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CHURN IS AN OPPORTUNITY, NOT A PROBLEM

INTRO

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Imagine this.. a company has a monthly churn rate of 5%. Which means they lose 45% of all customers each year. If you lower churn just by 1%, you increase MRR by 10% by the end of the year. If churn was solved already, growing revenue would've been harder. 

The reason why churn feels like a black-box is because there's a lot of theory but not enough tactical advice. This database seeks to change that. 

Why Churn Is Good?

Imagine two companies:

- Company A does 50M in MRR with a 5% monthly churn

- Company B does 50M in MRR with a 2% monthly churn

 

Which one’s better?

 

Your gut might say Company A. It's healthy. Churn is low.

 

But where’s the opportunity?

 

Suppose you’re brought in help grow revenue… but churn is already solved.

At a 5% of 7% monthly churn rate, that might be exciting.

 

Because if you barely move the needle and lower churn by 1%, you will increase MRR by 10% by the end of the year.

FIXING

CHURN

TIPS

AND

STEPS

TACTICS

Simple Cancel Flow

You can create advanced cancel flows but it doesn’t take a lot to get started. Stripe lets you redirect users to a custom link on cancellation. This is what OpenAI uses for feedback collection alongside Qualtrics.

Beginner

Failed Payment Retries

When cards fail due to reasons like insufficient funds, you can simply retry the card without emailing the customer. Mastercard and Visa have some limits how often you can retry. Retries are usually very impactful, and require zero engineering lift to turn on. 

Beginner

Cluster Feedback

Dump the CSV in any AI tool and ask it to cluster (example prompts). Assume some inaccuracies. 

Beginner

Usage Data on Cancellation

Show what users will lose at point of cancellation. Canva does this well showing how many pro features the user has used.

Beginner

Block Features

Sometimes the buyer and user of the product are two different people. Display in-app paywalls with card-updater on the same page. Offer grace periods instead of revoking immediately. DIY or use a solution like Churnkey

Beginner

Toggle On Auto-Renew

Users turn off auto-renew. Find creative ways to encourage them again (read Elena's article). Some companies roll over credits if you don’t let your subscription cancel.

Intermediate

Trial Extensions

If you detect low usage or a drop off after a trial, extend it automatically. If it's a paid trial, offer an extension at point of churn.

Intermediate

Friction Logs

Run friction logging with new hires to capture points of friction/errors. Ben Williams shares how to effectively run it. I ran one for Dropbox and can share privately. 

Intermediate

Refund Offers

When people ask for refunds due to budget reasons, make an offer. Chess.com does this when students churn. 

Intermediate

Multiple Senders

Send dunning emails via different senders to maximize deliverability and open rates. Prevents email threading. Easy to do via lifecycle marketing tools instead of sophisticated tools like Churnkey but they lack in certain ways. 

Intermediate

Grandfathered Users

Show grandfathered users or folks on a discounted plan the dollar values of what they would lose if they cancel. People often appreciate a disclaimer and will retain. 

Intermediate

Segmented Cancel Flows

Segment cancel flows based on user’s age, tenure, region, plan etc. A/B test and make different offer types to identify best for each segment. Available with Churnkey.

Intermediate

Abandoned Cancellations

Monitor people that visit the cancellation page but don't cancel. They're either dissatisfied if tenure is long or want to see how easy it is to cancel if they perform this within the first few hours of signing up.

Intermediate

Confirmation Step

Add a confirmation step, “Are you sure?” instead of immediately cancelling. This goes a long way and people often change their minds. Comply with laws like FTC's click to cancel so your flows aren't annoying to cancel. 

Advanced

Pauses

Let people pause their subscription and pick a custom pause length. Test different lengths to see what maximizes revenue for you. 

Advanced

Expiring Card Reminders

Do you send emails to users whose cards are about to expire? If so, test without it. Card tokenization has made it a thing of the past in some regions and can hurt more than it can help. 

Advanced

Localized Cancel Flows

If you have an international audience, localize the cancel flow in their language. Your brand marketers will love it too. Sometimes, required by law.

Advanced

Add a Sunk Cost

Give users something that prevents a cancellation. Like unused credits roll over if they stay subscribed. Having a sunk cost prevents cancellation. 

Advanced

Map Feedback to MRR Lost

Continuously map feedback to MRR lost so you can prioritize feedback by revenue whether it's feature gaps, bugs, or competitors. 

Advanced

Churn Risk Model

Run a churn risk model. Train it based on dozens of variables (tenure, LTV, features used..) so that the mdoel returns whether a user is likely to churn or stay. View tutorial, SaaS, research paper.

Advanced

Hidden Plans

If users don't use all your features, let them downgrade to a lite plan at the point of cancellation. No need to clutter up your pricing page with this. Canva, Adobe, Spotify all offer daily, weekly, monthly and yearly plans in-app but not on their pricing page.

Advanced

Skip Logins

Dunning emails and SMS links should take people to the card updater page. Without forcing a login. You’re fighting procrastination, more so with consumers, so each step is a drop off point. 

Advanced

Charge Early

Charge 30 days prior to renewal for yearly renewals (if it makes sense for your business). Website builders do this.

Advanced

Multi-Year Subscriptions

Offer longer than 1 year subscriptions. Domain registrars offer 2-3 year contracts because they know it’s an impulse purchase most of the time. 

Advanced

Prorated Refunds if Underused

Automatically reduce invoice if product is underused. Slack doesn’t charge for inactive users and it proved well. Some companies that cater to seasonal businesses auto discount subscriptions for a portion of the year. 

Advanced

Reactivation Campaigns

For products with an on-and-off use case or a low switching cost, reactivation campaigns help. Make a great offer and reduce friction best you can (eg, no logins required). Typically hard to pull off. 

Advanced

Assemble Trigger Moments

Remind people that they need to use you, outside of your product. Oreo used Got Milk and the entire desserts range.

Advanced

Force Network Effects

If your product has some sort of a network effect, don’t gate it. If it doesn’t, try to add one creatively. Eg, sharing your daily workout wasn’t done before Strava decided to make it cool.

Advanced

Gifts

Swag retains. Hard to scale. Tools: loopandtie or ongoody.com but you can also make it artsy like Figma.

Advanced

Transform A Drop Off Point

If your free tier has a limit that causes people to drop off (eg, Dropbox’ 2GB storage), let them raise this limit by helping you. Like a referral program. 

Product Changes

Secondary Products

If your core product has natural churn, layer on a secondary product. People use Zillow to buy homes. You don't purchase homes often. To offset that, Zillow launched Zillow Zestimate to increase retention. 

Product Changes

New Products

If your core product has natural churn and a definite day when they don’t need you anymore, get users to switch. Bumble launched Bumble for Work and Friends. Consider using a different brand though. 

Product Changes

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