There are two core metrics that should drive a lot of the decisions you have in your organization; churn & sales. A great agency is constantly studying these two numbers diagnosing them from every angle learning specific areas of opportunity.
The more you are able to understand these numbers and what they are composed of the better you’ll be equipped to making the right decisions for your business.
In this report, we want to look at churn, which is something we’ve been studying for about 10 years across two different agencies. The first one was scaled to over 1,000 clients and the second one we’ve scaled to over 200 full time employees in just 5 years.
When you’re a young agency, churn is so important because 1-2 clients can represent a large portion of your income, however as you scale, the same is true. Imagine you’re an agency like Hite and you’re doing $500,000 per month in MRR.
If you have 10% churn monthly, you’ll need to do $50k in new sales just to break even. If you can create an environment where you’re more likely to have 5% churn, if you do $50,000 in sales you’ll grow by 5%.
Understanding why clients leave and acting on it, isn’t only the key to scaling. Agencies with lower churn, partake in other benefits such as receiving more referrals & a much higher evaluation when it comes to selling the business.
Hite is constantly focused on understanding the why behind our growth & this is essential for your business if you want to scale in 2023.
Churn is critical, especially as you scale for churn is a representation of the quality of your product, service, & customers.
Every agency is constantly battling both the increase of sales and the decrease of churn.
Defining Churn?
Churn can be broken down in a lot a ways, but for agencies, the most common two churn metrics you’ll see is Client Churn & Financial Churn. These two churn types can be define these two churns as followed:
For Client Churn we will look at the monthly turnover of clients regardless of financial impact.
For example, If in January you had 10 clients pay you then in February only 8 of them paid you, that would be a turnover of 2 clients and equal 20% churn. In this example it would not matter how much each client represented financially.
For Financial Churn, we look at the monthly turnover of revenue regardless of clients.
For example, if in January you had $20,000 in recurring collected MRR and in February you only collected 18,000 of that $20,000, it would represent a 10% churn rate.
Understanding the difference between these two numbers is crucial, let’s look at the following list of clients.
MRR
Client A $1,000
Client B $5,000
Client C $2,000
Client D $3,000
If we were to lose Client B, you would have 25% client churn, however you’d have 50% financial churn. There could be a very large difference in these numbers especially as you scale.
The Problem With Researching Churn
Doing research on churn for agencies doesn’t come easily. First off, about 80% of agencies that exist today would be defined as micro agencies, doing less than $15,000 in monthly revenue of which the vast majority do not keep up with, nor have any data on their numbers, especially when it comes to churn.
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If you take into consideration those that do keep great track of their numbers, between those they may manage and report back churn in many different ways, even beyond the above numbers.
For example, there is a well known agency that is doing several $100m in annual revenue that keeps track of their financial churn, but in their own way focusing more on net growth vs. churn.
In their model, they look at how much was lost, and measure that against what was upsold in order to come up with a net churn.
With that said, we believe that this report takes all those data points into consideration arriving to tangible and definitive results.
[TAG4]The post How to Reduce Churn appeared first on DigitalMarketer.
Frequently Asked Questions
What is your best motivation in life?
Are you curious about my top motivations in life? Let me tell, you. It is the best motivator in my life to make people feel better. They will be amazed at how amazing they truly are. That they are worthy of love, because they are.
They do deserve happiness.
I'm here reminding people that being happy about yourself is the most important thing. Nothing. I'm willing to do whatever it takes for our world to be better.
Being happy with ourselves makes us more open-minded and compassionate towards our fellow humans. You stop judging people based only on their superficiality. Instead of judging them, you start to see the person within. This is really cool.
To motivate someone, it is important to let them know that they already have all they need.
They may not have realized it yet, but that's why they've been struggling with something for so long. They knew that deep down they had the power within to heal themselves.
They needed the right environment. The right support system. And the right mindset. They somehow forgot that.
Why did they lose sight of it? They were too busy trying find the root cause of the problem. They tried to fix it as fast as possible, not realizing they had all the tools necessary to do so.
They didn't realize they were the ones who had the answer.
So I am here to remind you that you have the ability to create an entirely new reality. To tap into your inner genius, all you need is to learn.
The rest will fall into place once you do. It's easy to make your dreams come true.
You see, every person has their unique superpower.
We just have to learn how to use it.
What are the 6 most important questions that motivate an entrepreneur?
For any business, motivation is key. You can't motivate yourself to get out of bed each and every day. You won't be able to complete projects if you don't have motivation. Without motivation, you can't even reach your goals. So, how do we find our motivation?
