Blog Entry

Mar 29
2011 

Churn — as it relates to SaaS… not butter!

Churn is something we all have to deal with in the software industry, whether it is repeat customer churn (hard to measure) or subscriber churn (easier to measure).

Repeat customers are those that come back for more (seats, years etc…) – and in order to measure churn you have to define what period of time needs to pass before you decide they are not coming back.  Subscribers sign contracts that have known end dates – so it’s much easier to keep track of churn.

When you are out looking for investment (or a valuation) churn is a critical determining metric.  There are some other:

  • MRR – Monthly Recurring Revenue
  • CAC – Customer Acquisition Cost
  • LTV (CLTV) – Customer Lifetime Value

David Skok blogs on these and other metrics that matter for startups and SaaS companies.