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Subscription churn is like the hole in the bucket you've been pouring water into constantly. You’re adding new users every week. But revenue’s flat. Why?
Because users are slipping away... churn is eating your growth.
Every time a user cancels, you lose more than money - you lose momentum. And it’s not just the ones who leave on purpose. Expired cards, failed payments, silent drop-offs -they all add up.
You fix product bugs. You tweak pricing. But if you’re not fixing churn, you’re just spinning your wheels.
At Propel, we've come across reputed brands facing high churn. They were doing everything right on the surface: shipping features, running ads, hitting growth targets. But churn kept eating their revenue from the inside.
We fixed it, and it's no hack! It's a strategy that actually works.
If you're drowned in churn and tired of guessing - this guide is for you. It breaks down what churn really is, why it happens, and how to stop it - fast.
No fluff. Just facts, fixes, and real-world playbooks.
Subscription churn or customer churn rate means the rate at which customers cancel or stop using a service over a set time. This churn rate is one of the most important numbers for any subscription business. It affects your revenue, growth, and how long customers stick around.
If your customer churn is high, you're losing money fast. For example, if 1 million people pay $10/month and you have a 10% churn rate, that’s a $1 million monthly loss. That’s why tracking churn is so important - it shows where your business is leaking money.
Unfortunately 80% of customers in subscription-based services cancel their subscriptions within the first three months.
Watching your subscriber churn helps you spot weak areas in how you keep customers. It also helps you plan future revenue and get more value from each person. The lower your churn rate, the stronger your subscription business becomes.
While the term may vary, membership churn rate is the same as subscription churn - just used in subscription box services, gyms, or clubs. It's the rate at which a subscription ends due to cancellations or inactivity.
Churn occurs in two main ways. Knowing both helps you fix the real problems.
Voluntary churn happens when a customer chooses to cancel. This might be because they don’t see value, find a better deal, or want to save money. When churn occurs like this, it usually means the experience didn’t meet their needs.
Involuntary churn means the customer didn't want to leave. It’s often due to failed payments, expired cards, or tech errors. This kind of churn points to system or billing issues -not unhappy users.
These types of churn need different fixes:
Whether it’s voluntary or involuntary churn, knowing how churn refers to each case helps you keep more users for longer.
This is when a customer says “I’m out” - they cancel on purpose. Think someone clicking “cancel subscription” after feeling like the service isn’t worth it anymore.
The customer didn’t mean to leave - they just forgot to update their card. It’s like your Spotify getting paused because your payment failed, not because you wanted to stop listening.
This shows how much business you lost - no sugarcoating. If 100 people leave, gross churn says “yep, you lost 100,” without caring how many new ones joined.
Net churn says, “You lost 100, but you gained 120 - so you’re actually up.” It tells the full story by balancing cancellations with new growth or expansion revenue.
When a customer drops one product but keeps another. Like canceling your company’s email tool but still using their analytics software - it’s not a goodbye, just a shift.
This happens when a customer finishes their 12-month contract and decides not to renew. Like a phone plan that’s up and they choose not to sign again.
No contracts, no obligations - just cancel anytime. Think monthly boxes or Netflix - customers can leave whenever, and you won’t see it coming unless you're tracking it.
Your subscriber churn rate doesn’t just affect your revenue - it reflects how valuable your product feels to users. A lower churn rate often leads to higher retention, stronger word-of-mouth, and a better brand reputation.
It also leads to stronger subscription retention and higher subscription revenue.
Escaping the truth won't help, look at churn into its eyes. For most industries, tracking monthly and annual churn rates is essential to identify where churn occurs and how to fix it.
Remember: churn rate is crucial to measure, understand, and fix. It’s not just a number - think of churn rate as a signal. If customers cancel their subscription, it means something in your offer, experience, or value isn’t working.
As a subscription business owner, if you’re not tracking churn, you’re not steering the business. You're reacting to it. Tracking churn is very important for subscription businesses because -
The standard churn rate calculation refers to the rate at which subscribers leave during a given period, so you can calculate the churn rate with these formulas-
Rate of Churn refers to the percentage of lost customers in a given period.
