Measuring Non-Cohorted Retention or Blended Churn - Issue 188
How to measure overall retention or blended churn for subscription businesses.
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Question: I know it's not best practice to measure retention without tying it to a period. But is there a way to measure "overall retention"? In your article on churn, you gave a formula that abstracted away the period, start date, etc. Wondering if there's a similar logic that can be applied to retention measurement for exec-level reporting purposes.
This question, which I received last week, is particularly timely, as (a) this month happens to be a Metrics Month in my newsletter, and (b) it touches on a challenge I have spent a lot of time figuring out: what is the right measurement for churn and retention in a way that not only reflects your overall business growth but also provides accurate and actionable insight for your team. It’s still frustrating to me how often these two pieces are disconnected.
So today, once again, I will share my take on growth metrics, including cohorted vs. non-cohorted retention, the nuances of blended churn, the connection between churn and retention, and effective ways for reporting overall retention.
Below, I will dive into:
When and why do you need to report on non-cohorted retention and churn? When cohorts are not sufficient?
What retention and churn measurements are venture funds looking for, and how are these KPIs different from the ones you already have in your dashboards?
Why we can never ditch massive spreadsheets with business KPIs, and why efforts to automate this often fail.
How to report the blended churn rate. Why are many flavors of this KPI misleading?
How to report overall non-cohorted retention. What are the different variations of retention KPI?
Why I give preference to dynamic and flexible metrics reporting over automation and “locking” metrics in semantic layers.
Why subscription growth and revenue reporting are unique and difficult.
This publication is aimed at senior analysts and above with experience in reporting retention and a solid understanding of SaaS and subscription lifecycle concepts, as well as revenue and growth metrics, including the math behind them.
This is also a follow-up to my deep dive into cohorted retention in the
: How to measure cohort retention and into churn in the : Everything you need to know about Churn.If you are involved in growth or subscription reporting, please read these two guides first.
If you are just getting started with cohorted analysis or need a refresher, here is a great introductory guide on what cohorts are, why they matter, and how to use and read them appropriately: The P9 Guide to Cohort Analysis in SaaS, written by one of my favorite bloggers, Christoph Janz. While Christoph’s focus is on SaaS, this guide is also useful for analytics in B2B and B2C.
While cohorts are vital and essential to report, additionally, you will also need to own a non-cohorted view of metrics. So now, let’s talk about use cases and common methods of measuring and reporting non-cohorted and blended retention and churn.
Why and when do you need to report on non-cohorted retention
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