If you ever dealt with the business side of SaaS you know how important churn is.
Growth = New Customers Acquisition - Churn. New customers are expensive for many businesses to get, they have marketing, sales, and promotion related expenses. It makes sense to spend money to reduce churn too, because it’s a cheaper way to boost your growth rate.
If you offer deals to reduce churn, you need to focus on if those deals are just delaying inevitable churn or if they are actually winning back customers. Delaying churn is just a game of spending money to make your books look better for a quarter.
Yes but it’s also a chance to convince the customer that you’re worth keeping around. Depending on your product, you might also have customers that dip in and out. Keeping them from churning, while sacrificing a little cash today, helps keep that customer from shopping around for alternatives, too.
Also, in my experiences most of those services which offered free time or heavily discounted alternatives to cancelling tend to be things which have a pretty low cost per subscriber (e.g., news sites, simple applications, not much per-user storage).
I agree with your statement but your general calculation of growth is off imho, it should be:
Growth = (New Customers Acquisition + Install Base Growth) - Churn
This also assumes that churn = Customers that leave completely and those that downgrade plans
IB growth can fuel business growth, especially during times of low new customer acquisition and or high to moderate churn
Growth = New Customers Acquisition - Churn. New customers are expensive for many businesses to get, they have marketing, sales, and promotion related expenses. It makes sense to spend money to reduce churn too, because it’s a cheaper way to boost your growth rate.
If you offer deals to reduce churn, you need to focus on if those deals are just delaying inevitable churn or if they are actually winning back customers. Delaying churn is just a game of spending money to make your books look better for a quarter.