If your business strategy hinges on the subscription model, 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.
Let’s look at some of the most important metrics you’ll need.
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.
Churn Cliff and Churn Plateau
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.
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. 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.
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 churn. Then you can tailor the subscriber experience accordingly.
Keeping an eye on cancellation reasons is also another way to help you identify product issues. For example, you might discover a production issue if you see a huge churn spike on a particular product at a particular time.
4. Customer Lifetime Value
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.
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.
How Stay Ai Helps Brands Easily Understand Their 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 the customer portal. You can use this information to identify high-value customers and proactively prevent churn
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.
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.
Ready to learn more about Stay Ai? Click the “Get Started” button below to book a chat with our team of subscription & retention experts.