Customer churn is one of the biggest threats to sustainable growth—especially in competitive markets like DeFi and Web3. A leaky bucket empties quickly. While acquiring new onchain users is important, understanding why existing users leave is essential to improving retention, boosting satisfaction, and increasing lifetime value.
In this article, you’ll learn:
What churn rate is and how to calculate it
Why churn happens (with real examples)
How to design effective churn surveys
How to use those insights to reduce churn using Formo
Let’s dive in and turn churn into opportunity.
Key Takeaways
Churn rate measures how many users stop using your product over a specific period.
High churn = lost revenue. Tracking churn helps identify problems and improve retention.
Top churn drivers include poor customer support, pricing issues, weak product-market fit, and low engagement.
Churn surveys are sent when users cancel to collect real-time feedback on why they’re leaving.
With Formo’s no-code Form Builder, you can create churn surveys, analyze results, and take action quickly.
Calculating the churn rate helps pinpoint the reasons for customer attrition and implement retention strategies.
What Is Churn Rate?
Churn rate is a key web3 product metric that measures the percentage of onchain users who stop using your product over a given time frame—monthly, quarterly, or annually. In DeFi, competition is fierce and onchain users often jump between protocols to chase short-term incentives.
While some churn is expected, a high churn rate can severely impact your revenue, growth, and customer lifetime value. Tracking this metric helps you identify problem areas, improve user experience, and increase retention.
How to Calculate Churn Rate
To calculate your churn rate, you need:
A defined time period (month, quarter, year)
The number of customers at the beginning of that period
The number of customers lost during the same period
Formula:
(Lost Customers ÷ Customers at Start of Period) × 100
Calculating the Churn Rate using the formula
Example:
If you had 100 users at the start of Q1 and lost 7 by the end, your churn rate = (7/100) × 100 = 7%.
While the “ideal” churn rate varies by industry, Web2 SaaS businesses aim for a monthly churn rate between 2%–8%. In Web3 and especially DeFi, churn rates can be much higher due to airdrop farmers mercenary users, ranging from 10% - 30% month over month.
Common Reasons for High Churn
Understanding why users leave is key to reducing churn. Here are the top causes:
1. Poor Customer Support
If users don’t get timely help when they need it, they’ll look for alternatives—no matter how good your product is. Brands have to provide excellent customer service not only to new customers but also to loyal ones.
2. Changing User Needs
User needs evolve. Without regular feedback, you’ll fall behind. Run product surveys to stay aligned with customer expectations.
Brands need to listen carefully to customer feedback and expectations to reduce the churn rate and build better products.
3. Incentives or Pricing Mismatch
Mercenary users in DeFi are constantly chasing token incentives. If your app’s fees or yields is no longer attractive, users will churn—even if your product functions well. Review your incentives and pricing strategy often to keep users from churning.
4. Poor Product-Market Fit
If your product doesn’t solve the right problem for the right audience, no amount of marketing will fix churn. Validate your roadmap with user feedback and achieve product-market fit.
5. Low Engagement
Inactive users are more likely to churn. Boost engagement through onboarding, personalized messages, and ongoing education. Help your users get as much value as they can from your product and all of its offerings.
High churn is a core challenge to a product's growth. Proactively addressing customer satisfaction is pivotal for maintaining your market position. In this context, churn surveys are invaluable.
How to Create Effective Churn Surveys
When churn happens, you have a unique opportunity: ask why.
What Are Churn Surveys?
Churn surveys are forms triggered when a user cancels or downgrades. They help uncover why customers leave—so you can fix it. Armed with this information, you can take action to address the root cause and reduce churn.
Churn surveys help brands prevent churn before users take action by collecting insightful feedback on customer issues.
What Questions Should You Ask?
Asking long-form questions may be great for collecting user sentiment, but it's not ideal for keeping a customer from churning. Instead, churn surveys should be designed to look like a natural part of the canceling process, without adding any unnecessary friction.
Keep your surveys frictionless. The best churn surveys use one of these formats:
1. Multiple-Choice Questions
Fast and easy for users. Example:
“What’s the main reason you’re canceling?”
"Why did you decide to cancel your subscription?"
Options: Too expensive, Missing features, Poor support, etc.
