Glossary

Churn

Churn is a key measure of customer attrition. Subscription churn is calculated as the number of customers who discontinue the subscription service during a specified time period, divided by the total number of customers at the start of that period. Subscription churn is an operational metric used to gauge the overall health of a subscription business. Subscription churn is measured in units or dollars.

Subscription churn

There are two different types of subscription churn:

  • Active subscriber churn: This measures the active attrition rate of subscribers. When subscribers purposely cancel their subscription or recurring service because they no longer want it, that is called active subscriber churn.
  • Passive subscriber churn or involuntary churn: When a subscriber wants to stay with the subscription service but cannot do so, that is called passive subscriber churn or involuntary churn.

Billing problems are by far the leading cause of passive subscription churn. The recurring transaction for the subscription fails. Problems can include expired cards, exceeded limits, cards temporarily blocked, and more. When a transaction fails, the payment processor usually returns a code indicating the reason.