Explore the data
What is a good churn rate?
Churn is a fact of life for any subscription business, and slight fluctuations in churn can make a significant impact on your current and future recurring revenue.
Comparative data by industry, audience, and price point helps gauge the health of your business. Recurly has compiled comprehensive data on churn, based on a sample of over 1,500 sites over 19 months, to provide benchmarks.
How do your customer churn rates compare?
Your churn rate is a critical indicator of the health of your subscription businesses. Monitor this rate closely for any unusual changes which could indicate a problem in your subscriber lifecycle.
Overall churn rate: 5.6%
Business churn rates vary widely, and minimizing churn is key to the growth and long-term success of any subscription business.
B2B
4.91%
B2C
6.77%
B2B vs. B2C: 4.9%, 6.8%
B2B benchmark churn rates are typically lower as they require a more complex, considered purchase process.
Voluntary
3.95%
Involuntary
1.38%
Voluntary vs. involuntary: 4.0%, 1.4%
Voluntary churn indicates customer dissatisfaction, while involuntary churn points to payment issues.
Minimizing voluntary vs. involuntary churn
Different factors lead to different kinds of churn—each requiring a specific approach. Improving customer satisfaction reduces cancellations that result in voluntary churn, while using decline management techniques minimizes payment declines that lead to involuntary churn.
We found that 66% of Recurly’s customers experienced decreases in their overall churn rate compared to the previous year. Reductions in involuntary churn were the primary reason for the overall churn rate decrease in 52% of those sites. We attribute this to the effective use of our decline management techniques–Account Updater services, dynamic retry logic, dunning management, and more.
66% of businesses saw a decrease in voluntary churn rates compared to last year, demonstrating that recurring revenue businesses need to address both types of churn to effectively reduce their overall churn rate.
Churn rate by industry
Different industries have different factors that influence churn behavior. Understanding these factors can help you formulate effective strategies to proactively fight churn and keep it at bay.
All Industries
Median
Churn Rates
Median
Voluntary Churn
All
-%
B2B
-%
B2C
-%
Involuntary Churn
All
1.89%
B2B
1.39%
B2C
2.16%
Key Insight
Churn tends to be seasonal, mirroring the school year
In general, B2C subscription businesses experience higher customer churn rates than B2B businesses. Digital Media and Entertainment, Consumer Goods and Retail, and Education industries have an average churn rate of 7.1%, while their B2B counterparts–Software, Business & Professional Services, and Healthcare–have an average churn rate of 5.8%. With lower prices for the subscriber, on average, B2C purchases present fewer cost risks compared to higher-priced B2B purchases.
Seasonality also plays a factor in customer churn rates, especially in Education when the academic year starts and ends at specific times. This can also be seen in direct-to-consumer subscription businesses, such as Box of the Month and other consumer goods that offer niche products that may be most relevant during certain months of the year.
B2C companies tend to experience wider variances in churn rates particularly at higher price points.
Churn rates by average revenue per customer (ARPC)
Undoubtedly, price impacts churn. Our research found that 71% of survey respondents cited price increases as the number one reason for subscription cancellation. Subscribers both signup and cancel more readily in categories with lower price points.
All Cohorts
Median
Churn Rates
Median
Voluntary Churn
All
-%
B2B
-%
B2C
-%
Involuntary Churn
All
1.89%
B2B
1.39%
B2C
2.16%
Understanding the different factors that drive churn is the first step. Taking action is the next step.
Methodology
Study examined a sample of over 1,900 subscription sites processing subscription billing on the Recurly platform.
The study period ran over 19 months (January 2021 to July 2022).
Transaction data was aggregated and anonymized; no personally-identifiable data was used in the study.
Churn rates are monthly, calculated by dividing the number of subscribers who churn during the month by the number of subscribers at the beginning of the month.
Study uses median, 25th, and 75th percentile values which eliminate outliers and provide a more accurate representation of the data.
The involuntary churn number excludes sites that may choose to leave a subscription active despite declined payments.
