Key takeaways:

  • Churn has two distinct causes. Your strategy must address both voluntary churn (customers actively canceling due to issues like price or value) and involuntary churn (customers leaving unintentionally due to payment failures).

  • You need a two-pronged solution. To reduce voluntary churn, focus on improving product value and the customer experience. To stop involuntary churn, you need technical solutions like dunning management, account updaters, and intelligent payment retries.

  • You can't fix what you don't measure. The first step is to consistently calculate your churn rate. This key metric reveals the health of your subscription business and the success of your retention strategies.

You’re building your subscription business. Customers are signing up, bringing new revenue with them. But overall growth is still slowing and more and more customers seem to be leaving. What exactly is going on? 

Churn happens in every subscription business. Recurly’s own benchmark data shows an overall churn rate of 3.27% across industries. But just because it’s common doesn’t mean you have to accept it. With the right churn management strategy, you can protect your revenue, retain more subscribers, and fuel long-term growth.

The 2 types of subscriber churn: Voluntary vs. involuntary

Subscriber churn is the percentage of customers who cancel or fail to renew their subscriptions in any given timeframe — a year, a month, or a quarter, depending on what you’re measuring. The higher your churn rate, the more customers you’re losing and the harder it becomes to reach your growth and revenue targets.

That’s why addressing churn head-on through a churn management strategy is key to sustaining and growing your subscription business. A successful churn management strategy takes into consideration two main types of subscriber churn:

  • Voluntary churn: the customers who actively cancel their subscriptions

  • Involuntary churn: the customers who don’t make a conscious decision to cancel, but find their subscription lapsing due to a payment failure instead

💡 Recommended reading: Understanding subscriber churn

Voluntary churn: Why subscribers choose to leave

A subscriber may voluntarily choose to unsubscribe from your business for many reasons. Voluntary churn usually happens quickly in the subscriber lifecycle. According to Recurly’s 2025 What Subscribers Want report, 66% of all cancellations occur within the first 12 months of subscription.

Here are some common sources of voluntary churn so you can prepare to combat: 

Lack of value or poor product fit 

If a customer feels like they’re not getting enough value from your subscription, they may choose to cancel. This may be because your offerings don’t fully meet their needs, or because they feel like they should be getting more for the price point. Recurly’s research shows that value is more important than ever with 89% of surveyed consumers rate “good value for the money” as a top important attribute when choosing a subscription. 

Poor onboarding experience

A bad first impression can go a long way. If your customer’s initial onboarding experience is slow, confusing, or difficult to follow, they may give up on your brand before they even experience its true value.

Subpar customer service

When your subscribers aren’t happy with your customer service team — or even, in some cases, experience a single negative interaction — they can feel frustrated and want to move on.

Pricing issues

If your pricing has changed, your product or service may now be priced outside your subscribers’ threshold. Or they may have become more sensitive to your existing price point because of an economic downturn or subscription fatigue. According to research on what subscribers want, when subscribers who anticipate canceling in the next year were asked for their reasoning, high costs and price hikes were the primary drivers.

Competitor offers

A competitor may have lured your subscriber over to their brand with a more competitive price or a service offering that better meets their perceived requirements.

Technical issues or bugs

When your offering doesn’t work properly — whether it’s a bug, a glitch, or a service issue — customers notice. If the problem isn’t fixed, they may decide to cancel.

Involuntary churn: When subscribers don’t choose to leave, but do anyway

Involuntary churn makes up 53% of total churn, meaning it’s just as important to address as voluntary churn. But unlike voluntary churn, it usually stems from a single issue:

Payment failures

There may be insufficient funds in your customer’s account, their transaction may have been declined due to: 

  • Fraud detection 

  • Expired credit card information 

  • Incorrect billing details

  • Soft declines due to maxed out limits

  • Hard declines due to a card being lost or stolen 

Incorrect flagging of charging

Sometimes, a banking system may not recognize a charge as a recurring bill leading to a decline. While this is rare, these instances can lead to significant delays in payments and can frustrate your customer base. 

How to measure churn rate

Whatever the reason for churn in your business, it’s important to be on top of it if you want to put together an effective churn management strategy. That starts by measuring and tracking your churn rate.

Otherwise known as your attrition rate or turnover rate, your churn rate looks at the percentage of customers who stop subscribing to your product or service over a specified period of time. You can measure it on a monthly, quarterly, or annual basis — though waiting a full year may mean you’re missing out on opportunities to take the action necessary to combat churn exactly when it’s needed.  

To calculate your churn rate, use this formula:

Churn Rate = (Total Lost Customers / Customers in the Time Period) x 100

The benchmark you use will depend on your business norms and the industry you work in. For instance, according to Recurly’s research, the average annual churn rate for a SaaS business is 1 to 5%, with 4% considered a good benchmark on average. 

Other metrics can also help you understand your customers better, so you can stay on top of possible churn. Your customer lifetime value (CLV), net promoter score (NPS), customer satisfaction score (CSAT), and product usage data are all key metrics to track. Customer health scoring can also help you determine whether your customer is engaged with your brand or ready to leave it.

