Cancellation vs. Churn: What’s the Difference and Why It Matters

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Churn Webhooks cancellation

Recurly-Churn-Cancellation-Image.pngDo you know what your subscriber churn rate is? How about the median churn rate for your industry? Do you know the difference between churn and cancellation? And perhaps most importantly, do you know what you can do to try to prevent a customer who has cancelled from churning?

Our customers frequently have questions about calculating churn, understanding the impact of churn, and how to minimize both voluntary and involuntary churn. While there are some best practices for addressing different types of churn, we always emphasize that there is no magic, never-fail way to mitigate churn but you can use the data in Recurly to gain insights. A good first step is to take advantage of the tools Recurly gives you to fight churn.

Cancellation Does Not Equal Churn

One key way to minimize churn is to recognize that cancellation and churn are NOT synonymous. When a customer cancels their subscription, this may lead to voluntary churn, but it doesn’t have to. Instead, this period between the customer cancelling and the actual expiration of the subscription (churn) can be an opportunity for you to win the customer back.

By identifying a customer at the moment they cancel, you can take action to encourage them to reconsider and reactivate their subscription BEFORE it expires. For example, you might send customized emails with more information about how to get value out of your service to try to sway the customer. Or you might offer a coupon (discount) to entice the customer to stay and reactivate their subscription. These are some ways a business can address voluntary churn that results from a customer cancelling.

Recurly can help you identify these customers at the time they cancel in a few different ways:

  • Webhooks – Recurly sends a webhook at the moment a customer cancels their subscription. This webhook will contain valuable contact information such as account email, account name, account code and company name as well as information about the subscription that was canceled, such as the amount, activation date and time and trial start and end date.
  • Recurly Admin Console – Recurly indexes all subscriptions and provides quick filters to identify the state of the subscription. Simply filter by Canceled to view the subscriptions that are in a canceled state.

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  • Exports – Recurly allows you to export all subscriptions with the status of Canceled. Use the unique account code on the export to surface account contact information about that customer within Recurly.

While preventing cancellation is one proactive tool to prevent churn before it happens, it is unrealistic to believe you can prevent all voluntary churn. Therefore, on the retroactive side, it’s important you dig into your churn numbers, both your own numbers (such as internal targets or trends over time) as well as industry benchmarks.

In the next part of this series, we will talk about some churn benchmarks to equip you with knowledge of where you stand in the market as well as methods for examining your subscriber churn rate in greater detail. This will enable you to take targeted actions to sustainably reduce your rate of churn.

To learn more about how recurly can help you reduce churn, contact us.  

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