4 Essential Churn Metrics to Analyze & Address Subscriber Churn

If your business strategy hinges on a subscription model, subscriber churn is always going to be a big concern. You need the right retention strategy — and you can get there, but not without really understanding and analyzing your existing churn. 

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What is Subscription Churn?

Subscription churn, simply put, is the rate at which customers cancel their subscriptions within a given period. It’s a critical metric for any subscription-based business because it directly affects your revenue and growth potential. Churn can provide insights into customer satisfaction, product quality, and overall business health. You can then make informed decisions to improve customer retention by monitoring your subscription business churn.

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How to Calculate Subscriber Churn

Calculating subscriber churn might seem straightforward, but it requires attention to detail to ensure accuracy. Here’s a step-by-step guide to help you calculate it correctly:

1. Determine the Time Period: Decide the time frame over which you want to measure churn. This could be monthly, quarterly, or annually, depending on your business model and subscription cycle.
2. Count the Total Subscribers at the Start
3. Count the Subscribers Who Churned

Use the following steps to calculate the churn rate:

• Choose a time period to evaluate, with a set number of subscribers at the beginning of the period, and a set number of subscribers at the end of the period

• Subtract the total number of subscribers at the end of the period from the number of subscribers at the beginning of the period

• Divide this new value by the number of subscribers at the beginning of the period

• Multiply this new value by 100

For example, if you wanted to evaluated the number of churned subscribers in a given month, and you began the month with 1,000 subscribers and 50 of them canceled, subtract 950 from the original 1,000 to get 50. Divide this value by the original 1,000 to get 0.05, and then multiply by 100 to identify your churn rate of 5%.

This percentage represents the proportion of your subscribers who have left during the specified period, giving you a clear view of your churn rate in a subscription business.

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Why Measure Subscriber Churn?

Understanding and measuring subscriber churn is vital for several reasons.

1. Revenue Stability: High churn rates can lead to significant revenue loss. By keeping an eye on churn, you can implement strategies to retain customers and ensure steady revenue streams.

2. Customer Insights: Churn analysis helps you understand why customers are leaving. Whether it’s due to product dissatisfaction, pricing issues, or competitive offers, knowing the reasons behind churn allows you to address them effectively.

3. Cost Efficiency: Acquiring new customers is often more expensive than retaining existing ones. By reducing churn, you can lower your customer acquisition costs and allocate resources more efficiently.

4. Business Health: A low churn rate typically indicates a healthy business with satisfied customers. It’s a sign that your product or service is meeting customer needs and expectations.

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4 Essential Subscriber Churn Metrics for Subscription Businesses

Let’s look at some of the most important subscriber churn metrics you’ll need.

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1. Churn by Cohort

If you’re only measuring churn by calendar month — 15% in July, 14.5% in August, and so on — you’re missing another valuable set of data points:

– The length of time your subscribers stick around
– Which orders they’re most likely to cancel
– Churn rate by number of shipments
– How many subscribers cancel after the first order but before the first recurring shipment

Bottom line: you need to identify the key drop-off points. Those will be pretty unique to every brand, but after working with hundreds of of them, we’ve noticed some recurring behavior patterns that can be helpful to understand. 

Brands will typically have two distinct points in the subscriber lifecycle that are especially important as you optimize your program: the churn cliff and the churn plateau.

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Churn Cliff & Churn Plateau Definitions

The churn cliff is your steepest drop-off point. We see nearly across the board that the churn cliff happens early in the subscription lifecycle: typically between the initial order and the first recurring shipment. 

The churn plateau is the point in the subscriber lifecycle that churn — you guessed it — plateaus. After that milestone, the odds of churn decrease significantly. 

So essentially, we can think about the subscription lifecycle as a funnel to push subscribers from the first order, through an obstacle course, to the churn plateau and beyond.

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2. Churn Rate by Product/SKU

You’ll also want to slice and dice your churn data by product. 

Let’s say you run the subscription program for a wellness brand, and your overall churn rate is 15%. What that doesn’t tell you? Subscribers to Product A might be churning at a rate of 7%, while Product B’s churn rate is much higher.  

This is important to know because, for one thing, it can identify issues with product quality, shipping, manufacturing, or a whole host of other things.

But this data can also surface patterns in preference. 

To build on the previous example, imagine your drink mix powder comes in two different flavors: mango and chocolate. 

Product	Churn Rate
Chocolate Drink Mix Powder (A)	7%
Mango Drink Mix Powder (B)	23%
Overall Churn Rate	15%

If you see a much higher churn rate on the mango flavor, you might want to try to get the chocolate alternative in front of more people, sooner.

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3. Churn by Cancellation Reason

It’s not enough to know “how many.” You need to know why.

This is how you’ll know if too many of your customers are leaving because of price, or if there are specific products in your catalog that typically see more chIt’s not enough to know “how many.” You need to know why.

This is how you’ll know if too many of your customers are leaving because of price, or if there are specific products in your catalog that typically see more churn. Then you can tailor the subscriber experience accordingly.

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4. Customer Lifetime Value (LTV)

You pay so much to acquire your customers. You have to understand how valuable they really are. Your customer lifetime value needs to be high enough for you to make a significant return on your investment. If it’s not, you may need to restructure your subscription program or tweak some other pieces of your strategy.

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Take Action on Data-Driven Insights to Keep Subscribers Longer

Leverage your churn data to identify patterns, understand the underlying reasons for customer behavior, and personalize the user experience accordingly, so you’re not just responding to churn — you’re addressing it proactively. 

Stay AI Helps Subscription Businesses Easily Understand & Reduce Subscriber Churn

Stay AI can deliver a wealth of insights into your subscription business, helping you improve your program and reduce churn.

Detailed Customer Insights: Understand your subscribers’ behavior, including purchase history, product preferences, and engagement with our customer portal. You can use this information to identify high-value customers and proactively prevent churn.

Cancellation Reasons: Hear directly from your customers why they’re canceling their subscription, so you can optimize your program based on trends or tailor follow-ups and winbacks based on their reasons.

Churn Forecasts: Stop spending so much time pouring through your data when with Stay you can easily see which customer segments are at risk, so you can take proactive actions to improve your program.

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