Not all churn is created equal.
While you don’t want to lose more customers than are coming in, savvy companies part ways with customers that no longer meet their ICP.
Most software businesses gravitate upmarket over the years. Meaning they expand the average contract value over time by creating and capturing more value.
Successfully moving upmarket goes hand-in-hand with customer churn. But contrary to popular belief, that is completely fine.
Let’s consider the following example:
You’ve just launched new functionalities that allows you to solve a problem 5 times faster. So, you decide to increase your price by 40%. Based on prior price increases, you estimate 7.5% of customers will churn.
If you have €10M ARR, that same customer base will now generate 12.95M in revenue.
Meaning, you’ll gross nearly 30% more revenue while having to serve fewer customers.
It’s a fallacy to think all churn is bad. Healthy churn is a sign you’re capturing enough of the value you create.
Monetization is our specialty. Growing your revenue is our responsibility.
Tjitte Joosten is the Founder of RevFixr, the one-stop shop for better monetisation of your customer base. RevFixr turns pricing into your biggest growth lever. Prior to founding RevFixr, Tjitte was responsible for the commercial strategy and operations at tech companies like Docfield and Experfy.
