Churn is the bane of all SaaS companies. Every team is always hellbent on lowering the customer churn rate. But this is where we want to bring a nuanced view on churn and its associated metrics. Behold, product churn.

Unlike customer churn, which is simply when users cancel their subscription and affect your monthly recurring revenue (MRR), product churn looks at the rate of usage attrition for your product. This metric holds the key to driving increased customer retention, long term revenue growth, and higher MRR.  

So let's take a close look at product churn. We'll talk about why calculating your product churn rate is more important, as well as which metrics to look out for, and what you can do in order to improve your product churn and push your revenue higher.

What is Product Churn?

Product churn refers to the percentage of users who stop using your product over a specific time period. It’s a direct measure of attrition that impacts your recurring revenue and overall business health. High churn rates can indicate that something isn’t working—whether it’s poor onboarding, a confusing user interface, or a lack of customer engagement. Accurately calculating the churn rate helps businesses understand the scale of customer churn and devise targeted strategies to retain users.

Now, you may be thinking, isn't product churn essentially just churn? What's the point of specifying it? Well this is where we need to talk about product churn, as opposed to customer churn.

Product Churn vs Customer Churn

People typically understand churn as customers leaving your product, lowering MRR as a result. In other words, customer churn. Product churn however, focuses specifically on product usage, such as the churn rate of certain features. 

Essentially, product churn is a signal that specific features are underperforming or are no longer meeting user needs, offering insights into how to improve product offerings. 

Meanwhile, customer churn points to larger issues, such as dissatisfaction or a lack of value in the product as a whole. However, product churn can be a precursor to customer churn, because product churn leads to disengagement from your product, which can eventually turn to cancelling altogether.

However, your product churn rate isn’t just about losing a customer—it’s about losing future recurring revenue, losing customer lifetime value, and disrupting your overall growth strategy. First, if product churn is happening when customers are trying your product, that means the likelihood of conversion goes down. Second, if your existing subscribers are finding less value in your product, that means they're not going to upgrade. Both of these directly affect your MRR, leading to lower revenue and customer lifetime value. 

This is why addressing your product churn rate might be a more effective way to address customer churn. It's like catching cancer early. By the time your customer decides to leave, it's too late. 

Common Causes of Product Churn

So, what causes high product churn rate? Here are some common reasons why. 

1. Poor Onboarding Experiences

A confusing or ineffective onboarding process can drive users away before they even get started. If users don’t quickly see the value of your product, they’re likely to churn early. Effective onboarding is crucial for driving engagement and reducing churn rates.

2. Lack of In-Product Communication

Users may get a subscription but never fully adopt the product. If key features are underutilized or the product isn’t integrated into their workflow, that adds to the product churn rate. Instead, have in-product communication like tooltips that highlight those features and nudge users toward using them. 

3. Lack of Self-Serve Support

One of the biggest reasons for customer churn is lack of customer support. Self-serve resources such as interactive tutorials, knowledge bases, in-app help centers and universal search bars are much more effective and efficient than customer support staff at addressing common issues and problems. This increases customer satisfaction, as well as reduces your support burden. 

4. Insufficient Customer Engagement

Users who feel unsupported or disconnected are more likely to churn. Regular check-ins, in-app guidance, and accessible help centers can help keep users engaged and satisfied, which is essential for subscription businesses relying on retaining customers for the long term.

5. Product Doesn’t Meet User Needs

Even if your subscribers initially find value with your product, if it fails to evolve with their needs, churn is inevitable. This often happens when product updates don’t align with user feedback or you're just simply not keeping up with the competition. 

Measuring Product Churn

Churn is on every product team's mind, but when it comes to calculating the churn rate formula, people often think of customer churn. But for product churn, you need to take a different approach. 

So the basic churn rate formula calculates the number of customers lost during a time period divided by the number of customers at the beginning of that period of time. For example, if you start the month with 1,000 customers and 100 subscriptions cancel by the end of the month, that's 100 divided by 1000, which means your calculated churn rate is 10%. This should mean your monthly recurring revenue suffers a 10% loss.

But the standard churn rate formula doesn't actually tell you the specifics. It just shows you how many subscribers and revenue you lost. Which is why it's not ideal for product churn. You need to know where drop offs are occurring. What percentage of people are using a certain feature. These kinds of calculations are much more effective than the same old churn rate formula or even your basic customer retention metrics. Not everything is about your MRR.

