What Is Churn? (How to Fix It)

About this video

Martell says churn was killing his company Flowtown: with 10,000 customers churning 12% a month, the company would lose 100% of its customers after 8.3 months, and many founders hit a growth ceiling because they lose more customers than they add without seeing it in their net new MRR graph. He offers three fixes. First, install a cancellation capture process — a screen at cancellation asking why the customer is leaving. At Flowtown this revealed customers were leaving to use other tools for workflows, prompting the team to build a complete solution, which he says brought churn down to 3 to 4%. Second, do a clickstream analysis: successful, retained customers leave clues in how they use the product, so find their common path and order the product around it. Third, reduce time to first value (TTFV). His example is Timely, a tool for queueing tweets to be posted automatically: users signed up excited but did not use it because they had nothing to share, so the team preloaded the top 25 quotes in history for new users to queue, improving the first-time user experience and getting users to core value quickly. He compares onboarding to level one of a video game, which teaches you how to play, and argues that removing distractions and getting users to value in the first experience drives word of mouth and growth.

Key takeaways

• Measure churn against net new MRR — at Flowtown, 12% monthly churn on 10,000 customers meant losing all customers in about 8.3 months
• Install a cancellation capture process and use the stated reasons to drive product changes, as Flowtown did to cut churn to 3 to 4%
• Analyze the clickstream of retained customers to find the common successful path through your product
• Shorten time to first value by removing distractions and sequencing onboarding around the steps successful users take
• Treat signup like level one of a video game: teach through doing, as Timely did by preloading 25 famous quotes for new users to queue

Episode details: published November 28, 2022 · 6:57 long. Summary written by Self Growth Videos from the episode itself. Business results and any income figures mentioned are Dan Martell’s own claims, shared for education — they are not typical or guaranteed.

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