What’s the difference between user churn and revenue churn and why should you care?
We’re going to look at the differences between user churn and revenue churn and how to track this data.
In a nutshell, user churn relates to the customers that leave your service, and revenue churn relates to the amount of money lost due to those churned customers.
If your business provides a service for clients who can have multiple subscriptions under one account (such as white-labeled WordPress Care Plans) you’ll see your revenue churn increase when they drop one of their subscriptions, but you won’t see your user churn increase, as they are still a current customer with active subscriptions.
If your client was to completely leave your service, you’d see both your user churn and revenue churn affected.
Want to learn more about how to reduce your churn? Read up on accepting and reducing your MRR churn here.
How do you log your user and revenue churn?
Logging your churn doesn’t need to be complex, especially if your business is just starting and you’re functioning on a smaller scale. Logging churn can be as simple as adding lost customers (and the lost revenue) into a spreadsheet so that you have these numbers at the end of each month.
Simply calculate the lost revenue using a formula at the end of the month to get your revenue churn number. Add up the number of lost customers for the month to get your user churn, and that’s it!
These numbers should be tracked on a regular monthly basis so that you can see what is and isn’t working when aiming to reduce churn.
Automating churn tracking
One of the most common payment gateways to use with WordPress is Stripe. If you’re using Stripe and are looking for an automated way to track churn (and more metrics), Baremetrics could be a great tool for you.
On a basic level, Baremetrics can track new customers who subscribe to your service, as well as those that are canceled in Stripe, allowing you to keep track of your user and revenue churn automatically. You’ll be able to see these metrics in percentages each month to allow you to focus on reducing your numbers for a healthier monthly recurring revenue business.
Want to learn more about churn? Have a read here.