An in-depth explanation of churn in Rinsed analytics
Subscriber Churn:
Churn, or percent churn, is defined as the number of subscribers whose subscription service ends within a specific timeframe. The rate at which subscribers churn is a crucial indicator of how well a business retains its members and, by extension, its overall health and longevity in the market. At Rinsed, we track and analyze churn to help our customers better understand their members’ lifecycle, anticipate their needs, and enhance their services to improve retention.
Churn Rate:
Rinsed calculates churn rate as the total number of unique members who ended their membership during a given month divided by the total number of active subscribers there were going into that month. Our churn rate calculation looks at all the subscribers who were actually eligible to renew during a given month, and how many of them churned instead. As new members have their first renewal opportunity in the month following their signup, they are not included in the churn calculation for that month.
Types of Churn:
- Voluntary Churn: Occurs when a subscriber voluntarily cancels their subscription. Rinsed observes the 25th to 75th percentile range for average monthly voluntary churn rate as 3.5% to 5.7%
- Credit Card (CC) Churn: Occurs when a subscription ends due to payment failure, such as expiration or credit card declines. Rinsed observes the 25th to 75th percentile range for average monthly CC churn rate as 1.7% to 3.3%.
Advantages of a Monthly Churn Calculation:
- Member Decision Cycle: As mentioned above, monthly windows align with billing cycles and member decision-making processes.
- Operational Response Time: A by-month overview provides sufficient time for businesses to implement strategic changes and see their impact on member retention.
- Data Stability: Daily or weekly churn rates can be volatile and are subject to day-of-the-week effects, seasonal fluctuations, or one-off events. A monthly window can smooth out anomalies that might otherwise skew daily or weekly churn rates.
- Consistency: Our churn calculation is the same across all Rinsed customers, and this consistency is important for benchmarking against our quarterly industry reporting or other figures we provide.
Churn FAQs:
- Q: “How can I minimize my churn rate?”
- A: In the case of credit card churn, Rinsed provides dunning functionality to automatically message members whose payments have failed. Subscribers may not realize that their subscription payment was unsuccessful, and providing them with multiple reminders to update their information can be extremely effective in preventing their churn. In each dunning message, Rinsed provides members with a one-click link to update their payment information online, streamlining the process of retaining members who would otherwise churn.
For preventing voluntary churn, Rinsed offers a downsells feature for online cancellation attempts. This feature provides customers with alternative membership options (such as a lower-tier plan or a temporary discount) that may better suit their needs instead of losing them completely. For voluntary online cancellations, Rinsed also records data about the most common reasons for voluntary churn that can be used to educate future downsells and retention efforts.
Beyond these features, it’s also important to engage with your customers proactively. Regular feedback loops, exceptional customer service, and understanding the reasons behind voluntary churn can lead to improvements in service offerings and customer satisfaction, thereby reducing the overall churn rate. Rinsed currently provides functionality for highly-customizable communication with both members and retail washers through our Audiences tab, and a membership/retail loyalty feature is soon to come!
- Q: “One of my new locations has had a higher churn rate during the first few months since opening. Why is this happening?”
- A: High voluntary churn rates in the first months of a new location can be attributed to several factors. Primarily, it may take some time for a new location to establish a consistent and loyal member base. Early subscribers may try the service once out of curiosity without an intention for long-term commitment. It’s also possible that initial promotional offers attract customers who are less likely to become long-term subscribers once the promotion ends. Across all locations, we typically see the most significant decline in member retention within the first three months of a member’s lifetime. Thus, a location where all memberships are less than three months old is going to see higher churn. Over time, the churn rate for a new location is expected to decrease and level out.
- Q: “How are rejoins included in Rinsed’s churn calculation?”
- A: Since Rinsed’s churn calculation is a measurement of the rate of all churn events, regardless of future status, members who churn and later rejoin are also included in our churn calculation.