How to Minimize Involuntary Churn

Whether you’re measuring your customer numbers or your revenue, churn is a key metric for subscription businesses. The main reason? Churn is expensive: acquiring new customers costs five to 25 times more than keeping the ones you have. And churn doesn’t just cost you now—you lose out on future profits, too.

Voluntary vs. Involuntary Churn

There are two major kinds of churn: voluntary and involuntary.

Voluntary churn is when a customer chooses to cancel their subscription. You’ve likely got systems in place to keep that from happening.

Involuntary churn is when customers get kicked out of their subscription unintentionally because of operational glitches; payment failure issues—an expired or stolen credit card—are the chief culprit.

It’s estimated that a whopping 20% of total churn can be attributed to the involuntary variety. So you may be missing out on a big opportunity if you’re not working to reduce it.

Involuntary churn is when subscriptions are unintentionally canceled due to operational glitches; payment failure issues are the chief culprit.

Up to 20% of total churn can be involuntary. You may be missing out on a big opportunity by not reducing it.

The Seattle Times newspaper is a great example of a company that’s worked hard on this. When they learned that 62% of their churn was involuntary (because the paper couldn’t process a payment), they focused their efforts on creating a more seamless payments experience. The result? They improved retention by 25%.

How To Put the Brakes on Involuntary Churn

Now for the good news: Unlike when your customer chooses to say goodbye to their subscription, involuntary churn is completely avoidable if you take things step-by-step and measure your success along the way.

Here are four ways to get started:

Bake in your retention strategies—now.
Better to solve the problem now than later, so build a foundation for strong retention upfront. Three things to focus on: making sure your subscriber payment portal is super easy to navigate; offering flexible payment options; and maximizing authorizations. Investments now will reap huge rewards later. RankingCoach is a good example here: they focused on involuntary churn early on and in just two months, they increased their payment success rate by 18%.

Prevent “hard decline” subscription failures by keeping cards up-to-date.
The easiest way to do this is enabling Zuora’s Payment Method Updater (PMU). PMU allows your systems to automatically incorporate changes made to your credit card data, including expiration date, new card number, account closure, and more. Next you’ll want to set up your systems to automatically alert customers before their stored card is due to expire so they have time to update their account with new information.

Recover “soft decline” failures with a smart retry strategy.
Even when your customers have chosen auto-pay, there can be situations where their payment is rejected by your system. We call this a “soft decline.” To reduce this brand of churn, you’ll want to implement a smart payment retry strategy for failed or incomplete payments so your customers experience as little hassle as possible. Automation is your friend here: a good payment retry system leverages AI to let you dial in the rules that fit your business. And of course prevention is always the best strategy: make sure you have a good dunning communications program to help your customers keep their card info up to date.

If all else fails, suspend the account and start reactivation plan.
There are times when your efforts to avoid involuntary churn fail. But remember: these customers didn’t choose to stop their subscription, so it’s worth the investment to start a reactivation plan as soon as possible to get them back. Time to crank up that email nurture campaign!

So a quick recap to end:

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