Churn vs. Retention: Where to Focus?

In the subscription economy, growth is vanity, but retention is sanity. While acquiring new customers is exciting, keeping them is what builds a unicorn.

The Economics of Retention

It costs 5-25x more to acquire a new customer than to retain an existing one. improving retention by just 5% can increase profits by 25-95%.

Metrics that Matter

• Churn Rate: The percentage of subscribers who leave in a given period.
• Net Revenue Retention (NRR): Revenue retained from existing customers, including upgrades.
• Customer Lifetime Value (LTV): Total revenue expected from a single customer.

Strategies for Improvement

1. Predictive Analytics: Identify at-risk customers before they leave.
2. Personalized Engagement: Send the right message at the right time.
3. Value Realization: Ensure customers are actually using the product features they pay for.

Focusing on retention isn't just about saving money—it's about building a sustainable, high-growth business.