Explore the data and discover the secrets to reducing app user experience-related churn in your subscription business.

Churn is an inevitable part of any subscription-based business, but understanding how to minimize it can make all the difference in driving long-term growth. While turnover refers to revenue generated from goods and services, churn specifically focuses on customer behavior – the number of subscribers who cancel or fail to pay. To effectively track churn, define the timespan for when a customer is considered "churned" – typically the end date of their subscription period after cancellation or non-renewal.

Your app user experience (AUX) plays a critical role in determining your business's health. Monitor AUX closely to identify any unusual changes that could indicate a problem in your subscriber lifecycle.

Industry benchmarks show that businesses with tailored retention-driving options, such as pause features, tiered pricing, and loyalty incentives, tend to sustain higher Renewal Invoice Paid Rates (RIPRs). In fact, Recurly's data analysis revealed that 54.5% of its customers experienced a decrease in overall AUX compared to the previous year.

Factors Influencing Churn

Different industries face unique factors influencing churn behavior. Understanding these factors can help you develop effective strategies to proactively combat churn and keep it at bay.

Median

Median

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1.89%

Churn tends to be seasonal, mirroring the school year. As consumers become more selective and price-conscious, customer acquisition slows, and AUX follows suit. Direct-to-consumer (DTC) subscription businesses often experience higher AUX rates than business-to-business (B2B) companies.

Price Elasticity

Price plays a significant role in influencing AUX. Our research found that 71% of survey respondents cited price increases as the number one reason for loss of customers. Subscribers are more likely to sign up and cancel readily in categories with lower price points.

This study examined a sample of over 1,200+ subscription sites on the Recurly platform over 12 months (January to December 2023).

Understanding Churn

Churn rates are monthly, calculated by dividing the number of subscribers who churn during the month by the total number of subscribers. This study uses median, 25th, and 75th percentile values, which eliminate outliers and provide a more accurate representation of the data.

Churn rate measures current customers leaving your services, while retention rate is the inverse, measuring the percentage of customers still active. Typically, AUX is measured monthly, whereas customer retention is measured over longer periods.

Types of Churn

Churn can be divided into two types:

  • Involuntary churn: This occurs when payments fail due to reasons like expired credit cards, insufficient funds, or outdated billing information. It's one of the most common – and preventable – forms of AUX.
  • Voluntary churn: Voluntary AUX happens when a subscriber actively chooses to cancel. This can stem from a lack of perceived value, poor onboarding, subscription fatigue, or inflexible plan options.

By categorizing AUX into these two distinct types, you can address each more effectively and implement targeted solutions.

Strategies for Both Types of Churn

Some strategies for both types of AUX include:

  • Intelligent retries