You may wonder, "What motivates my mind?" It might surprise you to find out the answer. Maybe you've been asking yourself this same question for years. You are missing one of the greatest rewards of life--the chance to discover your motivation.
Discovering why you are there is the best motivation. You will then realize what drives yourself. Your purpose becomes clearer and more meaningful. Why do you care? It will be much easier to stay motivated once you understand this.
Finding your motivation starts with looking within. These are your questions:
- What are my passions?
- What makes my heart beat quicker?
- What makes me feel alive?
- What gives me butterflies in my stomach?
- What makes me feel alive and connected?
- What draws you back to your project time and again?
Once you have your answers, it will be possible to determine your true motivations.
Your motivation will help you get through those tough times. It will give you strength when you need it. It will inspire you to work harder. It will motivate you to succeed.
If you're anything like me, you will never stop searching for your motivation.
You might be surprised at what you find. You may be surprised at the results.
What makes a successful entrepreneur?
There are two types of entrepreneurs; those who make money and those who make time.
They approach their business differently. That is what makes them different. Those who make money focus on making more money while those who make time focus on making more time.
People who make money are motivated by financial freedom. Their goal is to become rich and stay rich.
They are driven by fear and greed. They don't really care about the longer term, as they know that their goal will bring them joy.
This person is known as a hustler. They place emphasis on the bottom line, and they find ways to increase income without regard for quality.
Some people make their own time. These entrepreneurs are driven and passionate. They are driven by passion to create something lasting and meaningful.
They are motivated by altruism. They are driven to achieve great things. They are passionate about creating services and products that make a difference.
These people are known as dreamers. They are motivated by vision and inspiration. They understand that success takes hard work, perseverance, and dedication.
They are creative, which is the most important attribute of these entrepreneurs. They are constantly looking for opportunities that have never been seen before.
They are attracted to the unknown. They are open to spending hours researching new topics. Because they love learning new things, they are always open to trying new ideas.
It is also why they are adaptable to changing situations. They won't mind doing anything to win, even if it means getting dirty. They won't accept mediocrity.
So which type of entrepreneur are you? Do you have a burning desire to make money or a burning desire for meaning?
If you answered yes to both questions, then congratulations! You are a successful entrepreneur.
Over the years, I have met many successful entrepreneurs and observed one thing: passion.
Entrepreneurs are not defined solely by their monetary wealth. They are defined by the impact they make.
Steve Jobs, for instance, was well-known because of his charitable work but wasn't very wealthy. He didn't own a house until his mid-40s.
His ability create products that changed the course of history was his greatest source of wealth. And this is what defines him.
Your job doesn't involve accumulating wealth. It isn't to build empires, or amass political power.
Your job is to establish relationships with customers, partners, and other people. To build trust. To make others successful.
To make an impact. Your legacy. That's your legacy.
If you are interested in building a legacy that is meaningful, let's get started.
Social Media University will show you how to make passive income online. We'll show how to market your business so it grows naturally.
Why is motivation so important for entrepreneurs?
Motivation is what drives us forward when things seem difficult or hopeless. It gives us the power to face our fears.
Motivation is also the driving force behind success. Lack of motivation can cause us to become lazy, unmotivated or unproductive, ultimately leading to our failure.
You can unlock your potential by finding ways to motivate you. This means that you need to find ways to keep motivated throughout the day.
It is like a muscle. The more you work it, the stronger it will become. If you don't exercise it, it begins to atrophy and weaken.
Self-motivated entrepreneurs are the best. They set goals, plan how they'll achieve them, then follow through.
You may find yourself struggling to stay motivated at times. Here are three easy steps to keep you going.
Step 1) Get inspired. Find an inspiration figure. Someone who is already doing what you desire.
Step 2) Set small goals. Make sure that each goal is reachable. Focus on the next step rather than the ultimate result. You can reach big goals quicker by breaking them into smaller pieces.
Step 3 - Reward yourself You can reward yourself when you reach your goals. It doesn't have be something tangible, it could just be time spent doing something you enjoy.
Remember, motivation is a choice. Choose to be happy, to be successful, to live a fulfilled life.
You can make a difference in your life today. Start by deciding to change. Next, take action. Now is the time to live your dreams.
What are some of the benefits of an entrepreneurial mindset
There are many benefits to being an entrepreneur. The first is your ability to be self-reliant. You stop relying solely on other people.
This makes you independent and free to pursue your dreams. Because you have similar interests and challenges, it helps you to build relationships with other entrepreneurs.
You gain confidence. Entrepreneurs are always learning new things. This allows you to be flexible and adapt quickly. By thinking outside the box, you will not be trapped in a rut.
All entrepreneurs are free to start their own businesses. We no longer have to follow the rules and regulations set out by society. We are free to choose what we do and how we live.
