren’t clear enough with what you’re offering. You might even have to go drawing board and ask yourself, ‘Are we even aiming for the right crowd?’

But the best way to reduce your churn? Talk to the folks who are sticking around, the ones who are loving what you’re dishing out. Find out why they’re vibing with your product. 

Let your happy customers do the talking for you

Ask them exactly what problems they had before they found you. Find out how it feels now that they’ve got your magic solution. Get into their heads and use the way your happy customers talk about your product to attract more of their kind. It’s like having your own little fan club writing all of your ads for you!

Let’s say 10% of your customer base is all in for your product. Well, what if you could bump that number up to 20%, or maybe even 50%? That’s when the real party starts. You’ll be pulling in more folks who are nodding along, saying, “Yep, you’re giving me exactly what I needed.”

Instead of running around like a headless chicken trying to fix things for those who’ve already left, focus on the ones who are cheering you on from the sidelines. They’re your best friends. Get them happy, keep them happy, and watch your revenue grow.

Trust me, it’s the happy bunch you’ve already got that’ll show you the way to more success and help you to really nail your churn prevention efforts. So, go on, find your happy diners, and let them guide you to even more wins!

Is it too late when a customer clicks “cancel”? 

In a word: No!

This is exactly why it’s so worthwhile to set up your exit interview process and find out what’s making them leave.  One thing, though: never hold somebody hostage! You really don’t want to be telling people that they can’t cancel, or making it difficult for them to finish the cancellation process.

That right there is some shady, black-hat behavior that is sure to damage your reputation. Rather, you could try offering a win-back as part of your on-site cancellation flow.

Don’t just shrug your shoulders and move on

What you want to do is pick their brains. Try to truly understand what’s going on, and why they’re done with your product. You might get some positive results from offering a targeted win-back offer as part of their exit interview.

If there was a misunderstanding, correct it and show them how to do the thing they think can’t be done. Maybe they’ll be happy enough to come back on board. If you’re talking to them and they say, “Oh, I’m canceling because you don’t do this thing we need”, then you can point out: “Actually, we do help you to do this! Here’s how…”

Or with a bit of luck, their problem might be something that you are just about to fix. It might be something you could choose to prioritize next. Perhaps it’s something where, with a bit of communication and support, they might change their processes or learn how to use your product more effectively.

That’s why it’s always worth having that conversation if they’re willing. And that’s why it’s important to ask them what’s up, because it might be something you can fix.

Don’t expect to save all of them! But every customer rescued from the brink will help your bottom line, and teach you something about what your userbase needs.

A last note about preventing churn

One thing that a lot of PMs don’t realize is that your actual churn rate at any one time doesn’t really matter, as long as it tapers out eventually. In theory, as long as you’re keeping some people, and they’re sticking around for the long term, then you can run a healthy business.

Your results may vary depending on other factors in your business, but it’s more about making sure that you don’t consistently lose customers until your graph hits zero. It’s okay if you do lose a bunch, as long as your predicted losses taper out and flat line.

You could be losing 90% of them, but as long as you’re keeping 10%, and those 10% are big earners for you, then you might still be perfectly sustainable.

PayPal constantly loses most of its paying pals

Matt Lerner, a former Marketing Director at PayPal, recently pointed out that PayPal, which made over $11 Billion in gross profit in 2022, is in exactly that situation.

Pretty much everyone who signs up for a business account with PayPal turns off – within a year, they’re inactive. But the people who do stick around become big, happy sellers, and PayPal makes tons of money off them. Once you’re a successful PayPal seller, you’re not going to leave.

So, there you have a business that’s losing 90% of its customers regularly. Yet they’re making billions of dollars a year. Clearly, then, churn rate isn’t everything.

Ride the curve

What can you learn from this? Look at your own numbers. Figure out where your churn rate flattens out, and then what you can do to build value from the customers who have stuck around. If you can continue to keep those folks on board and grow revenue from them, then you might be just fine.

While churn prevention is a vital part of keeping your head above water, and keeping your customers liking the taste of what you’re serving them, the first thing on your agenda should always be to make a product that your users actually want and need.

If you’re not doing that, you need to either change your customers, change your sales pitch, or change your product!