version: "1.0.0" name: retention description: "Use this skill when the user needs to reduce churn, improve retention, understand why customers leave, build win-back campaigns, increase customer lifetime value, or create stickiness in their product. Covers churn analysis, at-risk identification, retention tactics, win-back sequences, and expansion revenue for bootstrapped SaaS."

Churn Prevention & Retention

A 5% reduction in churn can increase profitability by 25-95%. This skill helps you understand why customers leave, build systems to keep them, and win back the ones you've lost.

Core Principles

• Acquisition gets attention. Retention builds businesses. A 5% reduction in churn can increase profitability by 25-95%.
• Churn is a symptom, not the disease. Every cancellation has a root cause you can address.
• The best time to prevent churn is day 1. The second best time is today.
• Retention is not one thing — it's onboarding + value delivery + relationship + habit formation.
• For a bootstrapped founder, saving one customer is often easier and cheaper than acquiring a new one.

Understanding Your Churn

Calculate Your Churn Rate

Monthly Churn Rate = (Customers lost this month / Customers at start of month) × 100
 
Example: 5 cancellations / 100 customers = 5% monthly churn
 
Annual Churn Rate = 1 - (1 - monthly churn rate)^12
 
Example: 1 - (1 - 0.05)^12 = 46% annual churn (you're replacing half your base every year)

Churn Benchmarks for Bootstrapped SaaS

Types of Churn

• Voluntary churn — Customer actively cancels. They made a decision. You can learn why and sometimes prevent it.
• Involuntary churn — Payment fails, card expires. Customer didn't choose to leave. Fix with dunning (see payments).
• Downgrade churn — Customer moves to a lower tier or free plan. Still using the product, paying less.
• Logo churn — Customer count. "We lost 5 customers."
• Revenue churn — Dollar amount. "We lost $500 MRR." This matters more.

Finding At-Risk Customers

You don't need complex health scoring software. Track these signals:

Red Flags (Act Within 48 Hours)

• Login frequency drops (was daily, now weekly, now nothing)
• Key feature usage stops (they were using your core feature, now they aren't)
• Support tickets increase (frustrated users complain before they leave)
• Payment fails and isn't updated within 3 days
• They remove team members from their account
• They export their data

Yellow Flags (Act Within 1 Week)

• Login frequency declining but still present
• Only using basic features, not engaging with core value
• Not opening your emails
• Never upgraded from the plan they started on
• Hasn't used a feature you shipped specifically for their use case

Simple Health Check (No Tools Needed)

For your first 100 customers, you can do this manually. Weekly:

Customer Health Review:
- [ ] Check login activity for your top 20 accounts (by revenue)
- [ ] Flag any account that hasn't logged in for 7+ days
- [ ] Check for open support tickets older than 48 hours
- [ ] Review any cancellations from the past week — email each one
- [ ] Note any accounts approaching renewal date (act 14 days before)

Preventing Churn: The Three Layers

Layer 1: Nail the First 30 Days

Most churn happens in the first 30 days. If a customer doesn't reach your "aha moment" quickly, they're gone.

• Day 1: Welcome email + quickstart guide. Get them to one small win.
• Day 3: Check-in email. "Did you try [core feature]? Here's how."
• Day 7: Progress email. Show them what they've accomplished so far.
• Day 14: Value email. "You've [metric]. Here's what power users do next."
• Day 21: Social proof email. "Here's how [similar customer] uses [product]."
• Day 30: Milestone email. "You've been with us a month! Here's your impact."

(See onboarding for detailed first-run guidance.)

Layer 2: Ongoing Value Delivery

After onboarding, customers need regular reminders of why they pay:

Weekly/Monthly value recap emails:

Subject: Your [Product] month in review
 
This month you:
- [Metric they care about, e.g., "Sent 1,247 emails"]
- [Another metric, e.g., "Saved approximately 8 hours"]
- [Usage stat, e.g., "Created 12 new campaigns"]
 
💡 Tip: Try [underused feature] to [benefit].

In-app nudges toward underused features:

• If they use Feature A but never Feature B, show a contextual tooltip
• "Did you know you can [shortcut/feature]? [CTA]"
• Don't spam — one nudge per session max

Celebrate their wins:

• "Congrats! You just hit 1,000 [things]."
• "You're in the top 10% of users for [metric]."
• Small moments of delight build emotional switching costs.

Layer 3: Relationship Building

For a solo founder with <500 customers, personal relationships are your superpower:

• Reply to support emails personally. Sign with your first name.
• Email your top 10 customers quarterly. "How's everything going? Anything I can build for you?"
• Share your roadmap. "Here's what I'm building next. What matters most to you?"
• Tell them when you ship something they asked for. "You asked for X — it's live!"
• Be transparent about problems. "We had downtime yesterday. Here's what happened and what I'm doing to prevent it."

