Why You Can’t Fight Churn All At Once Churn isn’t one problem. It’s four—and the worst part? Three of them aren’t even about your product. Until you separate them, you’ll keep bleeding cash for no reason. In my 10 years of experience doing this, the only way to lower churn rates is to break this number down into seperate buckets. For most businesses, I’d categorize them as: Payments or technical churn  Selling to the wrong persona  Failure to deliver value fast enough  Happy user churn Payments or technical churn Selling to the wrong persona Failure to deliver value fast enough Happy user churn I’d suggest that you tackle them in roughly this order and I’ll walk you through the Below I’ll walk through each one as well as the best ways to fight them. The Impact of Improving Churn is Massive Its tough to understate the value of lowering your churn rate. It impacts basically every metric in your business. Before you understand how to fight churn, it seems impossible. But it is not. However, if you break your churn apart into the underlying reasons, you can make massive impact. I personally have seen companies with 25% churn rates get down to 10% by focusing on the below problems. But this is only a 15% improvement right? No it is a 250% improvement. Because Churn makes such a big impact on the metrics of your business, it has a huge impact across the board. metrics of your business For now, lets just focus on LTV, which you can calculate as: ❝ Life Time Value (LTV) = Monthly Price / Monthly Churn Rate as % This mean that lowering churn from 25% to 10% means that you raise your LTV by 250%, which can raise your revenue by 250% which can raise your enterprises value by 250% (likely more because your business is seen as more stable) Churn Rate  Monthly Price  LTV  25%  $20  $80  10%  $20  $200 Churn Rate  Monthly Price  LTV  25%  $20  $80  10%  $20  $200 Churn Rate  Monthly Price  LTV  25%  $20  $80  10%  $20  $200 Churn Rate  Monthly Price  LTV Churn Rate Churn Rate Monthly Price Monthly Price LTV LTV 25%  $20  $80 25% 25% $20 $20 $80 $80 10%  $20  $200 10% 10% $20 $20 $200 $200 Additionally, when you calculate the annualized impact of your churn rates, its pretty shocking: #1 Payment/Technical Churn This type of churn happens when you lose an otherwise happy user to payment or technical problems. Lets take Whoop (the fitness tracker) as an example. Whoop Payment churn would be if my membership was canceled because my card didn’t have enough balance when they tried to charge me. Technical churn would be if the strap lost connection to my phone and I couldn’t use it anymore. Both of these scenarios are painful because you’re losing happy users to preventable problems. Payment churn is (typically) the larger problem and easier too measure within this category. If you pull up your Stripe homepage and you will see a chart that looks like this. The orange part is bad. The more orange you have, the worse this problem is. Lets assume you have a $10 per month product and your LTV is $100. If a user fails their 2nd month’s payment, you didn’t lose $10, you lost $90. This chart will only show you a $10. Big difference. Very painful. How To Fight This: Best Practices + Stripe Settings If you’re read this newsletter for any period of time, you heard me stress the importance of good payment processing. stress the importance Best practices here won't radically change the business, but you can do the basics in ~10 minutes via Stripe. When I consult with companies - this is literally the first thing I do. consult While you can never get this number down to 0, this is the highest ROI work you can do. Short Term Fixes with Stripe: Go to the “Revenue Recovery” page in stripe and make sure you have the “Smart Retries” feature enabled. I prefer 8x in 1 month. Go to the “Revenue Recovery” page in stripe and make sure you have the “Smart Retries” feature enabled. I prefer 8x in 1 month. Email users when their cards are failing or going to expire. Turn these on. Email users when their cards are failing or going to expire. Turn these on. #2 Selling to the Wrong Persona This is a simple but deadly effective strategy for reducing churn. Identify who your highest LTV users are  Only spend money to acquire those users  Only build features for those users. Identify who your highest LTV users are Only spend money to acquire those users Only build features for those users. Sounds simple but a shockingly low number of companies do this. Everything you do costs money and adds complexity, so you should find the highest ROI way of spending that money. complexity The right data really makes this clear. If you have 3 core personas, and you can chart out their retention like below. Assuming you have a decent volume of this person, you should obviously be spending money to acquire “Persona 3”. So why don’t more companies do this? How To Fight This: Data Collection, Unified Goals & Feedback Loop In my