Voluntary vs. Involuntary Churn
What is Churn?
Churn is the term used to describe when a customer cancels their subscription or stops using a product or service. Churn is a normal part of any business, but it can have a significant impact on the growth and profitability of subscription-based businesses.
Types of Churn: Voluntary vs. Involuntary Churn
There are two main types of churn: voluntary churn and involuntary churn.
Voluntary churn occurs when a customer actively decides to cancel their subscription or stop using a product or service. This type of churn can be caused by a variety of factors, such as dissatisfaction with the product or service, a change in the customer’s needs or circumstances, or the availability of a competitive alternative.
Involuntary churn, on the other hand, occurs when a customer is unable to continue using a product or service due to circumstances beyond their control. This might include issues with payment (e.g. a credit card expiration or declined payment), changes in the customer’s contact information (e.g. a change of email address), or technical issues with the product or service.
On the Qonversion screenshot below, you could see that among the various stages of the subscription lifecycle, there are events that can be attributed to voluntary and involuntary churn.
Why is Churn Prevention Important?
Preventing churn is crucial for subscription businesses because it directly impacts the company’s revenue. When a customer cancels their subscription, the business loses the recurring revenue that the customer was providing. In addition, acquiring new customers is often more expensive than retaining existing ones, so reducing churn can also help to lower customer acquisition costs.
Churn Prevention Methods
There are several strategies that businesses can use to prevent churn.
1. Improving the customer experience
By providing excellent customer service and regularly soliciting feedback from customers, businesses can identify and address any issues that might cause a customer to consider canceling their subscription.
2. Offering incentives
Providing incentives, such as discounts or free additional products or services, can help to keep customers engaged and reduce the likelihood of churn.
3. Communicating with customers
Keeping customers informed about new features, updates, and other important information can help to keep them engaged and prevent churn.
4. Monitoring churn rates
Regularly tracking churn rates can help businesses identify trends and take action to prevent further churn.
How Qonversion Can Help
Qonversion is a tool specifically designed to help subscription businesses understand and measure churn, distinguish between voluntary and involuntary churn, and reduce churn rates. Qonversion provides very accurate data and insights, making it a valuable resource for any subscription app looking to reduce churn and improve customer retention.
With Qonversion, app owners can easily trigger automated push notifications to customers who are cancelling their subscriptions or experiencing billing issues. These notifications can be fully customized to include paywalls and specific messaging, and can be used to win back up to 10-20% of lost revenue. Qonversion’s automated push notifications can be used in conjunction with the platform’s analytics mode, without the need for additional integration. This makes it simple for app owners to effectively communicate with their customers and address any issues that may be causing churn.