💡 Recommended reading: How to calculate churn rate: A better formula

Proactive churn prevention strategies for reducing voluntary churn

Once you’ve measured and tracked churn at your business, you can begin to introduce specific churn management best practices. The following tactics can help you reduce cases of voluntary churn.

1. Optimize the onboarding experience

Make sure your onboarding experience is easy and intuitive, with frictionless, personalized offerings that cater to each user’s behaviors and account type. 

To provide value quickly, send new customers information on services or features they haven’t accessed yet. For example, remind them to complete a short quiz that identifies their preferences or dislikes. Not only will you better understand your new customers, they’ll feel heard and appreciated starting on day one.  

Offer ongoing resources and tutorials after the initial onboarding period so they’ll continue to feel connected.

2. Foster customer engagement

Turn subscribers into lasting relationships by keeping them informed on what’s happening with your brand. Provide regular updates, curated newsletters, and video messages highlighting new features or products — then make it personal by sending recommendations, exclusive offers, or content specifically tailored to them. The right platform can help you do this natively in your app and across devices. 

You can also build a private online community of subscribers, with special perks like exclusive virtual events, to create a stronger sense of belonging between your subscribers.

💡 Recommended reading: Delivering real value: How to keep your subscribers engaged

3. Continuously improve the value of your product or service

Use customer surveys or interviews to understand what you could be doing better. Monitor product usage to spot dips or engagement drops to identify declining value, technical failures, or other service issues. Then put that feedback and performance data into action to improve the user experience and offer new products.

But don’t stop there. Keep your subscribers up to date on your product roadmap — including future service offerings, bug fixes, and performance enhancements. This lets them know you’re listening to their needs and constantly striving to do better.

4. Implement smart, flexible pricing and incentives

Experiment with how you price your subscription. This could mean testing a fixed recurring model against a usage-based option, or adding pricing discounts based on loyalty. Or it might mean applying smart pricing, using customer data to dynamically adjust your pricing based on demand and competition. This can help ensure you’re pricing competitively and fairly, while optimizing your revenue. 

Finally, add to your customers’ perceived value through loyalty programs, exclusive benefits, long-term contract incentives, and referral programs. 

💡 Recommended reading: Subscription pricing and packaging: Strategies to optimize and implement pricing flexibility

Strategies for reducing involuntary churn

Involuntary churn requires a different strategy. These customers might already love your product or service, so the goal isn’t convincing them to stay — it’s removing the payment roadblocks that might cause them to leave anyway. That takes the right tools and a proactive approach. Here are some proven churn management best practices that can help. 

1. Identify at-risk customers early

Track payment information to stay on top of credit cards that are about to expire and payment methods going out of date. The right tools can help you automatically identify these problems before they even happen, helping you stay on top of payment issues and giving you time to notify your customers before their subscription lapses. 

For instance, Recurly’s Account Updater service monitors your customers’ Mastercard, Visa, Discover, and American Express credit cards, automatically updating their records as needed to ensure payment details are always current.

2. Apply quality dunning management

Dunning management refers to the communications you send to customers as you arrange to collect overdue payments. An effective dunning strategy will let you reduce involuntary churn and revenue disruptions. Plan your cadence carefully to ensure your subscribers don’t get overwhelmed. Leverage different messaging styles to convey urgency and provide clear timelines so that customers understand the stakes.

Finally, ensure your customer notifications are recognizable and consistent with your brand and company voice. This creates a seamless subscriber experience and lets customers feel confident that these notifications are coming from you. 

 💡 Recommended reading: 10 dunning best practices

3. Leverage intelligent retries

If a credit card gets declined — due to a bank error, fraud flag, or insufficient funds — retrying it makes sense. But simply guessing when to retry can waste time and rack up gateway fees.

You can reduce the chance of getting another decline on the same card with intelligent retries, which uses machine learning to automatically retry credit cards. The technology schedules a transaction retry attempt at a time when it is more likely to succeed. That retry schedule depends on a variety of specific factors, such as decline codes, customer behavior, and location.

How to use subscription software for churn management

Recurly knows that subscriber churn is easier to control when you have the right tools to support your churn management strategy. That’s why we offer a range of solutions for subscription businesses looking to minimize churn and grow their business. 

Take advantage of best-in-class solutions for:

  • Automated billing and dunning communications: Bill customers automatically, and allow subscribers to include a backup payment option (such as a second credit card) on their plan, in case their first payment option falls through. Create customized dunning campaigns for every cohort you serve. 

  • Pricing and packaging management: Apply different pricing models, with flexible and personalized options like fixed, ramp, quantity, usage, tiered, stairstep, and one-time offers. Create individual or combined pricing models depending on your pricing strategy. 

  • Customer data management: Store all subscriber data in a single location, making it easier to track engagement and identify signs that customers are about to leave. Access dashboards and customizable reporting for full visibility into key metrics. 

  • Integration with your tech stack: Apply robust APIs to connect Recurly to the rest of your tech stack, including leading data warehouse applications — creating an end-to-end view of your subscription business.

By offering a 360-degree view of subscriber behavior, Recurly lets you build a better churn management framework for your business — then gives you the tools you need to act on those insights. 

Learn more about how Recurly can help your business reduce churn.