
Ask HN: How do people get to a single number for churn? - seizethecheese
I often see churn quoted as a single number. How do people &quot;flatten&quot; churn like this? In my experience churn is very high in the first month, then falls as time goes on.<p>My current (consumer) startup has a churn of around 25% the first month, then dropping to almost nothing after a few months. Using a single churn number doesn&#x27;t even come close to approximating real behavior.<p>Seeing single number churns quoted as benchmarks makes them fairly useless. How do people reconcile this?
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jimnotgym
It depends on your business, but in the end it is just an average.

If you are a saas business then you may find churn is a case of customers
trying the product and then disappearing (often forever). This appears to be
the situation you are describing.

With eCommerce it can be completely different, people order once and then take
months to re-order. Maybe you sell gifts and people don't come back until next
Christmas! For a business like this, churn is simply a matter of 'did they
order again within the time period'

If you are in the first group then flattening churn to one number is totally
unhelpful. What would you do with that anyway? With business metrics it is
important to ask yourself why you are measuring, and what you are going to do
with the output. You need to consider the likely behavior for a person trying
your service.

Imagine you are 2 years into your service and you decide to make a change
which may impact retention, then measuring the 1 month and 2 month drop off
may be a much better metric than some 12 month average. You need to measure
things that make sense in your business. Taken this way it is a bit like
regression testing, did my change break the company.

Perhaps you were thinking of benchmarking churn against some market average?
Unless you have fabulous market research with almost identical competitors
this seems pointless.

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mpowell
You can use probability models to get better churn metrics. One we used in
business school was the beta-geometric which gives a discrete model for
heterogeneous churns (the population uses a beta distribution to describe
probability of churning).
[http://www.brucehardie.com/papers/021/sbg_2006-05-30.pdf](http://www.brucehardie.com/papers/021/sbg_2006-05-30.pdf)

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tixocloud
You’re absolutely right to question the numbers. Without knowing where you’re
seeing these single churn numbers, it’s important to also know the context and
business model before being able to use it for comparing.

