From the book ‘The Upstarts‘ about the early success of Airbnb and Uber, this bit:
Uber’s financial results also looked promising.The company was exhibiting an elusive phenomenon called negative churn, in which users who joined the service were more likely to stay with it and gradually increase their frequency of use than they were to leave. In other words, once customers joined Uber, they turned into a sort of high-yield savings account. The lifetime value of a user seemed unknowable, perhaps unlimited.
The more general definition of negative churn seem to be a state where a business generates more revenue month on month (MoM) from existing customers even as it progressively loses some of them.
Good SaaS businesses can display negative churn. But a wealth business is a particularly great candidate for a negative churn business when it’s achieved momentum. A wealth manager generates revenue
- (a) from new customers added MoM
- (b) from existing customers investing more MoM
- (c) from the MoM growth of existing assets under management
Even when customers from a cohort inevitably churn, increased revenue from (b) and (c) can counteract that loss, continuing revenue growth from that cohort. In particular, (c) is unique to wealth/investing.