Churn is a SaaS company killer — not because a single month's churn is catastrophic, but because it compounds. A company with 3% monthly churn loses 30% of its customer base every year. The same company at 1% monthly churn retains 89% annually.
The three types of churn
Involuntary churn — failed payments. Fix this first: it's low-hanging fruit. Use Stripe Radar, Paddle's dunning, or a tool like Churnkey to recover 30–50% of failed payment churns through automated retries and personalized win-back emails.
Voluntary churn from dissatisfied customers — these customers wanted it to work but didn't get value. Fix with health scoring + proactive CS outreach at-risk accounts.
Voluntary churn from wrong-fit customers — these customers churned because your product was never right for them. Fix upstream with better ICP targeting and sales qualification.
Early warning signals
- Login frequency dropping 50%+ from baseline
- Feature adoption below 3 core features (for multi-feature products)
- Support tickets unresolved > 7 days
- NPS drops from 8–9 to 5–6 on re-survey
- Usage approaching 0 seats despite paying for 10+
Track these with the Customer Health Score Calculator.