Cancellation Flow

When a customer clicks "Cancel," you have one last chance. Make it count:

Step 1: Ask Why (Required)

Show a cancellation reason survey before processing:

Why are you canceling?
○ Too expensive
○ Missing a feature I need: ___________
○ Switched to a competitor
○ Not using it enough
○ Technical issues
○ My needs changed
○ Other: ___________

This data is gold. Review it weekly.

Step 2: Offer an Alternative (Optional but Effective)

Based on their reason, show a targeted save offer:

Step 3: Make Cancellation Easy

Never make cancellation frustrating. Dark patterns destroy trust and generate chargebacks. The cancel button should work. Offer alternatives, don't hide exits.

Step 4: Downgrade, Don't Delete

When a customer cancels:

• Downgrade to free tier (if you have one) instead of deleting their account
• Keep their data for 90 days minimum
• This keeps the door open for return

Win-Back Campaigns

30-40% of churned customers can be won back if you approach them right:

Email Sequence

Day 1 (Cancellation):

Subject: We're sorry to see you go
Body: Quick, genuine message. No pitch. "If there's anything we could
have done better, I'd love to hear it." — [Your name]

Day 14:

Subject: Here's what's new at [Product]
Body: Share 1-2 updates shipped since they left. Show progress.

Day 30:

Subject: Want to come back? Here's 50% off for 3 months
Body: Time-limited offer. Link to reactivate with discount applied.

Day 60:

Subject: We built [feature they asked for]
Body: Only send if you actually shipped something relevant to their
cancellation reason. Include a free trial to come back and try it.

Day 90:

Subject: Last check-in from [Your name] at [Product]
Body: Final personal email. "No pressure, just wanted to let you
know the door is always open." Remove from win-back sequence.

Building Product Stickiness

Sticky products are hard to leave. Build these into your product:

Data Investment

The more data a customer puts in, the harder it is to leave:

• Encourage custom configurations and settings
• Make their historical data visible and valuable ("Your trends over 6 months")
• Offer imports but make exports non-trivial (not hidden, just not one-click)

Workflow Integration

Embed in their daily workflow:

• Integrations with tools they already use (Slack notifications, email digests)
• Automations they set up and depend on
• Team features (once a team uses it, no individual decides to cancel)

Habit Formation

Make your product part of their routine:

• Daily or weekly digest emails with useful data
• Streaks, usage milestones, or progress tracking
• Monday morning dashboards ("Here's your week ahead")

Switching Costs (Ethical)

Not lock-in. Value that accumulates over time:

• Reports and analytics that get better with more data
• Templates and workflows they've customized
• Relationships (if your product involves collaboration)

Metrics to Track

Retention Dashboard (check weekly):
- [ ] Monthly churn rate (logo and revenue)
- [ ] Churn reasons breakdown (from cancellation survey)
- [ ] Net revenue retention (revenue retained + expansion - churn)
- [ ] Time to churn (how long do customers stay on average?)
- [ ] Feature adoption rate (% of customers using core features)
- [ ] Win-back conversion rate (% of churned customers who return)

The One Metric That Matters Most

Net Revenue Retention (NRR):

NRR = (Starting MRR + Expansion - Contraction - Churn) / Starting MRR × 100
 
Example: ($10,000 + $500 - $200 - $800) / $10,000 = 95% NRR

• < 90%: Revenue is shrinking even if you add new customers. Fix retention first.
• 90-100%: Stable. New customers grow the business.
• > 100%: Expansion revenue exceeds churn. This is the goal. Existing customers grow your revenue without new sales.

Expansion Revenue: Growing Without New Customers

The cheapest revenue is from customers who already trust you:

• Usage-based upgrades — They hit a limit, naturally upgrade to the next tier
• Feature upgrades — Premium features that power users need
• Seat expansion — They add team members (each seat = more revenue)
• Annual conversion — Monthly customers switching to annual (higher LTV, lower churn)

Tell AI:

Design an in-app upgrade prompt for [product] that triggers when a user
hits [usage limit]. Show the value of upgrading with their specific
usage data. Include a comparison of their current plan vs the next tier.
Tone: helpful, not pushy.

Common Mistakes

Success Looks Like

• Monthly churn under 3% within 6 months of focused effort
• Cancellation survey data driving your product roadmap
• At least 20% of churned customers returning within 90 days
• Net revenue retention above 95%
• Customers telling you "I can't imagine going back to how I did it before"

Related Skills

• growth — Activation and retention mechanics built into the product
• email — Win-back sequences and engagement emails
• feedback — Understand why customers leave through feedback systems
• analytics — Track churn, cohort retention, and expansion revenue
• support — Support quality directly impacts churn