What is customer churn and why is it “the silent killer of the subscription business?”
Posted: Mon Feb 17, 2025 8:13 am
At a recent Crowdcast talk hosted by Bold’s own Jay Myers (Co-Founder), Patrick Campbell, CEO and Founder of Profitwell broke down what brands can do to reduce customer churn and foster lasting relationships.
Campbell has defined customer churn as “the loss of customers or subscribers for any reason at all.” Businesses typically measure churn as a percentage of lost customers compared to the total number of customers over a given time period. Doing so calculates their churn rate.
So what makes churn rate such an important metric for subscription brands?
Recurring revenue is the lifeblood of subscription businesses.
Without predictable revenue it’s difficult to sustain a business and forecast growth.
Customer acquisition costs are only going up making it cheaper to retain customers than acquire new ones.
Brands that aren’t tracking customer churn may find it difficult to know if their subscription program is healthy. Getting top-of-funnel acquisitions is exciting, but if it costs more to acquire those customers than what they provide in customer lifetime value (LTV) a subscription business could be in trouble.
If you’re too busy to catch the entire conversation, we’ve curated some key takeaways for subscription brands looking to reduce customer churn and drive recurring revenue.
Run the right playbook
“The beauty of the subscription model is that it’s the first commerce overseas chinese in australia data model in history that bakes the relationship with the customer into how you make money,” said Campbell.
Instead of having to put out a new coupon or promotion every time you want a customer to shop from you (like stores did back in the day), the subscription model provides an opted-in buyer. However, with that opt-in comes the reality that some customers are going to cancel.
If you’re not thinking about customer churn, you can end up running a “mismatched playbook” said Campbell, the “old-school commerce” playbook where you only make money when you send out an email or run a promotion.
Brands should instead be running the “growth playbook for subscriptions,” which in addition to acquisition, is heavily focused on monetizing and pricing properly and building a long-term relationship with the customer. “You have to make sure you are running the playbook that fits the actual model you are doing,” added Campbell.
Looking for sector-specific insights? Our food and beverage subscription guide is coming in hot.
Campbell has defined customer churn as “the loss of customers or subscribers for any reason at all.” Businesses typically measure churn as a percentage of lost customers compared to the total number of customers over a given time period. Doing so calculates their churn rate.
So what makes churn rate such an important metric for subscription brands?
Recurring revenue is the lifeblood of subscription businesses.
Without predictable revenue it’s difficult to sustain a business and forecast growth.
Customer acquisition costs are only going up making it cheaper to retain customers than acquire new ones.
Brands that aren’t tracking customer churn may find it difficult to know if their subscription program is healthy. Getting top-of-funnel acquisitions is exciting, but if it costs more to acquire those customers than what they provide in customer lifetime value (LTV) a subscription business could be in trouble.
If you’re too busy to catch the entire conversation, we’ve curated some key takeaways for subscription brands looking to reduce customer churn and drive recurring revenue.
Run the right playbook
“The beauty of the subscription model is that it’s the first commerce overseas chinese in australia data model in history that bakes the relationship with the customer into how you make money,” said Campbell.
Instead of having to put out a new coupon or promotion every time you want a customer to shop from you (like stores did back in the day), the subscription model provides an opted-in buyer. However, with that opt-in comes the reality that some customers are going to cancel.
If you’re not thinking about customer churn, you can end up running a “mismatched playbook” said Campbell, the “old-school commerce” playbook where you only make money when you send out an email or run a promotion.
Brands should instead be running the “growth playbook for subscriptions,” which in addition to acquisition, is heavily focused on monetizing and pricing properly and building a long-term relationship with the customer. “You have to make sure you are running the playbook that fits the actual model you are doing,” added Campbell.
Looking for sector-specific insights? Our food and beverage subscription guide is coming in hot.