experience, this is an organizational problem at heart but it comes down to the following problems. Not collecting and using data effectively: - Do you actually collect enough data to segment by persona? Can you easily apply that segmentation to all the metrics of your business? Marketing & product teams have different goals: - Typically marketing has a goal to acquire a total number of new users and product has a goal to retain users. No one is looking at the connection between the two. No feedback loop: Even if the data exists in the product world, its not making it back to the other team and actually changing their strategy. Not collecting and using data effectively: - Do you actually collect enough data to segment by persona? Can you easily apply that segmentation to all the metrics of your business? Marketing & product teams have different goals: - Typically marketing has a goal to acquire a total number of new users and product has a goal to retain users. No one is looking at the connection between the two. No feedback loop: Even if the data exists in the product world, its not making it back to the other team and actually changing their strategy. When you don’t have aligned goals, you won’t have aligned behaviors. Persona one might be the easiest to acquire, but if you focus there, you’ll increase your churn numbers, which will lower your LTV, which will lower the value of your company. #3 Failure to Deliver Value Fast Enough Users come to your product to solve a problem. You need to show them that you can solve this problem as fast as possible. This is know as getting user to the “Aha” movement, or the time they first see value in the product. This data from RevCat’s 2025 state of the subscriptions illustrates the point. data For mobile apps ~80% of users who start a trial will do so on day 0 downloading an app. You can set up emails to try to win them back but this won’t be nearly as effective as improving the experience to deliver value on day 0. You have to deliver value fast. Assume a new users will only show up once and you have maybe 2 minutes to get them to see the value of the product. How to Fight This: User Journey Mapping & Onboarding There are 3 core things you need to figure out here. What is the “aha” moment for my product? Note this might vary per persona.  What is standing in the way of this?  How can you design your onboarding to get users there faster. What is the “aha” moment for my product? Note this might vary per persona. What is standing in the way of this? How can you design your onboarding to get users there faster. There is a reason the dating apps just drop you directly onto a list of matches and get you swiping immediately. They also (allegedly) boost your visibility to you are more likely to connect with someone in the first 24 hours. Does this inflate your sense of dating possibilities, make you more selective, less likely to settle down and damage society in the long term? Yeah probably, but it also helps their activation rate. #4 Happy User Churn Users came here to solve a problem. Your product helped them solve that problem. Now they are leaving. They are probably leaving happily with fond memories of your product, which is nice, but they’re still not going to pay you anymore. We had this problem a lot in Codecademy. You came to us to learn SQL. We taught you SQL. Now you’re leaving happily. How To Fight This: Use Case Expansion or Extension This, in my opinion, is one of the harder forms of churn to fight because you need to stand up net new product lines or really big features. Inherent in that is hiring new teams, validating new ideas, and/or launching MVPs. All of which are expensive. Spotify added Audio Books that you can listen to in the same subscription  Bumble built Bumble BFF where you can connect with people for friendship.  Airbnb built Airbnb Experience where you can find activities to do in the city that you’re traveling to or Spotify added Audio Books that you can listen to in the same subscription Audio Books Bumble built Bumble BFF where you can connect with people for friendship. Bumble BFF Airbnb built Airbnb Experience where you can find activities to do in the city that you’re traveling to or Airbnb Experience These products work because you’re finding either the next problem that a users has or another problem that happens in parallel for users that you already have. That last part is key. Pick your best users, the ones that you already have distribution channels set up for and give them something else to do. So What Do You Do With This Information? The advice within this article is easy to say and much, much harder to do. If you can lower your churn rates materially and transform your company. How to fight each type of churn is listed above, so follow those and stay focused on each for long enough to make an impact. Good luck out there. Dan

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