How to calculate churn on a product where people just stop using instead of cancelling?
Churn is a nice metric to learn a lot more about your business. But it only works if there is a direct correlation between subscribed users and revenue. How to calculate churn on a product where this is not the case and people stepping to use it is the equivalent of cancelling?
3 Answers
If you are willing to pay some money http://www.kissmetrics.com has a set of "Cohort" reports that can measure your drop-off over time.
You need a usage metric that trends over time. Kinda like an email list. You can see over time how many people subscribe, click or unsubscribe.
Depending on the product, you may want to look at transactions or something else.
If they are still paying you then you got to wonder what's going on. If it's a free service, then you need to figure out how the churn turns to $$ or whatever metric you care about.
You could use "Active (logged on) in last 30 days" or something.
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Problem with this approach is that when I check on monday, a user can be counted as 'inactive'. Then he logs in on tuesday and is now counted to 'active' again - and this can make the resulting metrics very strange and unstable. – Jan P. 12 years ago
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Why is that a problem? You will need to set the date range that makes sense. Tax prep software sites are very busy for a few months, so they would look at a different date range then a daily newspaper site. – Mhoran Psprep 12 years ago
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You're over-thinking it - with a very small number of users you will get a lot of volatility but not with larger numbers. The key is to keep a record - so on 1st march you had 400 active and 1st April you have 500 (don't try and work out dynamically otherwise you without login history past day/months numbers will change). – Ryan 12 years ago
