September 12, 2012 | Authored by: Vindicia Team Blogs
Voluntary and Involuntary Churn: The Science of Customer Retention
An article earlier this week outlined the "7 P's of Customer Retention", describing a number of obvious and subtle levers to help businesses maintain long-term customer relationships.
The article, however, focuses primarily on how companies can overcome voluntary churn; in other words, customers who want to opt-out. There's an equally important area to focus on for all recurring businesses, which is the realm of passive or involuntary churn. Passive churn comprises of customers who want to stay with your service, but for some reason or the other, can't. These reasons often include payment failures, communication mishaps, or even chargebacks. We've discovered in our work with clients that this passive churn can range between 10-20% of your recurring transactions, assuming you do nothing about it. Needless to say, this revenue is the "easy" money that should flow into your coffers - not focusing on it is tantamount to throwing it away.
No matter the type of digital business you run, the science (and art) of customer retention needs to incorporate tactics for overcoming both types of churn. We provide a best practices guide on customer retention as well as webinars that cover different aspects of this issue, especially as it relates to your subscription billing function.
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