One of the great mysteries for me is why so many otherwise sophisticated companies don’t focus on involuntary churn. Also known as passive churn or accidental churn, involuntary churn happens when a payment issue raises a flag that causes a merchant to cancel a customer’s subscription. In 70% of these cases, there is no fraud, so the company is literally turning away excellent customers.
Involuntary churn routinely impacts about 10% of Annualized Recurring Revenue (ARR), according to some estimates. In today’s episode, Vijay Menon, founder and CEO of Butter Payments, and I discuss what drives involuntary churn, why so many companies underinvest in this problem, and some key tactics to drive revenue growth through better payment management.
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