In order to more closely look at user attrition in your product, these user engagement metrics may help you better in determining your product churn rate. 

• Onboarding Drop-Off Rates: Measures the percentage of users who abandon the onboarding process before completion. High drop-off rates during onboarding indicate that users may be struggling to understand or see the value of your product. This can lead to early customer churn. 
• Feature Usage Rates: Tracks how often users engage with specific features. Low usage rates for key features may suggest that users are unaware of their benefits, finding them difficult to use, or that the features do not meet their needs. Improving feature usage can help your customer retention rate. It also tells you which features are not contributing enough to your MRR, since they're not being used that much.  
• Session Duration: Measures how long users spend in your product per session. Short session durations may suggest that users are not finding what they need or that the product isn’t engaging enough to hold their attention. However, do take a nuanced approach, since it could just be that your users are getting what they need in a short time. 
• Task Completion Rates: Measures and calculates the percentage of users who successfully complete key tasks or actions within the product. Low completion rates can point to usability issues or a lack of clear guidance, both of which can lead to higher churn rate.
• Customer Support Interactions: Go through your customer support interactions and see where people's dissatisfaction is mainly coming from. It may help you to pinpoint which aspects of your product are contributing the most to your churn rate.
• Time to Value (TTV): Measures the time it takes for a user to experience the core value of your product. A longer TTV can result in users losing interest and churning. Shortening the TTV can help with your customer churn rate.

How to Improve Your Product Churn Rate

So now that we've looked at what product churn is, how it affects your monthly recurring revenue, churn rate and customer retention, as well as which metrics measure product churn more accurately than your standard churn rate formula, it's time to address how you can improve your product churn. 

Enhance Onboarding Processes

Onboarding is the first and best chance at lowering the churn rate. A smooth, engaging onboarding flow helps users quickly understand how to use your product and find value. Incorporating checklists, interactive tutorials, and personalized welcome emails can guide users step-by-step, minimizing early churn and improving user engagement. 

Leverage Customer Feedback

Regularly collecting customer feedback is essential to understanding why users are not finding value in your product, and what can be improved. Use surveys, in-app feedback forms, and customer interviews to gather insights. Even simple metrics like NPS or CSAT helps you to see how satisfied your users are. Acting on this feedback shows users that their input is valued, fostering trust and retaining customers while reducing churn. 

Flexible Subscription Models

Flexible subscription options can cater to different user needs and reduce cancellations. For instance, if you notice that certain features are not being used, what you could do is calculate how much value that feature counts for in the overall subscription. That way, you can offer tiered pricing, add-ons, and easy upgrade paths helps keep users engaged and subscribed, keeping customer retention high and reducing your churn rate. 

Personalize User Engagement

Personalizing the user experience based on individual behavior and preferences is key to keeping users engaged. Utilize in-app messages, personalized recommendations, and targeted content to connect users with the features that matter most to them, reducing the likelihood of churn.

Boost Customer Success

Customer success teams play a critical role in driving retention. By proactively reaching out, offering support, and guiding users to get the most out of your product, customer success teams can significantly reduce churn. This approach ensures users feel supported, valued, and engaged throughout their journey.

Tackle Product Churn and Increase Your MRR

Lowering churn rates is one of the most critical challenges for SaaS companies. But it's not enough to just calculate that your MRR is taking a hit. The true metrics of your churn rate are within your product. That's where it all starts.  

Focusing on optimizing in-product experiences, such as having a great onboarding experience, or personalizing how users are being engaged, is how you can truly raise your customer retention and lower your churn rate. It also motivates your customers to get more out of their subscription through upsells and cross-sells, which means more total revenue expansion. Not only that, an excellent product experience lowers the customer acquisition cost because it's more likely to convince them to become a paid subscriber. It's a win all around to keep your eye on product churn. 

If you want to start improving your product churn metrics and expand your revenue, we suggest getting a digital adoption tool like Userflow. With it, you can deploy onboarding flows and user engagement tactics in minutes. Userflow is easy to implement, and will get you closer to your product goals in a cost-effective way. That certainly includes cutting down your churn rate. So try Userflow today.