4 takeaways from our discussion about churn with Amy Konary, Subscribed Institute
Last editedJun 20222 min read
Find out some of the key findings from our discussion with Zuora on customer churn
Recently, we caught up with Amy Konary, Chair of the Subscribed Institute to talk through our latest piece of joint research with Zuora and the Subscribed Institute looking into the issue of churn. Amy was joined by Duncan Barrigan, Chief Product and Growth Officer and Ella Thompsen, Senior Product Marketing Manager to discuss the findings.
The report, How they pay impacts how long they stay, looks into how much your payment method of choice impacts churn and what you can do about it.
Watch the full discussion here to find out more.
Here’s some of the key findings that came out of our discussion.
1. There’s an important difference between voluntary and involuntary churn
When talking about the impact that payment methods have on churn, Duncan highlighted that, it’s important to understand the difference between voluntary and involuntary churn.
“What we’ve seen over the years is that when you start thinking about the different types of churn, that’s what’s really key to understanding why payment method makes a difference.
Really, voluntary churn is where people have chosen to stop using a product very actively, whereas involuntary is different. I will give my own example here. I've lost access to Spotify a number of times because of my credit card expiring and missing the multiple emails they sent me about it when I do actually like music and want to continue listening.
Involuntary churn when it’s related to payment failure is one of the core drivers of churn and needs to be understood.”
Duncan Barrigan
Watch the discussion to find out more.
2. For a healthy subscription company, between 70-80% of revenue comes from existing customers
Reaching that fly wheel of success that many subscription companies strive for comes not just from acquiring new customers, but monetising and strengthening your existing customers. Data around how to increase retention can help businesses to do that.
“The way that you generate that revenue is first by keeping those customers and then by having a strategy to grow the footprint of those customers with monetisation of that relationship. One of the things that you can do with the data that we’re presenting today is build that into your forecasting, your risk profile.” said Amy Konary
It’s not simply about acquiring the customer that makes you successful, it’s actually the ability to acquire, retain and monetise that gets you in that fly wheel that every subscription company aspires to and you need this kind of data to do that effectively.”
Amy Konary
3. Payment methods perform in different ways when it comes to payment failure
Your payment method of choice can have a significant impact on how many customers churn and that’s because payment methods perform differently when it comes to payment failure. Duncan suggests that multiple possibilities for failure increases your chances of customer churn.
“Different payment methods have secular different failure rates depending on how well they work. Within the card world you see different models on how they do it leading to different failure rates, especially internationally. Bank debit, on an underlying basis, has a lot fewer payments fail than cards do.
Basically, there’s a difference between a world where payments can fail for all sorts of reasons, which is what you have with paypal and cards, and then a world where a payment fails only because you don’t have enough money, where 80-90% of failures in bank debit come from.”
Duncan Barrigan
4. With recurring revenue and subscription based models, eliminate as much friction as possible
A seamless journey is how to get your customers as quickly as possible to the value of your product, suggests Amy when talking about keeping customers for longer.
“The key is to eliminate as much friction as you possibly can with some of these externalities. You want to get them using the service as quickly as possible so that your customers can find value in the service. Some of the other factors, in terms of how they pay, become really important in terms of building a picture of that subscriber's experience.”
Amy Konary
For more findings and information on how to manage payment related churn, watch the full session.
