How to Perform a Customer Churn Analysis in SaaS?

How to Perform a Customer Churn Analysis in SaaS? cover

How do you perform a customer churn analysis that gives you the necessary insights to boost retention and grow your SaaS business?

In this article, we cover how to measure and analyze churn to gather actionable data. Plus, learn four efficient strategies to lower your churn rate.

Let’s get started.


  • Customer churn analysis involves measuring and interpreting data to find out why customers churn. It gives you insights on how to reduce and prevent churrn.
  • The key customer churn metrics you should track are customer churn rate, net monthly recurring revenue churn (MRR), Net Promoter Score (NPS), and Customer Lifetime Value (CLV).
  • There are two main types of customer churn: involuntary churn and voluntary churn.
  • Involuntary churn happens when a customer doesn’t renew because of external circumstances. For example, the auto-renew was declined because of an expired credit card on file.
  • Voluntary churn happens when a customer consciously chooses to cancel or not renew their account.
  • Voluntary churn can happen for many reasons, including poor onboarding, lack of product value perception, bad customer support, unfixed bugs, lack of learning materials, or budget cuts.
  • The first step to managing churn is to conduct a churn analysis. Start by tracking feature usage data to see how often users engage with your most valuable features. Churn rate goes down when more customers are using high-value features.
  • Predict churn by analyzing customer behavior, such as page views. Check for any noticeable spikes or dips in traffic and resolve any issues that come up.
  • Use customer segmentation to analyze and prevent churn. Group customers based on their jobs to be done and then track feature engagement per segment. Find disengaged users who aren’t using important features and send them in-app messages to engage them.
  • Use machine learning tools, such as Amplitude, to identify high risk customers who are likely to churn.
  • Another way to analyze churn is to measure customer satisfaction. Unsatisfied customers will churn fast, so send regular surveys, such as NPS surveys, to gauge how customers feel and then proactively fix issues before it’s too late.
  • Learn from churning customers. Trigger an exit survey when a customer wants to cancel their account to ask them why they’re leaving. Then, fix any issues they mention to prevent new and current customers from churning too.
  • To improve customer retention, personalize the onboarding experience. To do this, use a welcome survey to segment customers based on their jobs to be done and then trigger a personalized onboarding flow that focuses on their most relevant features.
  • Win back inactive users before they churn to reduce your churn rate. Start by segmenting inactive users based on low feature usage. Then send an email engagement campaign encouraging them to come back.
  • Boost engagement by adding UX gamification elements. For example, reward users whenever they perform a positive action. Celebrating these moments motivates users to keep engaging, which boosts retention in the long run.
  • Don’t lose customers to involuntary churn. Give customers notice ahead of renewal time by sending in-app notifications reminding them to update expired billing information.
  • Friction leads to churn. Remove friction from your support experience by offering a self-serve option. Build an in-app resource center where customers can find instant answers to their questions.

What is a customer churn analysis?

When you complete a customer churn analysis, you find out why customers churn by measuring and interpreting data. You also determine what to do to retain customers in the future.

Key customer churn metrics you should track

Churn analysis is easy when you know which metrics you should track. Here are the four metrics to measure when analyzing churn:

  • Customer churn rate: Your customer churn rate tells you the percentage of users who cancel their accounts in a period of time. It’s the most accurate way to calculate churn and understand where you’re at.
Customer churn rate
Customer churn rate.
  • Net Monthly Recurring Revenue Churn (MRR): This metric tells you how much revenue you’re losing to churn on a monthly basis. Keep track of this metric to see the financial impact of churn on your business.
Revenue churn
Revenue churn.
  • Net Promoter Score (NPS): NPS measures customer satisfaction by asking users how likely they are to recommend your product or service. It’s relevant to churn analysis since churn occurs when customers aren’t satisfied. It’s a helpful metric for predicting churn.
Net Promoter Score (NPS)
Net Promoter Score (NPS).
  • Customer Lifetime Value (CLV): CLV tells you the average revenue you earn from a single customer over their entire relationship with your business. When you reduce customer churn, CLV goes up.
Customer lifetime value
Customer lifetime value.

What are the different types of customer churn?

There are two types of customer churn: involuntary churn and voluntary churn.

Let’s take a look at them both:

Involuntary churn

Involuntary churn happens when customers cancel or don’t renew because of external factors. They haven’t made the decision to cancel themselves.

Most of the time, customers involuntarily churn because of a payment failure – either their credit card expires or the billing information is wrong. Either that or they missed the renewal date if they’re not on an automatic renewal system.

Voluntary churn

Voluntary churn occurs when customers consciously choose to cancel or not renew their subscriptions. This happens for a whole host of reasons, such as:

  • Not experiencing value from the product
  • Believing the product is too expensive for what it is
  • Budget cuts (can no longer afford it)
  • No longer have a use for the product

What are the common causes of churn?

Customer churn happens for various reasons, including:

  • Poor onboarding. You have the highest chance of losing customers during the onboarding period. When your onboarding process doesn’t help customers experience the value, they are more likely to churn after trials.
  • Lack of product value perception. Customers don’t recognize the product’s value. They don’t believe it can solve their jobs to be done, so they go looking for another solution.
  • Bad customer support. Poor customer service leads to a poor customer experience. The churn rate goes up when customers are frustrated with your delayed customer service or the lack of a self-serve help center.
  • Unfixed bugs. Product bugs cause frustrating friction. If you don’t fix bugs, users churn and look for an alternative product.
  • Lack of learning materials, resource centers, or FAQs: When users feel lost or confused, they want a self-serve learning option that can get them back on track. Without training materials and a resource center to answer FAQs, churn goes up.
leading causes of customer churn customer churn analysis
Leading Causes of Customer Churn.

How to analyze churn efficiently?

