As we worked to scale Wavve over the last few years, we kept running into problems with retention. Our user base consists of musicians, some hobbyist podcasters, professional podcasts, social media consultants, and social media influencers. As we grew and expanded beyond our original audience of serious podcasters, we noticed an uptick in churn. For those not up-to-speed on SaaS lingo, churn is when a user cancels a subscription or downgrades a plan to a cheaper option. As a result, you'll lose some or all of that customer's revenue during the next billing period.
If a large number of users cancel during a given period of time, the business' churn rate will increase. Once monthly churn exceeds 10%, it becomes extremely difficult to grow. While this isn't as big a deal when you're first launching and experiencing hockey stick shaped top-of-funnel growth, it becomes extremely damaging as that customer growth rate tapers off.
By year two of building our new SaaS business, we realized that churn could stunt our companies growth at around the $30,000 MRR mark. We launched some experiments to get a better understanding of when customers churned and we updated the product to collect information about why they churned. Over the last three years I've been obsessed with this finding ways to fight churn. I redesigned our cancel flow, introduced the ability to pause plans, offered extended billing period, and ran a series of other experiments. So far, we've cut our churn rate in half and saved hundreds of thousands of dollars in revenue.
Growth stayed strong and with a healthier user churn rate of 8-9%, we smashed through the $30,000 MRR ceiling and are closing in on $130,000 MRR today.
Over the last year, we decided to take everything we've learned about user retention and make our tools available to other SaaS businesses. If you run a subscription as a service business or simply want to follow our journey as we document the process of building this new SaaS business, be sure to checkout our ChurnKey blog and follow us on Twitter @getChurnKey.