Example of Multiple-choice Questions
2. Open-Ended Questions
Open-ended questions discover why users are churning and reduce churn by improving the product and experience.
Allows users to explain in their own words. Best for deeper insights into the user’s pain points.
“Tell us why you decided to cancel.”
Example of Open-Ended Question
3. Mixed Questions
Combine the two: provide options and an optional text box for added context.
“Select a reason—and feel free to share more.”
Consider making the text box optional, as your main goal is to collect answers to the multiple-choice question.
Example of Mixed Questions
How to Build a Churn Survey with Formo
With Formo, you can create no-code churn surveys directly in your product. It’s fast, flexible, and built for Web3 teams.
With Formo’s Form Builder, you can:
Build churn surveys inside your app—no coding needed
Customize the look and feel to match your brand
Automate follow-ups based on user responses
Run A/B tests on different question types
Analyze churn reasons over time with built-in analytics
How to Manage and Reduce Churn
Reducing churn requires more than just asking why—it means acting on that data. Here’s how:
1. Analyze Customer Feedback
Use customer churn as an opportunity to learn why users are leaving. Use churn survey insights to improve support, product quality, and pricing. Compare your product and service against competitors, and improve your product offerings.
2. Improve Onboarding
Make a strong first impression and help users get value from your product. A personalized, value-driven onboarding flow helps users succeed early and reduces early churn. Create educational content to help customers derive maximum value from your products.
3. Track Churn Regularly
Monitor churn rates monthly to catch trends and respond fast. Don’t wait for it to become a bigger problem. Regular tracking allows you to stay proactive in addressing the churn rate and implementing strategies to reduce it over time.
Monitoring enables you to manage churn rates and implement effective strategies proactively.
4. Segment Your Users
Group users by behavior, age, plan, or other factors. This helps you identify which cohorts churn most—and why. Conducting cohort analysis and segmenting customers helps you understand how different customer groups behave and churn, enabling targeted strategies to reduce the churn rate for each group.
5. Invest in Retention
Use retention tactics like loyalty programs, regular check-ins, and product education to build long-term relationships. Remember, a leaky bucket empties quickly. Building strong relationships with customers increases loyalty and reduces churn rates.
Reduce Churn and Build Retention with Formo
Build better products and enhance customer loyalty with Formo’s Form Builder
Reducing churn is about creating better customer experiences—and Formo’s Web3 Form Builder is built to help you do exactly that. With Formo’s no-code Form Builder, you can:
Collect real-time feedback from users who cancel
Understand the reasons behind churn
Turn insights into action and improve product loyalty
Follow us on LinkedIn and Twitter, and join our community to learn how Web3 teams turn insights into action with Formo!
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Additional FAQs
1. What is churn rate, and why is it important?
Churn rate is the percentage of customers who stop using your product or service over a specific period of time. It's a key metric for understanding user retention, customer satisfaction, and overall business health. Monitoring churn helps identify areas of friction and opportunities to improve the user experience.
2. How do I calculate churn rate?
To calculate churn rate, use the formula:
Churn Rate = (Customers Lost ÷ Customers at Start of Period) × 100
For example, if you started with 100 customers and lost 7, your churn rate would be 7%. Tracking this monthly or quarterly helps spot trends and take timely action.
3. What are the most common reasons users churn from Web3 products?
Users typically churn due to:
Poor customer support or onboarding experience
Misaligned pricing or value perception
Low engagement or unclear product value
Lack of trust in the platform or brand
Incomplete product-market fit for their needs
Understanding these reasons can help teams prioritize improvements in UX, communication, and product direction.
4. What should an effective churn survey include?
A good churn survey should be short, embedded naturally in the cancellation process, and include:
Multiple-choice questions to identify top reasons for churn
Optional open-ended responses to collect deeper insights
Clear, respectful language that encourages honesty
Avoid long forms or questions that feel intrusive—your goal is to reduce friction and maximize useful feedback.
5. How does Formo help reduce churn for Web3 products?
Formo allows Web3 teams to:
Build in-app churn surveys without writing code
Customize surveys for specific user segments
Automate follow-ups based on user responses
Track churn trends over time with analytics
Turn insights into actionable improvements
By collecting feedback at the moment users leave, Formo helps you pinpoint why churn is happening—and empowers you to act on it quickly.
