This is part of a series of posts we're doing on our company blog about HOW early stage startups boosted key metrics. The tech press mostly just reports that company X reached some key milestone. We thought it'd be interesting to ask some of these folks how they did it.
> Currently, the number of Vidyard customers who upgrade their plans outpaces the number of those who cancel their accounts, Litt said, correlating with a negative churn rate.
Maybe i have a miss-understanding of churn. But given that definition any startup with growth would have negative churn.
I see no difference between upgrading to 'B' or registration with 'B'. Both is revenue. Both creates a customer.
It's a distinction between Revenue Churn and Customer Churn. If customer A cancels their account, it is a loss of 1 account. You can't really have negative customer churn.
Revenue churn would be Customer A cancels their account which was worth $5/month. But if customer B upgrades their existing account by $10/month, you would have negative revenue churn. The negative churn here is negative Revenue churn, ie. upgrades outpace cancelations.
Wouldn't given that ever freemium model (e.g. $0 -> $15) then automatically create negative churn?
Doesn't it make more sense to track first-time purchases/upgrades and future upgrades together?
Because if I am tracking revenue oriented I am not really interested in tracking customer growth but revenue growth
In a freemium model, looking at Revenue churn on the $0 accounts would definitely give you a pretty useless metric.
For some metrics it makes sense to lump the two together. But the distinction between the two is helpful for measuring a product's ability to up-sell itself to the existing customer base.
If you're interested in tracking revenue growth instead of customer growth - then say you have -1% revenue churn month/month, your existing customer base is going to be paying you 1% more the next month (even though you may lose a few customers along the way).
The idea of revenue churn is startup biz hype. This is how startups play with numbers to make their business seem better than its really doing. You can't make solid business decisions based on a framework of revenue churn since it hides real business issues.
The real issue with churn rate is that you have users leaving the service. If you want to better your business you want to reduce this number and get it as close to 0 as possible. Revenue churn would hide this and make it think you're doing well, when in fact you're not. You could be facing a dwindling user base with just a small number of high paying users.
Totally, reminds of the late 90s when companies were reported to move money around in circles to increase revenue. Company A pays B, B pays C, C pays A. Lots of money exchanging hands, zero profit, infinite revenue!
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[ 0.28 ms ] story [ 6.8 ms ] threadThis is part of a series of posts we're doing on our company blog about HOW early stage startups boosted key metrics. The tech press mostly just reports that company X reached some key milestone. We thought it'd be interesting to ask some of these folks how they did it.
We posted the first one to HN a few weeks ago and got a lot of great feedback. http://blog.perfectaudience.com/2012/11/01/manpacks-grow-cus...
The most common request was for more detail so we tried to make with the goods this time around. All feedback welcome on the piece.
And go check out Vidyard if you're doing video stuff.
Maybe i have a miss-understanding of churn. But given that definition any startup with growth would have negative churn. I see no difference between upgrading to 'B' or registration with 'B'. Both is revenue. Both creates a customer.
Thanks in advance for any explanation
Revenue churn would be Customer A cancels their account which was worth $5/month. But if customer B upgrades their existing account by $10/month, you would have negative revenue churn. The negative churn here is negative Revenue churn, ie. upgrades outpace cancelations.
For some metrics it makes sense to lump the two together. But the distinction between the two is helpful for measuring a product's ability to up-sell itself to the existing customer base.
If you're interested in tracking revenue growth instead of customer growth - then say you have -1% revenue churn month/month, your existing customer base is going to be paying you 1% more the next month (even though you may lose a few customers along the way).