CastleIsland

Associate Account Director

Churn Rate

What do you all deem a "healthy" churn rate for existing customers? My company churns 25-30% of customer YoY and I'm getting nervous that we are leaky bucket. For context we are trying to "SaaSify" traditional professional services that aren't often renewed, so it has been challenging for CS and our ARR. I'm the sales guy landing these new accounts and seeing them drop off after a year. I'm curious to hear what others have seen out there.

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13 comments

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Rallier

Politicker

SDR Manager and Consultant

That seems like a pretty high churn rate. But it also depends on a few things. If your company is moving up market it might be okay as their adjusting their ICP and making up for it with larger clients

CastleIsland

Tycoon

Associate Account Director

Yes, that is the plan. We have a lot of these Growth/SMB customers come and go, and the Corporate and Enterprise accounts tend to have higher ARR and stick. Still pretty volatile though.

Chep

WR Officer

Bitcoin Adoption Specialist

That's high but according to this article "SaaS sectors typically experience a greater volume of new, temporary customers who are “just browsing” instead of committing to the long haul right off the bat" https://www.incredo.co/blog/what-is-a-reasonable-customer-attrition-rate-by-industry/ Keep training your CS team putting customers first and I bet you'll be able to decrease the churn rate. Good luck Boomsauce

CastleIsland

Tycoon

Associate Account Director

Thanks Chep, I'll check it out. We have invested in our CS team's excellence but I am thinking its a market problem

Lumbergh

Politicker

Sr Account Exec

Depends on what kind of business it is ARR-wise, but in general 25-30% is a shitshow. What is causing the customers to churn? Is CS bad? They obviously are not getting value or would not be churning--you're the sales guy--what do you think is causing the churn?

A great resource for this stuff is SaaStr.com - here is a post on net dollar retention that relates well to this: https://www.saastr.com/what-do-all-the-unicorns-have-in-common/

CastleIsland

Tycoon

Associate Account Director

I'm a huge fan of Jason Lemkin! But yeah I think our problem is we are trying to call ourselves SaaS when we are really only delivering services through a platform that are traditionally ad-hoc and not renewable. We have also been focused on the volatile SMB market early on that has less demand to renew YoY. The services are penetration testing. Typically a point in time exercise.

Lumbergh

Politicker

Sr Account Exec

So pen-testing as a service basically? Seems like that would be a valid market having a bunch of pen testers ready to go at moment's notice but probably much higher value to bigger cos as once SMBs grow they have a group of people who can dedicate time to finding vulns...It's a cool idea but you're right usually it's consumed as a PS cost not a 'subscription' - SMB is always tough regardless

CastleIsland

Tycoon

Associate Account Director

Yeah you nailed it Lumberg. We have a pool of testers ready to go at a moments notice, and everything is delivered through a platform. We sell it as an annual subscription. That resonates better with upmarket customers

Lumbergh

Politicker

Sr Account Exec

Do you supply any reporting or 'leave behinds' geared towards the execs of the company as a proof of value? Even some basic canned reports might help move the notch, along with an upsell for custom recommendations? Just spitballing

CastleIsland

Tycoon

Associate Account Director

Yeah, any pentest that gets done comes with a comprehensive report with an executive summary for any stakeholders interested. We also have an "insights" feature that allows you to see historical data related to assets, pentests, and how long it takes teams to fix issues. Good way to view trends at a high level.

Lambda

Tycoon

Sales Consultant

our company with anyone of a churn over 28 is 98% chance to renewal

Salespreuner

Big Shot

Regional Sales Director

Unless ICP ain't changing, it is little high and risky
Focus on CS more, making sure they engage frequently with customers and all pains are taken care

MR.StretchISR

Politicker

ISR

Don't think it has to be special? Just go back to what it was prior to covid. No need to overthink

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CastleIsland

Churn Rate

13 comments

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