Unlocking revenue: The power of Active Churn Recovery in boosting customer retention

Thanks to Raphael Shin and Garrett Harney for this post.

At Recharge, we understand the paramount importance of customer retention in the competitive landscape of subscription-based businesses. 

Today, we’re thrilled to share with you the early findings of one of our latest Flows releases: Active Churn Recovery. Designed to empower merchants to stand up targeted churn prevention strategies, Active Churn Recovery has already proven its effectiveness in reducing customer churn, enhancing satisfaction, and boosting profitability.

The cost of losing a customer

In the subscription business arena, losing a customer is a multi-faceted loss. Gartner predicts that 80% of a company’s future revenue will stem from just 20% of its existing customers. According to one study, it costs a staggering 16 times more to bring a new customer up to the same level as an existing one. 

The Harvard Business School report emphasizes that a 5% increase in customer retention rates can lead to a remarkable 25 to 95% increase in profits. In navigating the subscription business landscape, it is crucial to prioritize and invest in customer retention for long-term success.

Cheaper to retain than acquire

In the realm of SaaS metrics, customer lifetime value (LTV) is a key indicator of a company’s viability. Successfully acquiring new customers while efficiently addressing churn leads to a high LTV, indicating a thriving business model. 

As highlighted by Paddle, it’s economically wiser to invest in leveraging existing brand loyalty and improving the customer journey for retention than acquiring new customers. In this landscape, active churn recovery measures become imperative, mitigating the costs of churn and unlocking sustainable business success.

Active Churn Recovery sees early successes

After the release of the Active Churn Recovery flow earlier this year, we meticulously tracked and studied merchants and their results. These early results from the first three months of release are in line with our expectations that Active Churn Recovery is making a positive impact on merchant metrics, and we will continue to monitor the results over time to confirm that our findings hold at scale. 

Now, let’s dive into the results. Spoiler alert: Active Churn Recovery is a game-changer for customer retention. 

• Average active churn attempts saved rate: 11.26%. On average, merchants are able to save an impressive 11.26% of subscribers who indicated that they wanted to cancel their subscription.
• Consistent monthly active churn saved rate: 10%+ saved rate each month since the availability of the Active Churn Recovery flow in August. These results affirm the sustained effectiveness of Active Churn Recovery in preserving valuable customer relationships.

The data from the first three months of Active Churn Recovery’s release affirms our commitment to delivering impactful solutions for our merchants. As we continue to delve into the results, we remain dedicated to refining and optimizing our solution to ensure enduring success for our merchants when it comes to reducing churn.

What’s next for Recharge?

At Recharge, we’re committed to continuous improvement and innovation, especially when it comes to supporting merchant LTV growth through reducing churn. Moving forward, we’re refining the Active Churn Recovery experience for merchants, ensuring a seamless and intuitive process. We’re also actively exploring ways to address passive churn and failed payments to further fortify custom retention strategies for our merchants.

To stay in the loop on upcoming enhancements, be sure to check out our Help Center, and provide feedback via the Recharge Product Roadmap.