To grow any subscription business, you must know how to calculate churn the right way. The most common method is:
Churn Rate = (Lost Customers / Total Customers at the Start of the Period) × 100
This formula helps you calculate churn rate and understand how many users cancel over time. In simple terms, churn rate is the percentage of customers who stop using your service during a set period.
Let’s say a subscription company starts the month with 2,000 users and loses 50: The monthly churn rate would be -
Churn Rate = (50 / 2000) × 100 = 2.5%
This means 2.5% of customers left during the month.
If a business begins the year with 10,000 customers and loses 1,000:
Churn Rate = (1000 / 10000) × 100 = 10%
That’s a 10% annual churn rate.
These churn rate calculations are simple but powerful.
When you calculate your churn rate measures consistently, you can track customer drop-offs and spot problems in retention. Understanding churn rate over time gives your team the data it needs to take action.
For any subscription business, it’s important to check subscription churn by using these formulas regularly - not just monthly or yearly, but whenever you launch new features or change pricing.
While churn is a key number, it's not the only one. These extra metrics help round out your analysis and show the full impact of customer loss.
This tracks lost revenue - not just lost users.
Revenue Churn Rate = (Lost Revenue / Revenue at Start) × 100
Example: If you lose $10,000 in revenue from a base of $100,000:
Revenue Churn Rate = (10000 / 100000) × 100 = 10%
This metric is critical for understanding financial impact in churn rate for subscription services.
This flips the churn rate formula to show what percentage of customers stayed:
CRR = (1 - Churn Rate) × 100
If churn is 10%, retention is 90%.
CLV refers to customer lifetime value. Higher customer retention allows you to achieve a higher customer lifetime value. CLV estimates the total revenue one customer will bring over time. A high churn rate can sharply reduce CLV and hurt your long-term profits.
This happens when your upgrades, cross-sells, or add-ons bring in more revenue than you lose from canceled users. It’s a positive sign - even if some churn still exists.
Understanding why customers who cancel their subscription leave is the first step to fixing churn. Let's figure it out right away -
Not every user cancels for the same reason - so why send them the same message?
One-size-fits-all communication might work when you’re small. But as your subscriber base grows, it stops resonating. Churn occurs when customers feel overlooked or misunderstood, it’s not always about your product - it’s about how you talk to them.
Here’s the truth: personalizing across segments, lifecycle stages, and behaviors isn’t a DIY task anymore. Most teams don’t have the time or tools to do it right, let alone test and optimize at scale.
And the result? Higher unsubscribe rates, poor engagement, and a slow but steady decline in recurring revenue.
To improve your company’s churn rate, Propel can help you do more than basic automation. You need smarter segmentation, sharper timing, and messaging that feels human - at every touchpoint.
If you're not yet measuring subscription churn by behavior, you're missing the patterns that drive loss. The impact of churn doesn't just show up in dashboards - it drags down your average retention, increases acquisition pressure, and chips away at your brand trust.
If you’re serious about reducing churn, start with customer feedback. It’s one of the fastest ways to uncover the common causes of subscription churn - especially when churn occurs for reasons you might not expect.
A case of voluntary churn often shows up in feedback - users say what pushed them away.
But involuntary churn doesn’t speak up - use signals like failed payments and silence to catch it early.
Churn happens when customers feel let down - either by your product or your systems. Listening to feedback is how you fix both.
One of the most overlooked reasons for churn? Competitors doing it better.
To stay competitive and keep a low churn rate, highlight your unique value. Innovate fast and often - before someone else gives your users a reason to go.
Let’s be honest - if your product or service isn’t delivering, churn is expected.
Regular product reviews and churn analysis help you catch these gaps early. Fixing them leads to higher retention and stronger subscription revenue.
Churn isn’t just a number - it’s a signal that something’s not working. When subscribers leave, you’re not just losing revenue, you’re losing the relationship. And fixing it takes more than a discount code. To reduce churn, you need a smarter approach - one that’s proactive, personalized, and built around the customer journey.
Generic messages don’t retain anyone. Personalized communication is what keeps subscribers engaged and loyal. If you’re working with a retention marketing specialist, they’ll help build campaigns triggered by user behavior - like abandoned carts, inactivity, or plan fatigue.
