Let’s say you’re running a membership site with the following numbers:
- 300 members
- 10% monthly churn rate
- $49 average monthly payment
- 30 members added each month
At this point, you’ve hit the “dreaded plateau” and are losing as many members as you’re adding each month (30). Your annual revenue is $176,400. Not bad, but it’s not increasing.
What happens if you drop your churn rate by just two percentage points, to 8% (but keep the same acquisition rate of 30 members per month)?
After one year, you’ll have 344 members.
- Year 1: $190,768.76
- Year 2: $207,652.20
- Year 3: $213,557.68
In total, that’s an extra $82,777 of revenue over the next three years.
(I use our churn calculator to produce all these numbers; feel free to plug in your own!)
Sure, it’s not insane amounts of extra money, but you wouldn’t exactly turn it down, now would you?
And that’s just from improving your churn rate a little bit; we haven’t even touched on acquisition/conversion rates or average revenue per user (ARPU).
Making small improvements in the right places can have a tremendous long-term impact on your business. But you need a plan, a roadmap if you will, to know how to achieve those small improvements. Without that, you might just spin your wheels and never get there.