Churn (in all its forms) is such a critical health metric for SaaS businesses because customer acquisition costs are typically high for subscription software companies. So high, in fact, that it’s not uncommon for a vendor to not recoup its acquisition costs until several years into the contract. As a result, early churn means the company lost money on that customer. Similarly, understanding churn is a prerequisite to understanding customer lifetime value, which is another foundational metric for SaaS businesses.
To help identify potential churn before it happens, many companies are turning to product analytics. Restaurant365, a restaurant management software, measures usage across its platform and if an account goes dark or exhibits abnormally low usage, customer success reaches out to find out why and proactively intervene.