For many in the SaaS and subscription business world, churn is the metric that looms large—often keeping teams awake at night. Losing customers feels like failure, right? But here’s the reality: not all churn is bad.
Yes, there’s such a thing as good churn.
When Churn Is a Positive Signal
Some customers are simply not the right fit for your product. Losing them isn’t a sign of failure; it’s a natural part of refining your customer base. Here are examples of churn that might actually benefit your business in the long run:
- Misaligned customers: These are customers who were never a great fit for your product. Perhaps they misunderstood your offering or needed something entirely different.
- One-off users: Some customers sign up for a discount, promotion, or one-time need. They were unlikely to stay long-term, and their departure shouldn’t concern you.
- External factors: Customers who churn because they downsize, pivot their business, or close their doors often leave for reasons beyond your control.
Think of this as pruning the garden. By letting go of customers who aren’t aligned with your product or long-term goals, you can redirect energy and resources towards nurturing the customers who matter most.
When Churn Becomes a Problem
The real trouble begins when core users—those who match your Ideal Customer Profile (ICP) and should be thriving with your product—start slipping away. This type of churn, often called bad churn, points to deeper underlying problems that require immediate attention.
Here are some common warning signs of bad churn:
- Misaligned value: The product isn’t delivering on the promise customers were sold, or its perceived value doesn’t match their expectations.
- Gaps in the product experience: Missing features or a frustrating user interface could be driving customers away.
- Poor onboarding: If customers aren’t set up for success early on, they’re less likely to see value in your product and more likely to churn.
- Overreliance on one champion: When a single person within a company drives the use of your product, losing that champion (due to turnover, for example) often means losing the account.
- Shifting market needs: If your product doesn’t keep pace with evolving customer demands or industry trends, even loyal customers may look elsewhere.
Churn Is a Signal, Not Just a Number
It’s tempting to fixate on keeping churn as low as possible, but a churn rate alone doesn’t tell the whole story. Instead, use churn as a signal to investigate deeper issues within your business.
Ask yourself and your team:
- Is onboarding effective? Are new customers getting the tools, guidance, and support they need to succeed early in their journey?
- Is pricing aligned? Are customers leaving because the perceived value doesn’t justify the cost?
- Are we addressing feature gaps? Are competitors offering solutions or functionality that we lack?
- Is the sales process realistic? Are sales teams overpromising, leading to unmet expectations after the deal closes?
- Is our ICP well-defined? Are we targeting the right customers who will find long-term value in our product?
By digging into these questions, you can identify the root causes of churn and separate the fixable issues from the strategic ones.
A Team Effort
Churn isn’t just a customer success metric or a number for the boardroom. It’s a company-wide issue that touches every team—customer success, product, sales, and even marketing. Collaboration across all functions is essential to understand why customers are leaving and how to prevent it.
- Customer success should focus on nurturing relationships, improving retention efforts, and gathering feedback directly from customers.
- Product teams must prioritise addressing the gaps and friction points that lead to customer dissatisfaction.
- Sales and marketing need to ensure messaging is consistent, expectations are realistic, and the right customers are being targeted from the start.
The Right Mindset for Churn
Instead of obsessing over churn as a “failure,” treat it as an opportunity to learn and grow. What can the numbers teach you? How can you use this data to create a better product, refine your processes, and build a stronger, more loyal customer base?
The companies that thrive aren’t the ones that avoid churn entirely—they’re the ones that respond to it with curiosity, agility, and a commitment to constant improvement.
By focusing on the why behind churn, rather than simply reducing the metric, businesses can make strategic decisions that improve retention, strengthen customer relationships, and drive sustainable growth.
