> More importantly you can tell investors you have even more accounts than you do and your churn rate is very low.
I know you're being a little facetious but it is actually a benefit. Many companies have implemented subscription pausing to reduce churn. The reason is pretty straightforward good business: it's easier to reactivate customers who lay dormant for 1 or 2 months than it is to let them churn and have to re-sell the product to them from scratch.
I've had places offer to just not bill for a few months while still allowing full access or offer some steep discounts in the workflow for cancelling in attempt to reduce churn.
If you ever dealt with the business side of SaaS you know how important churn is.
Growth = New Customers Acquisition - Churn. New customers are expensive for many businesses to get, they have marketing, sales, and promotion related expenses. It makes sense to spend money to reduce churn too, because it’s a cheaper way to boost your growth rate.
If you offer deals to reduce churn, you need to focus on if those deals are just delaying inevitable churn or if they are actually winning back customers. Delaying churn is just a game of spending money to make your books look better for a quarter.
Yes but it’s also a chance to convince the customer that you’re worth keeping around. Depending on your product, you might also have customers that dip in and out. Keeping them from churning, while sacrificing a little cash today, helps keep that customer from shopping around for alternatives, too.
Also, in my experiences most of those services which offered free time or heavily discounted alternatives to cancelling tend to be things which have a pretty low cost per subscriber (e.g., news sites, simple applications, not much per-user storage).
I agree with your statement but your general calculation of growth is off imho, it should be:
Growth = (New Customers Acquisition + Install Base Growth) - Churn
This also assumes that churn = Customers that leave completely and those that downgrade plans
IB growth can fuel business growth, especially during times of low new customer acquisition and or high to moderate churn
Fair enough, but as far as your investors are concerned you're changing the definition of churn. I'm sure if they ask, they'll be provided with "pause" metrics, but such data will never see the light of day in any marketing materials.
Correct, your churn would be artificially lowered, so you'd probably want to define a point where a "paused" subscription is effectively inactive and count that against churn.
It would still show in other metrics, however, as you'd have monthly active users (or accounts), which would take a hit. You'd also see a drop in MRR when an account is paused.
Bear in mind I'm assuming a business that wants clear, accurate metrics so the executive team know what actions to take; not simply a business looking to scam investors out of money ;-)
A thoughtful investor will be more interested in paid active users and cohort analysis of retention (in terms of actual usage) rather than subscription numbers/revenue in absolute terms.
Engagement can always be monetized better in the future.
And they don’t usually ask for number of subscribers, but number of paid subscribers. Startups have played enough games with this that investors should be able to hone in on the right numbers.
Plus, you get to stay in touch and advertise via a monthly email: “You didn’t do any searches so we’re giving you next month for free, here are all the cool things you could do:…”.
You can do that, but if they don’t interact with your email either, you may be better off not doing so. You get worse delivery rates if you constantly send email that gets ignored.
They send by default an email every month when the payment time is approaching, so I assume they may just send the same email and state that the payment amount is covered by the previous month. They have really good practices at that.
Yet Kagi is one of the very very few services I've seen that sends a monthly reminder that they are ABOUT to charge you... And you have time to stop it. Typically I only ever see something like that with shipped goods where they might have to deal with a return + cancellation
That's really nice sounding and comforting. I've been a little on the fence, but Google has become such absolute garbage lately that I've had to frequently use Bing in order to find something that should be one of the first results. This may just be a better model.
People also forget that they're subscribed to something (or that they signed up for emails either explicitly or implicitly), so they just report to Google (or whoever) as spam. I'm sure that's why I get a lot of email (mostly in my Gmail Promotions or Updates tabs that are from companies that scanned me at some event or whatever or I ordered something from.
A huge benefit to companies with subscription services is that people forget they have them and keep paying for Ancestry.com or whatever for months (what? no, of course that never happened to me...) after they've stopped using it. Kagi is voluntarily giving up that benefit. This just seems like a consumer-friendly move to me, not sinister at all.
I somehow ended up with two simultaneous Audible subscriptions in different regions. It seemed like a coin toss which one the website would send me to. I only found out because I canceled one of them, and then still got billed. Support was very understanding and refunded the double-sub period.
Ans any difference in pricing is made up for it by increasing rates to cover the lost revenue that wasn't automatic. And people are happy they don't pay in non use months but the company still makes the same momey.
I've seen the opposite of this at a startup once in the streaming music industry. We _knew_ our "free trial for a month" was being abused by 500k+ users because the sign-up flow neither required a valid payment on file or email validation. In fact there was an entire industry built around generating false throw-away accounts.
The company used stats including non-paying users to demonstrate demand for our service was high, even though we knew they would highly likely never spend a cent with us.
