lower churn

Eric Deeran argues the simplest way to cut churn is collecting the full contract upfront. Offer a discount like one free month to incentivize it. Once they've paid for the whole period, they can't churn.
Chapters
The easiest way to have lower churn is to just collect all the money upfront. I know it sounds obvious, but so many people are trying to fix their churn when in reality, some of it's a structural churn where it's just the person and the type of person you're selling to or the type of business you're selling to. They have seasonality, right? And so they, you know, if they have bad months, you're the first person they cut. Not really much you can do about that because it doesn't have anything to do with how good you are. And then B, they're leaving the churn up to chance. So it's like, if we sold, if you sold something for, I don't know, $50,000 for 6 months, it's like you could have them pay monthly, or you could just have them pay upfront by giving them a discount and trying to get as many people as possible to pay you upfront. Now, obviously not all of them are gonna do that, we know that, but incentivize them to pay upfront with a hefty discount. Typically we like to do like 1 month for free. If they pay upfront. And when you do that, it cuts your churn to zero because they already paid the entire contract, right? Whereas like if you let them go month to month, sometimes you'll have people drop off, you'll have a higher churn some months than others. And recurring revenue is great, but like it depends on the type of business you're in, right? Is it a consumable thing that they're gonna get every single month or are they gonna get a lot of the value in the first couple months and then they're gonna get less value in the following months? In that case, I'm gonna try to collect as much as I can upfront. Instead of letting that play out across the entire contract. So it really depends on what type of business you're in, but to get less churn, just get them to pay upfront. Easy.










