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How To Lower Churn

GigaOm

Dealing with churn, is one of the most important elements of building a subscription business.  While some churn is inevitable over time, too much churn indicates a more fundamental problem: customers aren't finding value in your product.  

I wrote an article over at GigaOm on this subject including some examples about how to reduce churn from my experience at MySQL and Zendesk.

Having churn is like rowing a leaky boat. After a while, you spend more time bailing water than moving forward. By contrast, organizations that focus on reducing churn will find that their revenue grows every quarter.

To accurately measure what’s going on, you should begin by breaking out churn (customer cancellation) from contraction (a downgrade in spending). Measure downgrade and churn separately from upgrades and expansion; otherwise, your net growth numbers will mask problems that are bubbling below the surface. If your SaaS product has different editions (e.g. Basic, Pro, Enterprise) you should watch for downgrades that suggest customers are not seeing the value in the higher-end features.

It’s also worth paying attention to churn and contraction by customer segment. In most SaaS businesses, churn is highest in low-end customers — some of whom will inevitably be acquired or go out of business. Over time, if you move upmarket to larger SMB or Enterprise customers, low-end churn becomes less significant. Customers who spend a lot of money usually have greater commitment and resources for working through any speed bumps during implementation. They’re also far less likely to switch to another vendor with newer features.

Hopefully this article will spark some other ideas and discussions in your company.  You can read the full piece at GigaOm.


Open Source Enigma Project

Open Friggin' Enigma

The wild and crazy guys over at S&T Geotronics, James Sanderson and Marc Tessier, have decided to go full tilt with a Kickstarter version of their DIY Open Enigma Project.  For those who missed the fanfare last year, they were featured on Instructables showing how to build an Arduino-based encryption machine that works exactly like a WWII era Enigma.  You know, the thing that Alan friggin' Turing and his team at Bletchley Park cracked to  bring an end to WWII?  Yeah, that Enigma.  

The Enigma was also featured in the aptly-titled novel "Enigma" by Robert Harris and the film starring Kate Winslet and some people I've never heard of.  That film was produced by Mick "code-breaker" Jagger.  Yeah, that Mick Jagger... By the way, Jagger owns his own personal friggin' Enigma machine.  How cool is that?  

The Enigma Machine (and it's cracking) remains one of the most significant breakthroughs in computing.  And Turing is considered one of the fathers of modern computing as well as a brilliant mathematician, logician, code-breaker and... wait for it.... world class marathon runner. (I kid you not, the guy ran a 2:46 marathon, coming in 5th in an Olympic qualifying round.  Take that Nazi scum!)

But unless you happen to have a spare $208,137 lying around to throw at a Christie's auction, the closest you're ever gonna get to an Enigma machine is to view Mick Jagger's Enigma sealed behind glass at Bletchley Park.  I've been there, it's fantastic.  But it's also heavily guarded.  Just sayin'. 

Enigma kitNow with the Open Enigma Project, you can get a working, life-size replica of the Enigma and be a part of computing history.  You can sponsor the Kickstarter project for as little as $5 (cheapskate), or if you're a DIY hardware hacker, for $250 you get a bag of electronic stuff you can assemble. 

Or if you're a software person who wouldn't know which way to plug in a soldering iron, then you can get a fully assembled kit (without a case) for $300.  And if you want the whole enchilada including the genuine wooden case, it's $600.  Executives, VCs, rock stars and others can splurge for even higher levels to help make this project a reality. 

This is literally a once-in-a-lifetime opportunity to get a working Enigma replica.  And that is some cool cyber-encrypting steampunk goodness!  You can plug the Open Enigma into your PC via USB port and run some kind of crazy distributed big data bitcoin-mining NoSQL social media photo sharing site on it.  

All the hardware and software is open source so you can compute all you want on your desk, put it behind glass or run a marathon with it.  Just like Alan Turing would have done.