We have two options: follow the crowd, or fight it. We have the choice to be successful or unsuccessful. You can choose to win or fail.
It's exhilarating to have freedom. You also have to take responsibility. Because once you step into this role, you're accountable for everything that happens within your business.
So if you want to succeed, you must learn to manage risk. Don't be afraid to try new things. Your goal will be achieved if you are open to learning from your mistakes.
These lessons will help you to stay on the right track when you embark on your journey.
Remember:
- Entrepreneurship can be a lifestyle choice.
- You're the boss when your business is owned and operated by you.
- Be careful of following fashion trends.
- Success doesn't come in money; it comes in freedom.
- Your personal and professional lives must be balanced.
- Set clear expectations.
- Always be honest with your team.
- Remember, if you want something to happen, you've got to do something about it.
What motivates entrepreneurs?
Passion is what drives us. However, we are driven by passion and a strong desire to create meaningful things that make a real difference. To make a positive difference in the lives of our loved ones and ourselves.
To give back. To give back. To leave a lasting legacy.
We do it because we love what we do. We are driven to live a full life and enjoy success in the ways that matter.
We are driven to fulfill a sense purpose and mission. This cannot be accomplished by money alone.
Find a way for business to be enjoyable. Entrepreneurship becomes more than a job.
Entrepreneur success is what I am passionately interested in. My goal in helping entrepreneurs achieve financial freedom and make a lasting difference in the world is my goal.
My life is proof that creating value is the best thing. You can share your knowledge and experience with the rest.
It doesn't suffice to have a great product. First, you must understand your customers. What they are looking for.
If you do, you'll always know how to improve your offering. You'll provide more value.
And if you provide more value, you will gain more customers. Customers will buy more of your products and services, so you'll have more customers. Plus, you'll generate more revenue if your products and services are more popular. Plus, if your revenue is higher, you will eventually be financially self-sufficient.
Money is not everything. It's a means to an ends. Not the end in itself.
So, if you truly want to live a rich life, you cannot focus only on money. Focusing on positive change is also important. Contributing. Be a part of a legacy. Create something unique. Create something special. It will add meaning to your life as well as the lives of others.
Entrepreneurship requires risk-taking. It doesn't necessarily mean that you have to follow certain rules. It's about being flexible. Adapting. Adjusting. Improving.
You won't fail if you are true to yourself, your values and your integrity.
Entrepreneurship is a calling. A vocation. You have the chance to contribute. To create wealth. To influence history.
If you embrace these things, you'll be the best you.
You will be unstoppable.
Statistics
- Invest at least 30% managing those with authority over you and 15% managing your peers.” (americanexpress.com)
- "Most of the time when people ask me about motivation, 80 percent of the time, I attribute it to gratitude. (entrepreneur.com)
- “Effective communication is 20% what you know and 80% how you feel about what you know. (americanexpress.com)
- "If you improve by just 1% every single day, in several months, you will have improved by 100%. (carolroth.com)
- That means for $150,000, you could have bought 10 percent of Airbnb." (entrepreneur.com)
External Links
due.com
kabbage.com
inc.com
cnbc.com
- This is the inspiring quote Jeff Bezos keeps on his fridge
- Richard Branson is a billionaire. Here are my top ten tips for success
How To
How can I keep my motivation high when starting a new business?
You must focus on creating an income stream if you want to make online money. This is how you can generate steady revenue through your website.
This is easiest if you create products that solve customer problems. But how do you make these products? That's where the real fun begins.
There are two ways to approach product creation. The traditional approach to product creation is to first come up with an idea and then work hard on it.
However, there is another option. Another option is to ask yourself "What problem am i trying to solve?" You can then search for the product that will solve your problem.
This is known as the "find-a problem" method. You're likely to find a problem on another site if you use the "find-a-problem" method.
Once you've found this problem, you'll have to decide whether or not you want to solve it. The following questions will help you answer the most basic of these questions:
- Does it make sense?
- What can you do to fix it?
- Is it worth it?
You have the foundation for a product that is successful if you can answer all three questions. The next step is to determine how to package it.
Many businesses fail because they don't have a plan to generate recurring income. It is easier to continue working after you have exhausted all your ideas.
You may also discover that your ideas are more valuable than the time it takes to implement them all. In this case, you can delegate tasks to other members of your team (or hire freelancers).
As long as you are able to increase your income stream, you will be motivated.
Remember: You can do almost anything if you are willing to work hard. Don't wait! Get started today!
Did you miss our previous article...
https://consumernewsnetwork.com/technology-news/give-your-marketing-a-makeover
