Customer retention chart for SaaS and subscription business
  • Customer retention chart for SaaS and subscription business
  • Customer retention chart for SaaS and subscription business
  • Customer retention chart for SaaS and subscription business
  • Customer retention chart for SaaS and subscription business
Originally published: 24/03/2020 12:17
Last version published: 12/04/2020 16:49
Publication number: ELQ-79109-3
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Customer retention chart for SaaS and subscription business

Monthly customer retention chart for SaaS or subscription business

Description
This best practice gives you a more accurate view of retention / churn rate that general monthly churn calculation, especially for growing businesses.

For concrete example of why this tool would be useful please have a look at the following article
https://medium.com/@pierre_alex_h/churn-rate-retention-rate-and-ltv-3-key-saas-metrics-that-can-be-deceiving-in-high-growth-saas-8327b9d17da1

For each month, you will need to indicate either the number of customers who subscribe in this month (or the monthly $ value generated by these customers) and for every subsequent months (in the columns on the right) you will indicate how many of these customers were still active ( or how much $ the business was still generating from these customers on a monthly basis).

Once you have input this information, the chart will automatically update and give you an overview of how well your business has been doing in terms of retention for each "pool" of newly subscribed customers.
That will allow you to accurately assess the behavior of your customers and better understand who and when your customers churns, which should help you focus your attention to discover the "why".
It will also be a good analytical tool to see the impact of your ongoing changes. For instance if you have recently improved your onboarding process, or focused more on a different category of customers, you will be able to see the impact on the retention rate of customers onboarded in the most recent months vs historical.

This chart basically replicates one of the charts generated by profitwell (Disclaimer, I have no relationship with them)

This Best Practice includes
1 Excel file, 4 tabs

Pierre-Alexandre HEURTEBIZE offers you this Best Practice for free!

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Further information

Gives the user a better understanding of his retention rate

It is especially recommended to use this method rather than a simple monthly churn rate calculation in the case of high growth companies.

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