The single biggest source of churn might surprise you.
It’s not a communications issue, or a product/market fit issue, or even an onboarding problem.
The biggest driver of churn in most consumer subscriptions is what’s known as passive or involuntary churn.
Involuntary churn is when a customer is canceled due to a payment issue or other technical problem.
According to ProfitWell CEO Patrick Campbell, a recent guest on Subscription Stories, involuntary churn makes up 20-40% of overall churn.
Many organizations don’t even track passive churn, and that’s a mistake, because there are ways to manage.
Today’s guest, Paul Larsen of Optimized Payments, is one of the leading experts on “card not present” payments, and works with many of the largest subscription businesses in the world on churn management. He launched his career at Reader’s Digest, one of the earliest and largest subscription publications in the world. When Paul started, churn management focused on getting people to renew their subscription by mailing in a check. Since then, he has been deep in the world of credit cards, debit cards and alternate payments, helping subscription merchants reduce costs and increase customer retention.
In our conversation, we talk about why so many good subscribers end up in the dreaded “do not honor” bucket, who should own passive churn in the organization, and how to bring together the right team to manage involuntary churn.
Excerpt:
Subscriptions are great. We love them, but there's promise and peril associated with them at all times. We are joined by Paul Larsen of Optimized Payments, one of the leading experts on "card not present" payments. He shares his vast knowledge about working with the largest subscription businesses on churn management as he discusses the reasons behind the dreaded "do not honor" bucket and how to build the dream team to address this involuntary issue.
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