🎙️ Hey there, SaaSpreneurs!🎙️

It's Ben Murray here, your host, with another exciting update. This week, we’ll tackle one of the most puzzling questions in the SaaS universe: When do we actually count churn? 📊💡

In Episode 85, I break down the two major perspectives—one from the finance side and the other from customer success.

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You can also listen to this episode here.

📓Key Concepts to Learn💡

📅 Churn Reporting Timing:

- Finance Perspective: 🏦

Finance teams report churn in the month revenue stops. If revenue cessation occurs mid-month, it is recorded in that month. If it occurs on the last day of the month, it is reported in the following month.

- Customer Success Perspective: 🤝

- Customer success teams may record churn when the customer indicates their intent to churn, even if the revenue continues until a later month. This helps in forecasting future revenue accurately.

💸 Revenue Retention Formulas:

- Finance relies on revenue retention formulas to determine churn by identifying the month when revenue from a customer stops. These formulas are based on monthly recurring revenue (MRR) schedules. This is a key item in due diligence.

📊 Indicated vs. Actual Churn:

- Indicated Churn: 🗓️

This occurs when a customer communicates their intention to leave at a future date. Customer success teams track this to aid in forecasting.

- Actual Churn: ✅

- This is when the customer's revenue actually stops, and it is used by finance teams for accurate revenue tracking, reporting, and metrics.

🧮 Churn Impact on Forecasting:

- Tracking both indicated and actual churn is essential for accurate financial forecasting and maintaining the health of the SaaS business.

Keep these concepts in mind to understand when and how to record churn in SaaS metrics!

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If you found this episode helpful, make sure to tune in to future episodes of SaaS Metric School to broaden your knowledge of essential SaaS metrics and finance topics.

Got any burning questions or specific metrics you'd like us to cover?

Drop us a line, and we'll do our best to address them in upcoming episodes.

Until next time, keep hustling and measuring those metrics!

Best regards,

Ben Murray
Host of SaaS Metric School

P.S. Don't forget to subscribe to our podcast and share it with your SaaS business buddies. Together, let's conquer the world of SaaS metrics!

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