Shopify merchant churn: deciding which losses matter and which are acceptable

Suppose churn on Shopify is high. Is that acceptable? Take a position, then explain how you would decide whether it is a problem the company should work to fix. ```hint Not all churn costs the same Ask which merchants leave, how long they were around before leaving, and what the business had earned from them by then. ``` ### Clarifying Questions - Does churn here mean merchants cancelling their Shopify plan, or shoppers who stop buying from stores that run on Shopify? - Should churn be counted in merchants or in revenue, given that Shopify earns from both subscriptions and services that scale with merchant sales, such as payments? - Is "high" measured against Shopify's own history, against other commerce platforms, or against typical benchmarks for small-business software? - Do merchants who leave during a free trial or while on a paused plan count as churned? ### What a Strong Answer Covers - A clear position that depends on which merchants churn, rather than a blanket yes or no - Segmentation of churn by tenure, plan, sales volume and acquisition channel, separating early-life churn from the loss of established merchants - Unit economics: acquisition cost, payback and lifetime value of the merchants who leave compared with those who stay - The difference between churn Shopify can influence (onboarding, pricing, product gaps, competitors) and churn it cannot (merchants' businesses closing) - Metrics and thresholds that would change the verdict, and the actions that follow from it ### Follow-up Questions - Logo churn is high but revenue retention from surviving cohorts is above 100%. How would you explain that to an executive who wants churn cut in half? - Which single intervention would you test first against the churn that matters, and how would you measure it? - How would your answer change if a competitor began targeting Shopify's highest-volume merchants?