Customer Churn and Retention: Top 25 Stats You Need to Know

We listed the top 25 stats every SAAS, online course, or subscription box business owner should know regarding customer churn and retention.
Written by: Tara Horstmeyer

As a subscription business owner, ‘customer churn’ is a term you’re all too familiar with. Especially, no one likes to think about the rate at which they’re losing customers. But, in order to prevent customer churn and improve your churn rate (a.k.a. the percentage of customers you’ve lost over a given time period), you’ve got to know your numbers. The pandemic has affected the subscription industry, and now more than ever, customer retention strategies needs focus and attention.

We’re not just talking about the numbers relating to your SaaS or other subscription-based business. Having a general overview of customer churn rate statistics will help you to make more sense of what’s happening in your business. Understanding how your customer retention and churn fit into the bigger picture will be a massive help when creating your subscription churn strategy and your benchmark for customer experience.

Before looking at the customer churn rate numbers outside of your business, are you sure about what’s happening in your business? What level of brand loyalty do your existing customers have?

As experts in payment recovery, we find that most business owners we speak to have an ‘a-ha’ moment when they calculate the true cost of customer churn.

If you want to find out the ins and outs of your customer churn rate and their lifecycle and want help extending their lifetime value , book a free coaching session with us today. Read our no-nonsense guide to customer churn for a quick-fire rundown of this critical business metric.

Churn – in all its forms – is directly related to revenue and is also a useful metric indicator of how happy your customers are with your company, product, and service. Here are customer retention and customer churn rate stats you should know to help you make better business decisions.

What is Customer Retention?

Customer retention percentage essentially is your company’s ability to keep its customers on their customers journey and maintain company-consumer relationships.

Customer Retention Statistics

If you can easily acquire new customers, you might think to ask why you should bother focusing on customer retention? Customer acquisition seems easier in hindsight. In fact, customer retention is the Achilles’ heel of lots of businesses because it takes a long-term focus on building a churn-reduction company culture. In essence, this means that customer-boosting customer retention and reducing churn should run through every aspect of your business – from onboarding to customer support.

It’s important to put effort into retaining a high customer retention percentage and satisfying the customers you already have as it’s less costly to keep those number of customers happy. Customer acquisition cost is generally higher than the cost of maintaining them. This means more profit added to your bottom line.

So, what can you do to improve your customer retention? The answer is customer success. Here are some statistics to give you some benchmark for your customer churn rate:

1. Forrester Research, Inc. found that 69% of people surveyed said that they choose to shop more frequently at retailers with consistent customer service. In order to prevent customer churn, a better program for supporting your subscribers needs to be in place.

2. Forrester also found that the most important thing a company can do to provide a quality customer service experience (according to 66% of people asked) is to value customer time.

3. PWC found that 32% of the people they asked said that, after just one negative experience, new and current customers would stop doing business with a brand or company they’d previously loved despite previously excellent customer service.

4. Not only does providing a great experience help you to keep customers but you can change your pricing and charge more for your service. According to PWC, companies that are excellent at creating brilliant customer experiences charge a 16% higher rate or premium on their services.

5. More than half (54%) of survey respondents said that companies need to do better at providing a good customer experience and customer satisfaction.

6. A survey from the Temkin Group shows that bad news isn’t the only thing that travels fast. They found that 77% of customers would recommend and provide a referral to a company to a friend where they’ve had a great experience.

7. Not only are satisfied customers less likely to cancel a subscription, McKinsey found that happy customers are also willing to add services or upgrade their existing packages. Upsells, new products, and special offers are especially attractive to satisfied customers.

So, to summarize, if you give your customers quick, high-quality, consistent customer service – manned by people whose advocacy is to value customer time and concerns – you’re well on your way to achieving higher customer retention and higher customer spends (woohoo!), probably even better than the average churn rate by industry. Here's how to Get Your Entire Business Onboard To Build a Retention Department Without Hiring Any New Employees.

Voluntary Customer Churn

This type of churn can feel personal — and, let’s face it, it hurts when a customer chooses to terminate their relationship with your brand or company. While voluntary customer churn can sting momentarily, it’s often indicative that something within your company needs fixing or improving. And that’s exactly what you need to do.

Here are a few loyalty statistics, which may help bring to light how you can reduce voluntary customer churn within your own company:

8. Avoidable customer churn is costing U.S. businesses $136 billion a year.

9. Zendesk found that a whopping average of 66% of consumers had terminated their relationship with a company due to poor customer service. Keeping customers happy is key.

10. Kolsky concluded that customer churn can be reduced by 67% if companies succeed in solving customer issues during the first time interaction and successfully managing customer expectations.

11. Nearly half (48%) of consumers surveyed by Accenture said that they had ditched a company’s website and bought the item somewhere else because of a poor experience. A poor conversion rate on your website should give you a clue.

12. After a customer has a negative reaction, 58% of them wouldn’t bother going back to that company. Your marketing automation retargeting them would essentially be useless if you don't fix the user experience. You don't have to be Apple or Amazon to be able to solve this.

13. If your customer base includes high-income earners, this stat is for you. According to Zendesk, 79% of high-income earners shunned a company for more than two years after they had a bad experience.

