Why subscriber churn isn’t always bad

• Subscription publishers often attempt to drive churn as low as possible, but taking a more nuanced view of subscriber turnover can ultimately help build more robust long-term businesses.
• For healthy and growing subscription businesses, some level of subscriber churn should be expected and welcomed.
• Many publishers would be better served by trying to identify their churn “sweet spots” rather than optimizing to zero.

All publishers fear high subscriber churn: Losing subscribers means fewer renewal payments and diminished revenue, and ongoing churn raises fundamental questions about a subscription product’s long-term viability.

Many publishers are engaged in a constant battle to whittle down subscriber churn as a result, perpetually searching for new tactics and tricks to get as close to the elusive “zero churn” as they possibly can. Product managers and staffers are often incentivized to mitigate churn at all costs, even if it means resorting to questionable tactics, massaging their metrics, or sacrificing long-term revenue for the sake of short-term churn reduction.

This impulse is understandable, but optimizing to low churn for the sake of it is — in practice — a short-sighted approach. Sophisticated publishers understand that churn should be carefully monitored and managed, but that “getting as close to zero churn as possible” can ultimately result in revenue left on the table, disengaged and low-quality subscriber bases, dissatisfied customers and — ultimately — stifled subscriber and revenue growth.

For any publisher with a growing subscription business, churn should be embraced and understood, not eradicated. Many publishers would be better served by trying to identify their own churn “sweet spots” rather than optimizing to 0%.

When subscriber churn is positive

Too much churn is invariably a problem, but taking a more nuanced view of subscriber turnover can ultimately help build more robust long-term businesses. 

Detailed cohort and data analysis can be used to help understand the effects and implications of churn on specific publishers’ businesses more granularly, but some level of subscriber churn should be expected and welcomed when:

• Pricing is well-optimized: Low churn can be a signal of underpriced products. Most publishers should aim for a portion of their audience to view their products as too expensive and expect them to churn as a result (although these subscribers might be retained with discounted retention pricing.) High churn is often a signal that a product is priced too high, but if a publisher’s entire subscriber base is happy to pay the sticker price for a product, there’s a good chance there’s money being left on the table.
• A publisher is growing and expanding beyond its core audience: The easiest route to zero churn is to attract zero subscribers, but publishers looking to grow their audiences and subscriber bases should expect and embrace some level of subscriber churn as they do so. Their products and content won’t be for everyone, but low churn can suggest they’re not casting their net wide enough or pushing far enough beyond their existing audiences to realize meaningful growth.
• Conversion funnels are functioning optimally: Some level of churn is to be expected with any healthy conversion funnel. Low churn can signal that a publisher is not pushing its audience hard enough to become paying subscribers, and that tweaks or adjustments are required to more aggressively push a larger chunk to make a purchase. This could include making changes to paywall implementations and rules, meter limits, product messaging, marketing activity and more.

• The product isn’t a good fit for a subscriber’s needs. Ultimately publishers’ products aren’t going to prove valuable for all subscribers, and that’s OK. In instances where subscribers need to be better educated on how best to derive value from a product, publishers should ensure they do so with better onboarding and feedback processes, manual outreach and more. If a product simply isn’t a good fit for a subscriber’s needs, however, there’s typically little point attempting to convince them otherwise. It’s better to part ways on amicable terms, leaving the subscriber with a positive experience and boosting their likelihood to return if and when they’re in a position to realize more value. 
• “Sleeper” subscribers aren’t using the product. There’s varying schools of thought on the best approach to “zombie” or “sleeper” subscribers. One is to keep charging their credit cards, minimize email contact with them and hope they never wake up. Another is to attempt to re-engage them, better understand their needs, and ultimately to part ways if they’re simply not finding value in a product. Cutting paying subscribers loose is difficult, but can ultimately result in a stronger subscriber base and a much healthier (and honest) business in the long-run, even if it does result in greater churn in the short-term.
• Subscribers are migrating to a publishers’ other products or services. For publishers with multiple products and revenue streams, subscriber churn isn’t necessarily negative if customers are migrating their spend to other products and services they offer. In some instances subscriber “churn” actually serves as an on-ramp for other more lucrative products that are better suited to a customer’s needs, such as events, consulting arrangements and more. (Although in an ideal world audiences would purchase multiple products, of course.) Publishers can begin understanding this dynamic via surveys, cancellation flows, and well-documented customer service interactions, among other tactics.
• Subscriber needs are short term or transient. Subscribers frequently churn soon after purchasing publishers’ products, but that doesn’t mean they derived no value from them. Short-term churn can be a signal that a product delivered strong immediate value and quickly satisfied a subscriber’s needs. In these instances, publishers might consider if tweaks to their products might help make them more “sticky” on an ongoing basis. But in cases where a subscriber is working on a one-off project or changing jobs or industries, for example, churn needn’t be viewed as a negative reflection on the product itself.
• Offering discounted promotions and trials: When offering discounted offers, promotions and trials, publishers should expect a spike in overall churn even if those promotional efforts are proving highly-effective. Before utilizing such tactics, publishers should ensure they have at least a basic cohort analysis plan in place in order to effectively segment and analyze the behavior of users who converted on different plans, price points, and other variables.

Understanding good and bad churn

Understanding the nuances of churn is a challenge for publishers of all types and sizes. Established subscription publishers with access to cutting-edge technology and teams of data scientists still don’t have the level of visibility into the behaviors and motivations of their subscribers they would like.

Cohort analysis coupled with common sense can help publishers better understand when churn is a negative for business, when it’s a positive, and when it can help uncover new opportunities and possibilities. But even publishers with limited resources can better understand the behaviors and motivations of their audiences simply by asking them – via automated surveys, cancellation flows, or simply via manual outreach and customer service interactions.

Ultimately, publishers of all sizes should understand that while high churn can kill a subscription business, over-optimizing to low churn can risk drastically limit their potential, too.

For more practical guidance on building sustainable subscription and membership products and businesses, see the Subscription Publishing Toolkit.