Churn management

Customer retention management is the process of keeping existing customers engaged and satisfied with your product or service to build long-term loyalty and reduce churn. This is done in various ways, such as through exclusive products, loyalty programs, payment flexibility, plan options, and more.

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To calculate your subscriber churn rate, use this formula:

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

Whether your churn rate is good or not depends on your industry and company type. Findings from Recurly’s benchmark report show that a 4% monthly churn rate is considered a good benchmark.

Direct-to-consumer (DTC) merchants face higher churn rates than business-to-business (B2B) providers.

When discussing churn benchmarks, it’s important to determine your revenue churn rate — the percentage of revenue lost to churned customers — to get the full picture. Here’s how your revenue churn rate is calculated:

Revenue churn rate = (Revenue Lost to Churn / Total MRR in the Period) x 100

This is a more accurate indicator of success if your business offers multiple products or tiers.

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To analyze customer churn, you should:

• Determine when you’ll consider a customer to be “churned” (is it after an official cancellation or could it be another scenario, like a 6-month pause?)
• Choose a timeframe to analyze (this can be monthly, quarterly, yearly, etc.)
• Calculate your customer churn rate and revenue churn rate
• Separate voluntary and involuntary churn
• Break both groups into smaller cohorts based on your goals
• Find patterns within the cohorts that point to pain points
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When you think of churn, you likely picture subscribers who cancel on purpose — but that’s just part of the story. Voluntary churn happens when a subscriber actively cancels their subscription, often due to dissatisfaction. Involuntary churn, however, occurs when a payment fails and the subscription is unintentionally terminated. It’s not about how they feel about your service, and it can be prevented with the right payment tools.

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Churn prediction is the strategy subscription businesses use to identify which customers are at a high risk of leaving based on their behaviors.

While no one can predict the future with perfect accuracy, Recurly Engage provides a clear advantage. It’s designed to give you a granular, real-time view of customer engagement, so you can identify the signals of voluntary churn and act on them. Here’s how it helps:

• Track usage trends: Go beyond a single data point. Engage allows you to see if a customer’s activity—like logins or specific feature use—is trending downwards over time, a powerful indicator of fading interest.
• Plan downgrades: Recognizing subscribers who move to a lower-tier plan, which can often be a precursor to canceling
• Build hyper-targeted segments: Combine these signals into precise, rule-based segments. For example, you can create a dynamic list of users whose usage is trending down and who have recently downgraded, allowing you to focus on your most at-risk cohort.

Why is this important?

The goal isn’t just to identify these segments — it’s to save them. Once an at-risk segment is defined in Recurly Engage, you can launch targeted campaigns with personalized offers, discounts, pause capabilities, or other messages designed to win them back and prevent churn before it happens.