That’s how you stay relevant. Think Netflix showing you what to watch next based on your last binge. Think your favorite meal kit letting you skip a delivery without canceling. It’s all about creating experiences that feel tailored, not automated.
Rigid subscriptions force customers into an all-or-nothing decision - stay or cancel. And most will cancel. But if you give them flexibility, you give them a reason to stick around.
Let them pause instead of quit. Let them downgrade instead of disappear. If payment fails, don’t just mark them as churned. Retry, remind, and make it easy to update billing details. The easier you make it to stay - even if they need a break - the less likely they are to leave for good.
Your product might be great, but if customers don’t see value early, they won’t stay. A solid onboarding experience - like guided walkthroughs, quick tips, or welcome emails - makes sure new users hit the ground running.
And when something goes wrong, fast, friendly support can be the difference between a saved account and a lost one. Don’t just wait for problems. Follow up, check in, and show your subscribers they’re supported from day one.
People leave when your product stops being useful. Regular updates, new features, and relevant content show that you’re listening and evolving. It doesn’t have to be a huge relaunch - sometimes, a small improvement based on user feedback is all it takes to keep someone from churning.
Retention doesn’t stop at month one. Long-time subscribers should feel like insiders, not afterthoughts. Offer perks, discounts, or early access to keep loyalty high. A subscriber who feels valued is one who stays - and tells others.
Misaligned expectations are a churn trap. If you promise “24/7 support” in your marketing, make sure you actually deliver it. When customers feel misled, they don’t complain - they cancel. Set clear expectations from the start, and make sure the experience matches what was promised.
A strong product is great. A strong community is better. When people feel like they’re part of something - whether that’s a user group, a Slack channel, or just a space to share ideas - they’re far less likely to leave. Community creates emotional stickiness, not just functional value.
Churn doesn’t have to be forever. Reach out to past subscribers with offers, new features, or simple check-ins. Many people leave not because they hated your product - but because the timing wasn’t right. A well-timed win-back campaign can bring them back cheaper than finding someone new.
Data shows what’s happening. Feedback tells you why. Use exit surveys, NPS, and in-app questions to understand the root causes of churn. If users consistently drop off after a certain step or time frame, that’s your fix-it zone. Don’t wait for problems to pile up - catch them while they’re small and fixable.
Sometimes, it’s not your pricing or product - it’s your stack. A Martech Audit helps uncover issues in your retention flow, like broken automations, missed triggers, or poor segmentation.
If your tools aren’t working together, your customer experience will suffer - and your churn will climb. A proper audit connects the dots between data, tech, and strategy so nothing falls through the cracks.
Churn occurs when a customer stops using your product or service, either by choice or due to issues like failed payments.
Remember: churn in the context refers to the rate at which customers cancel their subscription, and churn rate is an important signal of customer satisfaction.
Managing subscription churn rate isn’t just a metric - it’s a strategy. Whether you're running a SaaS platform, a subscription box service, or a streaming app, churn can be expected. A quick MarTech audit gives you insight into what’s working and what needs fixing.
A consistently high churn rate can erode revenue, inflate acquisition costs, and slow your growth. On the flip side, a good churn rate combined with high subscription retention can lead to predictable revenue and stronger customer lifetime value.
To build long-term success, focus on strategies that help you:
For subscription companies, success depends on how well you can reduce churn while increasing value for your users. Every percentage drop in churn = a big jump in subscription revenue.
Subscription churn refers to customers canceling their subscriptions, directly impacting revenue, customer retention, and business growth.
Use the formula: (Lost Customers ÷ Total Customers at Start of Period) × 100 to measure churn monthly or annually.
Poor customer experience, pricing issues, payment failures, lack of engagement, and competitive alternatives often drive high churn rates.
Improve user experience, optimize pricing, use automated dunning management, and leverage customer feedback to lower churn rates.
Subscription management software, AI-driven analytics, and automated payment recovery tools help monitor and mitigate churn effectively.
Use our free Retention Impact Calculator to see how much revenue you’re leaving on the table — and how much you could unlock by improving retention.
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