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- PLG SaaS Churn: The 2025 Guide to Understanding, Measuring, and Reducing Churn
PLG SaaS Churn: The 2025 Guide to Understanding, Measuring, and Reducing Churn
Help SaaS and PLG teams master churn analysis with actionable frameworks, proven methods, and real-world tactics to forecast, control, and reduce churn, turning at-risk customers into loyal advocates.
Gary Chan
May 19, 2025
Churn is the silent killer of SaaS growth. For product-led and customer success teams, understanding why customers leave and acting on those insights is the difference between compounding growth and a leaky funnel. In my guide below, I highlight the churn analysis strategies for 2025, how to measure, analyze, and proactively address churn before it impacts Product Led Growth SaaS bottom line.
Table of Contents
What is Churn and Why Does It Matter?
Churn is the percentage of customers or revenue lost over a given period. High churn signals product-market misfit, poor onboarding, or lack of ongoing value. For PLG and SaaS, reducing churn is essential for sustainable growth, improving retention, and driving expansion revenue.
The 5 Key Methods for Churn Analysis
Product Top 10 Method
Summarize and rank the top ten reasons customers churn by gathering insights from your customer-facing teams. This method helps you quantify the financial impact of each churn driver and prioritize fixes that will yield the greatest retention gains.
“Gather your customer-facing teams and list the top ten reasons for churn. Quantify the financial impact and use this to influence product and business decisions.”
Exit Surveys and Calls
Conduct thorough exit interviews and post-mortems to understand why customers leave. Use this feedback to anticipate and prevent future churn.
“Don’t let customers leave without a conversation. Exit interviews are gold mines for actionable feedback.”
At-Risk Team Check-ins
Identify customers showing early signs of disengagement, such as reduced usage or missed renewals. Regular check-ins allow you to address issues before they result in churn and demonstrate your commitment to customer success.
“Proactively reach out to customers showing low engagement. Address issues before they escalate and set reminders for regular follow-ups.”
Cohort Analysis
Analyze retention and churn by grouping customers into cohorts based on signup date, product usage, or other relevant criteria. This approach reveals patterns and trends, helping you pinpoint when and why customers are most likely to leave.
“Track retention by customer cohorts—monitor last login dates, active months, and drop-off points to spot patterns and blockers in the journey.”
Core Activity Engagement
Monitor how frequently customers engage with your product’s core features (not just logins). A drop in engagement with core-value workflows is a strong early indicator of potential churn. It’s a big red flag for you to intervene before customers decide to leave.
“Monitor usage of core features, not just logins. If customers aren’t engaging with key workflows, intervene early to re-engage and deliver value.”
Read more on 5 methods to analyze churn:
Step-by-Step Churn Analysis for PLG
Conduct Exit Interviews. Don’t let customers leave without a conversation. Record calls, gather feedback, and look for patterns in reasons for churn.
“Record calls, gather feedback, and look for patterns in reasons for churn. Every exit is a learning opportunity.”
Rank Churn Reasonings. List and rank churn reasons by recency, frequency, and intensity. Share findings with product and engineering to close the feedback loop.
“List and rank churn reasons by recency, frequency, and intensity. Share findings with product and engineering to close the feedback loop.”
Conduct Product Usage Analysis. Track inactivity, segment by country, company size, or urgency. Use engagement spikes and drop-offs to identify at-risk accounts and intervene quickly.
“Track inactivity, segment by country, company size, or urgency. Use engagement spikes and drop-offs to identify at-risk accounts and intervene quickly.”
Read more on Product-Led Growth Churn Analysis and Top 5 Reasons for Churn:
Churn Rate: How to Calculate and Benchmark
Churn rate is calculated as:
Churn Rate = Number of Customers Lost in Period / Total Customers at Start of Period
Track both customer churn (logos lost) and revenue churn (MRR/ARR lost). Benchmark against industry standards and segment by plan, cohort, or user type for deeper insights.
Read more about the SaaS churn rate:
Reporting Churn: Metrics and Best Practices
Monthly/Quarterly Churn Reports. Track churn trends, highlight reasons, and quantify revenue impact.
“Track churn trends, highlight reasons, and quantify revenue impact. Use visuals to make the story clear for stakeholders.”
Visualize with Cohort Charts. Use cohort analysis to visualize how different groups of customers (e.g., by signup month or segment) retain or churn over time. Cohort charts reveal when churn is most likely to occur in the customer lifecycle and help you identify which segments need targeted interventions. This approach makes churn data actionable and helps guide product and customer success priorities
“Show retention over time by signup month or segment. Cohort charts make churn actionable.”
Share Insights Org-Wide. Distribute churn analysis findings across departments—product, marketing, sales, and customer success. Cross-functional collaboration ensures everyone understands the drivers of churn and aligns on solutions. Sharing actionable insights encourages accountability and enables teams to work together on strategies that improve retention
“Present findings to execs, product, and customer success to drive alignment and accountability.”
Read more on how to report churn:
CAC, LTV, and the Economics of Churn
Churn directly impacts Customer Lifetime Value (LTV) and the payback period for Customer Acquisition Cost (CAC). Use the CAC:LTV ratio to assess the health and scalability of your business model. A high churn rate means lower LTV and a less efficient growth engine.
“If churn is high, LTV drops, CAC payback stretches, and your growth engine sputters. Churn isn’t just a CS metric—it’s a business model metric.”
»»» Download the Excel CAC LTV Heatmap template here: https://docs.google.com/spreadsheets/d/1qt16CEzHTyCgcg-VFM0uQCWHWIsZk5mzMBPI6gd5Vpk/edit?usp=drive_link
Influencing Your Org with Churn and CAC:LTV
Show the CAC:LTV math to executive, nothing gets attention like a shrinking payback window. Use churn data to drive real change.
Use churn analysis and CAC:LTV data to:
Influence product roadmap decisions
Make the case for customer success investments
Prioritize features and fixes that improve retention
Drive alignment between product, marketing, and CS teams
How to Track At-Risk Customers
Build dashboards to monitor engagement and flag at-risk users.
Set up automated alerts for inactivity or drop-offs in core activity.
Use proactive outreach and playbooks to re-engage and retain customers.
Don’t wait for churn to happen. Track engagement, flag at-risk users, and intervene before it’s too late.
Read more Track At-Risk Customers:
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I am Gary Yau Chan. 3x Head of Growth. Product Growth specialist. 26x hackathon winner. Building ClarityInbox. I write about #PLG and #BuildInPublic. Please follow me on LinkedIn, or read about what you can hire me for on my Notion page.