Customer Churn Metrics You Should Be Tracking in 2024

Customer Lifetime Value represents the total revenue a business can reasonably expect from a single customer over the entire period of their relationship. By understanding LTV, you can determine how much to invest in customer acquisition and retention. A higher LTV suggests loyal customers who are less likely to churn. It’s especially useful for deciding if the cost of acquiring or retaining a customer is justified based on the expected revenue.

NPS measures how likely your customers are to recommend your product to others. High NPS is often a good sign that customers are satisfied, which generally correlates with lower churn. Collecting NPS scores regularly can help identify at-risk customers before they leave, allowing you to take preemptive action.

This metric focuses on the percentage of monthly recurring revenue (MRR) lost to customer cancellations or downgrades. Unlike customer churn rate, which just counts lost customers, revenue churn rate takes into account the financial impact. Tracking revenue churn helps identify if you are losing high-value customers, even if the overall customer count remains stable.

Customer Health Score (CHS) is a composite metric that uses various customer interactions and behaviors to predict the likelihood of churn. Factors like engagement levels, customer support tickets, product usage, and satisfaction scores are combined to calculate a health score. A declining CHS can indicate a need for proactive engagement to prevent churn.

This often-overlooked metric tracks the rate at which customers fail their initial payment attempts. High rates of first payment failures could be an early warning sign of potential churn, particularly for subscription businesses. Implementing automated follow-ups and making the retry process user-friendly can help reduce this rate.

TTV is the amount of time it takes for new customers to realize the full value of your product. A shorter TTV correlates with higher retention rates, as customers who quickly understand and experience the benefits of your product are more likely to stay. Reducing TTV should be a priority, especially for SaaS businesses with complex onboarding.

Product Stickiness measures how often users return to your product after initial usage. It is calculated by dividing daily active users (DAU) by monthly active users (MAU). A sticky product implies regular engagement, which in turn reduces churn risk. If stickiness is low, it may indicate that users do not see ongoing value in your product.

CSAT provides insights into how happy your customers are after key interactions, such as a support experience or product update. Low CSAT scores can indicate areas of frustration that may lead to churn. By addressing these pain points, you can improve customer satisfaction and retention.

Overdue can assist you with tracking and managing these metrics effectively. For example, customer pages in Overdue display LTV, helping you understand the long-term value of each customer. Additionally, NPS surveys can be seamlessly integrated using the Overdue widget, providing valuable insights into customer satisfaction and loyalty.