14. Just one in 26 customers makes a complaint when they are unhappy. All the remainder churn without saying a word or providing customer feedback. Your messaging will have to be able to make the customer feel that their feedback is valuable.

From the stats, it’s clear to see that both one-time purchases and long-term relationships with customers are abandoned as a result of bad customer service. The takeaway here is that the stats show a direct relationship between a great customer experience and a reduction in churn.

SaaS Churn Rate

When referring to churn in relation to SaaS companies, it can mean either the loss of subscribers or the monthly revenue that is lost as a result of cancellations and customers leaving. As a SaaS company, it’s even more vital that your churn rate is low as it’s reported that around 90% of SaaS companies will fail. As a business, you need to detect customer churn early on in the customer's lifetime value in order to prevent a high turnover.

15. McKinsey found that 92% of SaaS companies that grew less than 20% annually failed. From the start, SaaS should implement customer retention programs in order to survive.

16. If a SaaS company’s net revenue churn is above 2% each month, it indicates a fault within the company that needs to be fixed.

17. More than two-thirds of SaaS companies had an annual churn rate of 5% or more in a given year.

18. Totango reports that 29% of low-growth SaaS companies and 30% of medium-growth SaaS companies could keep a revenue churn rate under 5%.

19. Tunguz found that the median churn rate per month for SAAS businesses is 0.75%.

20. For entrepreneurs found that companies that sold SaaS contracts lasting two years or more were more likely to report less annual churn rate.

21. According to entrepreneurs, the top SaaS companies have a Dollar Retention Rate of 100% and a negative monthly churn rate.

22. More than one-third (36%) of SaaS businesses were able to reduce revenue churn and increase lifetime value of their best customer over the last 12 months.

Reducing customer churn should be at the top of the agenda for any business, but this is especially important for SaaS companies. Competition is fierce and the stakes are high, so a single-minded focus on reducing customer churn is absolutely what’s needed to keep your customers and give them enough reasons from being enticed by your competitors.

Involuntary Churn

Involuntary churn usually happens for reasons related to failed payments. Maybe the customer has insufficient funds in their account for their monthly recurring or there could be problems in the network or gateway. The good news is that either way, your customer still likes your service and your company! Although this is cause for a little celebration, you can’t break out the bubbly just yet because involuntary churn still has serious consequences for your company and could affect your profitability.

The bottom line is that you can’t afford to overlook involuntary churn in favor of improving your services or products to reduce your voluntary churn. However, you can’t focus on one type of churn and neglect the other.

Here are some stats that will convince you that you’ll need to focus just as much on involuntary churn as voluntary churn:

23. Around 12% of monthly credit cards for average customers will fail.

24.  In general, only about 15% of payment failures from credit cards are recovered every month which results in higher churn.

25.  A staggering 85% of the total number of customers fail to respond to the run-of-the-mill dunning emails that remind them to update their card details. Continous follow-up even results to customer complaints.

Read our post on calls vs. texts vs. emails when it comes to churning rate reduction and increasing customer loyalty.

Watch this short video (under two minutes) by our CEO, Casey Graham, for some more interesting facts about why dunning software is not enough to generate customer satisfaction. He'll talk about failed credit card payments as well — and how we can help your business to recover what it’s owed and increasing customer lifetime value.

Reducing customer churn should be at the top of the agenda for any business, but this is especially important for SaaS companies. Competition is fierce and the stakes are high, so a single-minded focus on reducing customer churn and lowering attrition rate is absolutely what’s needed to keep your customers from being enticed by your competitors.

Marketers understand that content marketing strategies can lead to increased customer retention rates. At Gravy, we use a wide variety of customer retention strategies that go way beyond the typical customer loyalty program to increase customer satisfaction and customer engagement.

Repeat customers and their repeat purchases are critical to the profitability of subscription businesses. Loyal customers, especially millennials, will use word-of-mouth on social media after having a positive experience with your company.

Conclusion

The stats above should spur you on to take action to tackle churn in your SaaS or another type of subscription-based business for customer success. Whether you’re losing money to voluntary or involuntary churn, it results in the same thing – a negative effect on your bottom line for every given period of time. While there are 101 ways to reduce voluntary churn, there has traditionally been only one main solution to involuntary churn – dunning software.

Now, dunning software has its place. However, we know that it has to be backed with a full-time focus on payment recovery for it to be effective in creating a negative churn. That’s where Gravy comes in. ‍We offer services that help prevent subscriber churn. Our support team experts in recovering failed payments to boost your profits and ltv every end of the month and increasing customer retention. Our proactive retention specialists present a human face to the automation of Dunning software enhancing customer relationships.


We’re pleased to say that our churn-reducing service helps any business model like SaaS, ecommerce, startups, and subscription-based businesses like yours recover payments on a daily basis. If you want to find out how partnering with Gravy can lessen your high churn rate and give your payment recovery efforts the boost it needs, book a free coaching session today. You might also learn a few more things -such as finally figuring out how to calculate churn and customer retention!

Inspired for some more content? Listen in to our podcast as our CEO Casey Graham speaks about How To Lead Through Change.


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