The Startup Velocity Question: The Churn Issue

The market is full of companies facing velocity issues due to high churn.

Somehow or the other, they may have managed to sell subscriptions to enterprises, SMBs or individuals.

But the product is not being used.

Come renewal time, customers cancel the subscription.

EdTech is a segment notoriously heavy with this phenomenon.

Online learning requires tremendous self-discipline and intrinsic motivation.

Many EdTech players have started selling subscriptions to enterprises.

Buyers, in this case, are different from Users.

Often, Users don’t USE what Buyers BUY.

Accounts churn.

This formula creates havoc in the velocity equation.

This is one of the reasons why EdTech companies do not attract high valuations.

Key Takeaways:

• Many companies face velocity issues due to high churn rates.
• Some businesses manage to sell subscriptions but struggle with product usage.
• At renewal time, customers often cancel subscriptions due to low usage.
• EdTech is particularly prone to this issue due to the self-discipline required for online learning.
• In B2B sales, especially in EdTech, buyers are often different from users.
• When users don’t utilize what buyers purchase, accounts tend to churn.
• High churn rates significantly impact a company’s growth velocity.
• This issue is a key reason why EdTech companies often receive lower valuations.

My Question to You:

Do you focus on strategies to increase user engagement and reduce churn?

If you think you need help, consider 1-on-1 Private Consulting with me. I will diagnose and create a path forward in an hour.

Image by Gerd Altmann from Pixabay

This segment is a part in the series : The Startup Velocity Question