Involuntary Churn: Let’s stop it!

Just when you think that your business is thriving, churn may pop out of nowhere which can start hampering your business, well let’s say churn things up!

As a subscription business you are probably already looking at churn and how it is affecting your business; but there are times when your customer churns without intending to stop the services known as “involuntary churn”.

Involuntary churn is mostly related to payment cycles. When it comes to non-subscription businesses which do not involve recurring based revenue model, payments are one time- details are captured, authorized and you are all set. But when it comes to subscription ecosystem payments are complex, because the payment details are captured once and used for the entire subscription life cycle.

The trend says that involuntary churn impacts 16% of the subscribers

Let’s understand better with an example.

Pooja, who is interested in web series and movies, is a subscriber of a leading OTT platform. She is a fashion designer who runs her fashion label. Her work requires a lot of travel and she is away every alternate week.

Her card details were captured during her initial sign up process and regular payments were carried out using that information. Due to her busy schedule, she had forgotten to update her card details, which had expired, because of which the recurring payment failed.

Such a type of declines leads to a default situation and if nothing is done to recover her payment or more importantly her attention, the business loses an interested subscriber. This is a typical example of an involuntary churn.

Statistics state that the subscription businesses lose a major chunk of revenue on a monthly basis due to involuntary churn.

Research findings:

  • Involuntary churn accounts for more than 30% of the churn
  • It doesn’t only affect your least engaged customers but affects all of them
  • It can hamper customer relationships
  • Further, 15 unhappy customers will tell 15 more people, which leads to higher churn rate, especially in the age of social media

How can a subscription business take control of involuntary churn?

To manage involuntary churn, a business must take necessary steps to address unwilling churn, which in turn will help them reduce/stop subscriber churn. The following illustration depicts the points of involuntary churn & methods to stop them:

  • Dunning should be planned in accordance to the payment date (ideally before a week)
  • Notification about the expired cards before the payment run can be sent through an in-app pop-up or any other communication medium (email, SMS)
  • The subscription can be kept on hold, post the payment date for a limited time period
  • Automatic re-trying after the payment failure
  • Notifying the associated card provider on first try failures

In a nutshell being, proactive and using the right set of tools is most important to decrease the payment failures, in the cases where a subscriber is interested to pay for her services but can’t due to various reasons. On the brighter side involuntary churn can be avoided or curbed through a structured approach.To know more visit: http://magnaquest-com.stackstaging.com/products