50% of the success of any business depends on generating leads and customer satisfaction. With millions, if not billions, of companies struggling to keep their existing customers around while putting efforts into reducing churn rate seems like a big undertaking.

According to the research, a 5% decrease in customer retention can boost profit by 25% to 95%.

What is Churn Management Software?

Customer churn software is a tool that helps businesses keep track of customer churn or the rate at which customers are leaving. Churn prediction software helps identify trends and patterns in customer behavior and predict future churn rates. Customer churn software can also help businesses take action to reduce customer churn, such as by offering incentives to customers who are at risk of leaving.

How does customer churn software work?

Churn management software is designed to help businesses reduce customer churn or the number of customers who cancel their service. To do this, the software uses various methods to calculate the churn rate.

One of the most common ways to calculate churn is by using the monthly recurring revenue, or MRR. This method looks at how much revenue a company brings each month from customers still using their service. To calculate MRR, you take the total amount of revenue generated in a month and divide it by the number of customers still using your service.

For example, let’s say a company has 100 customers and generates $10,000 in revenue in a month. If 10 of those customers cancel their service, that leaves 90 customers remaining. The company’s MRR would then be $10,000 / 90 = $111.11.

Another way to calculate churn is by looking at the number of new customers acquired in a period divided by the number of customer cancellations in that same period. So if a company acquires 50 new customers in January but loses 20 existing ones, its monthly customer churn rate would be 20%.

There are other ways to calculate customer churn, but these two are some of the most common methods businesses use today. By understanding how customer churn is calculated, companies can more effectively manage it and keep more customers coming back for more!

The causes of the high churn rate

There are many reasons why customers may choose to churn or leave a company. In some cases, it may be due to poor customer service, while in others, it may be because the customer is not happy with the product or service they are receiving. Here are some of the most common causes of customer churn:


Your customers feel your products are overpriced, or the features given in the chosen subscription plan do not justify the price. They may decide to churn if they find your products or services costly. Therefore, offer them value by establishing a strong relationship and educating them about your products and services, so they feel their purchase is worth the cost.

Good-fit customers

Train your teams to speak about the real-time value of the products to attract the right audience or good-fit customers. If you push your sales team to hit the quota of bringing more customers instead of focusing on bringing valuable customers—you may have to face a higher churn. As a non-good fit customers may realize the products are not suitable for them, they may decide to leave.

Bad user experience

Buggy, glitchy or complex products offer bad user experiences. Make explainer videos to explain all your products’ complex and technical features. If your users don’t know how to use your product properly, they may not decide to stick around for longer.

Unwelcomed and undervalued treatment

Digital platforms and social media handles of your business are the face value of your brand. If they fail to influence your audience, they may likely churn. Your audience wants to feel welcomed and valued by the communities they follow, and if they don’t receive positive experiences interacting with your company, they won’t want to stick around.

Good Churn Management Will Keep your customers happy

How to choose a good churn management software—a complete checklist.

The best time to buy good churn customer churn software was yesterday. As with each passing moment, you are missing valuable opportunities to understand why people decide to churn and how you can win their hearts back. Also, retaining older customers is 7X cheaper than pitching a new customer. It means you are missing a good opportunity to generate real revenue if you don’t decide to buy churn prediction software on time. Take a checklist of all the requirements you need for customer churn software. Prepare a detailed questionnaire if you think you need guidance on all technical aspects to run the software.

Does your churn management software integrate with the cramped system?

Knowing how easily you can integrate churn management software into your existing system is very important. Integration of churn management software into your existing billing platform or CRM will help your teams gain 360 views on the customers’ reasons why they decided to leave and help you build a strategy to win back their trust.

Does it compile the data for a comprehensive view?

Algorithms of churn management software gather an abundance of information. As a Saas-based company, data is very useful for your business. But collecting data, segmenting it, and organizing it is pretty time-consuming and effort-prone. Therefore, you need software that drills down the valuable information and discards the rest of the bulk. Compiling up data for a comprehensive view and making it accessible and transparent for your teams to take proper action is very important.

Does it come with pre-build templates and start sprinting?

Due to advanced technology, things are moving fast, and the customer wants faster results. Having a pre-build basis to begin from is very much essential to bring back all the angry customers. Running up late on integrating and getting started with your churn management software is not advisable. Therefore, you need to look for software that comes with pre-built templates and start doing its job immediately. Look for software with pre-built components that can mix and match your existing system, helping you know the reasons for higher churn and how you can take quick action.

Does it integrate and prioritize with your product roadmap?

As a Saas-based company, you need to move fast. Therefore, you require software that runs along with you with the needed agility. You should know that the chosen software helps the team stay focused on their goals and evolve by understanding your ever-changing customer preferences. That kind of software can help you build confidence and help you set up a robust strategy to achieve the best results.

Does it have an automation-based system?

AI-powered and automation-based tools possess intelligent algorithms that help you drill down the right information, saving you time and effort while allowing you to focus on the right thing: customer retention strategy.

Does it offer a segmentation?

When building a customer retention strategy, you need segment-based information to understand how long they have been your subscriber, their usage habits, what affected them to cancel out on your product and knowing the ultimate factors to win back their trust.

Can your teams easily manage it?

There are greater chances that your sales teams and developers are busy on other stuff and wouldn’t have extra time to invest in making customer churn software updates. Therefore it is advised to look for software that comes with pre-built templates and does not require extra time from your team to manage the software.

Can it conduct A/B testing?

One of the big mistakes marketers and business leaders make is hunch-based decisions in driving customer retention strategies. You cannot leave the fate of your business to a hunch. Therefore, the chosen churn management software should have the power to conduct A/B tests that are not hypothetical, give you the correct data about the audience segment, and help you make the right business decisions.

Can it conduct performance-based measurements?

One real-time capability of churn management software is its results’ accuracy. If your software cannot acquire the correct information and the right calculation on churn reduction rate, then you won’t be able to make a customer retention strategy.

Benefits of using a churn management software

Any business’s goal is to make the best business decisions and generate revenue; one of the best ways to do that is by retaining customers. Customer retention can be challenging, especially if you don’t have the right tools.

The churn management software helps businesses keep track of their customers and identify those at risk of leaving. By doing so, businesses can take steps to prevent them from leaving in the first place. Once you find the right solution for your business, you’ll be well on your way to increased customer retention rates and more profits.

There are many benefits of using churn prediction software, including:

1. Increased Customer Retention

By tracking customer churn, businesses can identify at-risk customers and take steps to prevent them from canceling their service, leading to increased customer retention and loyalty. This can include reaching out to customers who have stopped using the product, offering discounts or incentives, or providing better customer support.

2. Reduced Churn Rates

By keeping track of customer behavior and taking steps to prevent customers from leaving, businesses can lower their overall churn rate and improve their bottom line.

3. Improved Customer Satisfaction

Churn reduction software can help businesses identify issues causing customers to cancel their service. Companies can improve customer satisfaction and reduce churn rates by addressing these issues.

4. Reduced Costs

The costs associated with acquiring new customers can be significant. Businesses can save money on marketing and other acquisition costs by reducing customer churn.

5. Better Decision Making

Churn data can provide valuable insights into a business’s products, services, and marketing efforts. This information can help businesses make better decisions about allocating resources. You can also explore Illumeo courses to unlock insights from churn data for better decision-making, and optimizing resource allocation in business.

Bottom line:

Finally, when searching for churn reduction software, you must conduct comprehensive research to understand the tool and the mindset of the company that built it. It would feel like a real alliance with the customer churn software provider is empowering you with their knowledge and expertise to help you create a customer retention strategy that will successfully drive down your churn and grow your revenue.