Churn Rate: Driving Startup Growth

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Customer success is a key driver of startup growth, and, thanks to increased revenue from existing clients, your company’s value will also increase. Customer success is the way high-growth companies will operate in the future, but it’s not just about preventing shrinkage or fostering incremental growth.

Churn Meaning

There are two reasons why churn happens:

  • your customer dies or goes out of business
  • your customer doesn’t achieve their desired outcome.

Whilst the first reason may be difficult to avoid, the second reason is a lot easier, and in fact should be one of your startup’s main missions. But how should founders go about improving their startup’s churn rate?

How to Improve Churn Rate?

Churn Rate

1. You Have Customers Who Aren’t a Good Fit For You

If your business relies on bringing in customers that are a bad fit for your startup, you are ultimately harming your business in the long run.

And your turnover will reflect this poor business judgement as long as you keep bringing in consumers who don’t have any success potential.

To fix this, you must first identify what a bad-fit customer is, such as what characteristics they possess that indicate they will not be successful, and then relay this message back to your sales and marketing departments in order to stop the flow of customers who lack success potential. This will give them the guidance they need to be able to refine their sales and marketing processes and improve the health of your business.

Churn Rate: Business startup help and advice

2. You Have a Broken or Incomplete Product/Service

You should ensure that the product or service your startup is offering is not broken or incomplete. This means focusing on the upkeep of your current products/services before offering new ones. Make sure that what you offer right now is in pristine working condition before expanding.

Goals for startup growth/churn rate


3. You Are Providing the Wrong Experience for Your Customers

The correct customer experience with your product is what your customers need to feel successful, and it covers all interactions across the customer’s lifetime, from the buying process through onboarding, and even from within the product, to support, training, and professional services.

Customers that are otherwise functionally “successful” with a product churn out, cease renewing, or at the very least refuse to increase their investment with your company because of a poor customer experience.

If you want to eliminate churn, you must consider the customer’s entire desired outcome and address all of it – result AND a good customer experience. 

Additionally, you must ensure that all customers are receiving a good experience, even if you feel the package they pay for (for example, a ‘lesser’ subscription) is not economically viable for you. All customers deserve a good experience with your product/service, and ensuring those currently paying less are enjoying their experience could be their deciding factor to upgrade.

New business startup advice - calculating churn rate is essential for your startup growth

4. You Don’t Understand What “Success” Actually Means for Your Customer

Startups need to get to know their customers for many reasons, with one outstanding reason being to understand their definition of success with your product/service. What do they want to get out of your business? What is their desired outcome here?

Clearly defining what success means to your customers is a critical step in decreasing churn rate and improving your customer’s experience.

Client success management is critical for startups

5. You Don’t Have a Process to Help Make Customers Successful

Once you fully understand what customer success and desired outcome looks like for your startup, you need to structure and implement a process to help them get there. When startups onboard customers that are good-fit (see point 1), they only have strong success potential. Their desired outcome is not guaranteed and businesses must therefore be very careful in how they guide their customers from the onboarding process, all the way to their desired outcome.


Decreasing your customer churn rate, or better still, getting rid of it altogether, will exponentially help your startup growth to the point where you can scale up. The most successful small startups focus intensely on offering the best customer experience possible, attracting only the best-fit customers for them, and guiding customers from onboarding all the way to their desired outcome. Predicting churn in your startup before it happens is the most effective way to prevent it – this means carrying out a pre-mortem analysis on what could go wrong during the customer’s experience.


Amit Khanna

Amit Khanna, 7startup Founder


Amit has 18 years of experience in the industry and an MBA. He supports entrepreneurs with every aspect of their business including concept and product development, investor presentations, and fundraising. Amit & 7startup assist startups in the pre due-diligence process and help connect them to our vast network of investors. Reach out to us today and see if we’re a fit!

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