As a subscription merchant, it is crucial to track churn—the ecommerce metric that signifies when a customer cancels their subscription.
The more customers churn, the more you’ll have to work to bring in additional customers. And when customers churn sooner rather than later, you’re less likely to have strong subscriber lifetime value (LTV) metrics to grow your business.
Types of churn
When looking at churn, it’s important to note that there are actually two types of churn: active churn and passive churn. Both will have different approaches and strategies for mitigation.
Active churn happens when customers voluntarily decide to stop a subscription. To tackle active churn, merchants can visit the Customer Cohort dashboard (available on Pro and Enterprise plans) to see the exact reasons why customers decide to cancel.
Armed with that information, you can move forward to address these reasons for cancellation. Typically this involves incentivizing the customer to remain on the subscription in some way, either by providing a discount or offering alternatives to canceling—like swapping products or skipping shipments.
Passive churn, on the other hand, is typically involuntary and unintentional. It usually happens without the customer even knowing, oftentimes once it is too late and they have churned out of your subscription program.
There are a few reasons passive churn occurs:
- A credit card expires
- A credit card gets declined enough times
- Stock and inventory issues
- Product variants customers are subscribed to are removed from the store
Every single store has some level of passive churn since credit cards expire, get canceled, and get declined for various reasons. Many customers have multiple subscriptions going at any given time, that are often associated with different credit cards. With so much going on in their world of subscriptions, it’s easy to miss when one doesn’t show up or gets canceled.
Recharge has built-in features, called dunning, to help automatically tackle the issue of passive churn. With the dunning features, Recharge will automatically try to prevent passive churn from occurring in order to recover potential lost revenue.
Deploy automatic dunning features to mitigate passive churn
The most important piece to preventing passive churn is to let the customers know that there is an issue in the first place. That way, you can help them fix the issue if it is indeed a mistake and unintentional.
Make time to frequently review charge errors within the merchant portal so that you can see the most common causes of passive churn and work to clean them up quickly.
From there, it’s up to you as the merchant to make it as simple as possible for customers to make changes.
Use built-in dunning features to automatically mitigate passive churn
When it comes to mitigating churn, communication is crucial to resolving any issues.
For example, proactively alerting customers to payment issues allows them to take the right action to try their charge again, or change their credit card on file.
Recharge has various built-in dunning features that can be set up to automatically deploy to help prevent passive churn:
- Set Recharge settings to automatically retry orders at an interval of your choosing.
- Automatically email customers if the store has failed to successfully charge a customer’s card on file. These emails are also customizable under Notification Settings.
- Use RechargeSMS to automatically send an alert text message to your customers if a charge attempt fails.
- Deploy RechargeSMS to automatically create a customer support ticket when dunning occurs, creating the opportunity for a winback.
Alongside every feature, give your customers the transparency and flexibility to modify their own subscriptions.
Work with 3rd party integrations to prevent churn
Alternatively, merchants also have the option to use Churn Buster, a Recharge partner. Churn Buster optimizes failed payment recovery with a mix of charge reattempts, email campaigns, SMS, and other scheduled actions.
Track dunning metrics to optimize customer retention
With Recharge Enhanced Analytics, available on both Pro and Enterprise plans, merchants can track various dunning metrics, including:
- The number of those dunning in various cohorts
- The percentage of customers currently in dunning
- The percentage of customers who have been through the dunning process and remained active
- The percentage of customers who have been through the dunning process and passively churned
The available metrics come together to comprehensively tell the story of your store’s ability to retain customers. As a merchant, you want to continue to keep the percentage of customers currently in dunning low by actively managing what you can control—like inventory availability and product variant settings. You also want to ensure that optimal dunning processes are in place to see a high percentage of customers remain active after going through the dunning process.
At the end of the day, it’s important to consistently monitor these metrics alongside dunning processes in order to optimize for better customer retention.
Monitor customer churn & optimize dunning processes
As a subscription merchant, it is important to always monitor for customer churn.
To tackle active churn, understand the reasons customers cancel their subscriptions and make moves to address those concerns. Passive churn, on the other hand, is oftentimes involuntary and unintentional, making it more difficult to attend to. Recharge gives you the tools to identify reasons for passive churn as well as automatic dunning features to help you mitigate passive churn.
By actively focusing on decreasing active and passive churn, you’ll be well on your way to growing your subscriber base and business.
 Lifetime value (Recharge ecommerce glossary)