Data: Impact of Product Pricing on SMB Advertiser Churn
February 11, 2016 | Contributed by: Joe Morsello
Based on new data from Vendasta, there is a correlation between product pricing and SMB advertiser churn. Companies offering digital products below $100 per month had average annualized churn of roughly 28%. By contrast, those accounts worth more than $100 per month saw 50% average churn on an annualized basis.
This finding is almost entirely unexpected. Even more surprising is that Vendasta reported an 8% increase in churn for each $100 per month in additional account value. In other words, the more money spent the greater the churn. This inverse budget-churn correlation contradicts other data and industry conventional wisdom.
There’s a body of industry and agency data that reflects larger-value accounts tend to have lower churn rates than smaller-budget accounts. Part of this may be tied into the sophistication and maturity of the advertiser. The Vendasta finding seems to fly directly in the face of these understandings and logic.
The data comes from analysis of over 275,000 SMB marketing and advertising customers across a number of providers. The data is featured in a new LSA report, “SMB Advertiser Churn: New Data for an Old Industry Problem.” To access the report, click here. To access and share the graphic above, click here.
At LSA16 we will be exploring a variety of SMB issues in the marketplace including SMB advertiser churn, local media sales, the SMB product suite and we will also moderate a live panel of San Francisco SMBs. To see the full agenda, click here.