What are Churn Rates in Product Management?

Understanding Churn Rates for Product Managers

Your churn rate or rate of churn indicates the percentage of users who stop using your product during a given time period. Product Managers generally want to keep their churn rates as low as possible. High churn rates can indicate issues with the product or customer experience, while low churn rates suggest a healthy and engaged customer base.

Why Churn Rates Matter

Churn rates provide stark insights into customer satisfaction and loyalty. While customer acquisition matters, customer retention can matter just as much depending on the state of maturity of your product. Reducing churn rates can lead to increased revenue by increasing Customer Lifetime Value

How to Monitor and Reduce Churn Rates

Battling high churn rates? Follow these steps to get yours under control.

• Step One: Define Churn. Define what churn means for your product—for example, deleting an account, no longer logging into an App, canceling subscription plans.

• Step Two: Set Goals. Set a specific goal for reducing churn. This could be a percentage decrease in churn rate over a set time period or a target number of retained customers.

• Step Three: Analyze Data. Look at the number of customers lost over a specific time period and identify if there is a step in the User Flow where customers stop engaging with the product.

• Step Four: Identify Reasons for Churn. Use surveys, customer feedback, and or data analysis to identify the reasons users are leaving your product.

• Step Five: Address Customer Issues. Take steps to address the customer issue you have identified—for example by improving product features, enhancing customer support, or simplifying the onboarding process.

• Step Six: Implement Retention Strategies. Retention strategies encourage customers to stay with your product—popular examples of retention strategies include offering loyalty programs, providing personalized recommendations, or creating more engaging content throughout the User Flow.

• Step Seven: Measure Success. Regularly analyze data and compare your evolving churn rate with your goals. Continue to make adjustments as needed to improve retention rates.

When to Use Churn Rates in Product Management

Churn rates are most useful for Product Managers when evaluating the success of a product or feature that has already been launched to the market. They can be used to identify areas for improvement and track progress over time. Additionally, churn rates can be used to inform Product Roadmap decisions and prioritize initiatives that will have the greatest impact on customer retention.

Churn Rates in action

“Monitoring churn rates and implementing retention strategies allowed us to identify why users were leaving and improve our Customer Lifetime Value.”