Churn analysis involves collecting and analyzing different data points to get the big picture on customer churn. Use these seven methods to analyze churn efficiently:

Track feature usage for customer engagement data

Users who engage with high-value features are less likely to churn. Monitor feature usage data to see how often users engage with your most valuable features. Filter usage by user segments to see which features connect to churn or long-term retention.

Do users who churn have a pattern of neglecting certain features? Or do loyal customers regularly use specific features?

Once you know this information, proactively prompt users to engage with relevant features for them that also correlate with retention.

track feature usage in userpilot customer churn analysis
Track feature usage in Userpilot.

Monitor in-app customer behavior to predict customer churn

Track customer behavior on an ongoing basis across the entire customer journey.

For example, monitor page views and filter by users and companies. See a sudden spike or drop in unique or total page views?

Examine any issues and fix them before customers leave.

monitoring page activity in userpilot
Monitoring page activity in Userpilot.

Analyze customers by different segments

Segment users by grouping users by their shared characteristics, such as their jobs to be done. Then, track how each segment interacts with important features.

Find disengaged users who are not interacting with these important features. Trigger in-app guidance that encourages them to engage more.

analyze customers by segments in userpilot
Analyze customers by different segments in Userpilot.

Use a churn prediction model to identify at-risk customers

Use machine learning to identify high-risk customers who are likely to churn. Tools like Amplitude use a churn prediction model to predict behavior based on previous data.

It takes a look at the behavior of churned customers and then identify at-risk customers who are displaying the same behavior.

amplitude churn prediction model customer churn analysis
Amplitude churn prediction model.

Use surveys to measure customer satisfaction along the journey

Measuring customer satisfaction is an essential part of churn analysis. Unsatisfied customers will churn if you can’t turn their experience around.

Send regular surveys to gauge customer satisfaction along the journey. Include open-ended questions to get context around their responses.

Then review survey responses to identify issues or friction points that might lead to churn. Work on fixing the issue before it’s too late and you lose customers.

sending customer surveys with userpilot
Sending customer surveys with Userpilot.

Analyze NPS responses and identify patterns

Sending an NPS survey is one of the best ways to measure customer loyalty and satisfaction. It asks customers how likely they are to recommend your product or service to others.

Categorize and analyze the responses to see what correlates to low scores and high scores.

This type of response tagging will help you identify trends and patterns among scores. For example, you can investigate the most common problems that low scorers face. Solve those problems and you’ll boost user retention.

analyzing nps responses in userpilot
Analyzing NPS responses in Userpilot.

User exit surveys to understand why customers churn

Despite all your best efforts for preventing churn, some customers will end up leaving. You can use this opportunity to collect feedback to improve the experience for existing and new users.

When customers request to cancel their account, trigger an exit survey and ask them why they’re leaving. Add an open-ended question to gather even more actionable insights. Use the exit survey data to prioritize product improvements or make the customer experience better.

building an exit survey in userpilot
Building an exit survey in Userpilot.

How to act on churn data insights to improve customer retention?

After completing a churn analysis, it’s time to turn those insights into action with these strategies that improve retention:

Let’s explore each one in detail.

Personalize onboarding experience for new customers

As we mentioned before, the onboarding experience is one of the most critical times to prevent customer churn.

Your goal is to get new users experiencing value as soon as possible to retain them. How?

By personalizing the onboarding experience to cater to their needs. Use a welcome survey to segment customers based on their jobs to be done. Then guide new customers to relevant features that solve their jobs to be done with personalized onboarding flow.

They’ll be more likely to engage since the experience is relevant to them. Higher engagement will reduce churn.

example of a welcome survey
Example of a welcome survey.

Trigger personalized re-engagement flows for disengaged users

Disengaged users are at risk of churning. Re-engage inactive users with personalized flows. Here’s how:

Segment inactive users based on low feature usage and behavior, such as no logins in the past 30 days. Send emails encouraging them to make use of your app. Once they’re back in the app, target and trigger personalized re-engagement flows encouraging them to use high-value, relevant features.

building re-engagement flow inactive users
Building a re-engagement flow for inactive users with Userpilot.

Boost engagement with UX gamification elements

Gamification triggers dopamine – and dopamine keeps motivation and satisfaction high. Those are two essential ingredients for customer retention.

Boost engagement by adding UX gamification elements. For example, reward users whenever they perform a positive action.

Asana rewards users for finishing a task with a cute flying unicorn element. They show users that this is a moment to celebrate, encouraging them to keep going.

asana gamification elements
Asana’s gamification elements.

Send in-app notifications to remind existing customers of renewal time

It’s a shame to lose customers to involuntary churn. Avoid it by giving customers plenty of notice ahead of renewal time. Send in-app notifications a week before it’s time to renew reminding customers to update any expired billing information.

Also, take this time to remind them of your product’s value so they’re encouraged to stay. For example, you can remind them how much time or money they’ve saved by using your product (vs. the alternatives).

reminding customers of subscription renewal
Example of reminding customers of subscription renewal.

Build an in-app resource center to provide self-serve support

Make it easier for customers to find the answers they need quickly. Otherwise, they’ll get frustrated waiting for your support team to get back to them. Frustration from bad customer service leads to higher churn rates.

Build an in-app resource center where customers can find help articles and video tutorials to solve their issues or answer their questions. They’ll appreciate the self-serve support option that keeps their workflow running smoothly without delay.

building an in-app resource center in userpilot
Building an in-app resource center in Userpilot.


Analyzing customer churn is the key to retaining users. You learn why past customers churned and the behavior leading up to it so that you can be proactive with current customers. Reducing churn starts with collecting helpful customer data that you can then act on.

Want to get started with customer churn analysis? Get a Userpilot Demo and see how you can track product usage and build product experiences that help fight churn.

previous post next post

Leave a comment