Understand customer churn and behavior

The challenge

Our private equity client was looking to acquire a company developing and distributing a B2B SaaS platform in the executive training industry.

The company generates its revenues based on the number of users connecting on the training platform. Understanding users adoption and behaviors was therefore a critical analysis our client needed in order to challenge the ambitious growth assumptions which had been factored in the sellers business plan.

Consequently, our client wanted our assistance to gain a deeper understanding on key business drivers, and particularly levers of revenue growth (retention and churn rate) and challenge the sustainability of the sellers’ sales forecasts.

The outcome

To perform our analysis, we combined users’ behavior data such as number of connection, number of trainings initiated, connection time, number of trainings completed, and revenue data by client.

This granular information allowed us to perform in-depth analyses on the characteristics and evolution of the client portfolio. Our analyses revealed that the company had been successful at recruiting new clients but it had difficulties to retain these new customers over a long period. This insight had major implications on the revenue growth assumptions announced by the seller.

Diving into the analysis of user behaviors on the platform, we realized that, after an initial peak of users at the start of the contract, the number of active users quickly diminished. Moreover, we observed a negative correlation between the number of users on the platform and the number of trainings completed, suggesting a lack of satisfaction of users with the content of the platform. These insights helped us understand the reasons for this lack of client retention.

Such analyses provided clarity to our client on several key business issues of the target and helped him raise accurate and critical questions during Q&A with the seller and negotiations.