Good question. 6% churn per month on $5M is $300,000. Seems like a lot of money to me without even knowing your cost of customer acquisition. It's like trying to fill a leaking bucket. A little uptick in churn rate will have a HUGE NEGATIVE impact on your valuation: you reduce your LTV and ARPA while you have to increase your total sales and marketing costs just to stay even.
I've done built a lot of financial models and analyzed many recurring revenue businesses ranging from SaaS, B2C, B2B, telephone companies, mutual funds, retirement plans, Netflix, LinkedIn, and cable TV among others.
Set up a call with me and I can walk you through how churn rates, valuation, and other variables tie together in a financial model.
Answered 3 years ago
There are many factors to consider, but yes I would consider 6% as a high churn for any SaaS solution. I would focus on finding ways to retain the current user base and narrow down the issue.
Other things you could do is improve your nurture materials such as nurture emails , better user experience etc.
Answered 2 years ago