Running a subscription service? Don’t make this mistake

eCommerce, Membership

This year will introduce a new challenge for membership and subscription sites that cater to US customers.

If you've not been following things here in the US, the number of security breaches last year were so significant that most banks announced late last year that they'd be switching over to chip-based credit cards in 2015.

Not a big deal, right?

Except that involuntary churn on subscription sites can be as low as 3-4% and as high as 25%.

In case “involuntary churn” is lost on you, let me explain.

Churn is the same thing as customer attrition. It's the notion that a customer is leaving. And if you run a subscription service and count on the recurring revenue that comes from monthly billing (to a credit card), you're probably tracking attrition or churn already.

But a lot of churn is voluntary.

  • A customer doesn't like the service enough to keep paying.
  • A customer doesn't feel like they're getting the value for what they're paying.
  • A customer consolidates the online products they're using and cancels.

All of those customers that cancel do it voluntarily.

Involuntary churn is different. This isn't customers who are tired of you or trying to quit you.

It comes when credit cards expire. When banks re-issue cards. That kind of stuff.

And that's what's about to happen in a big way in 2015. Tons of new cards issued.

And you can imagine what that means: the potential to see attrition rise. Not good, right?

Most people solve this problem by setting up emails to notify customers when their card has expired. Some companies even pro-actively email customers before their card expires.

But this kind of stuff isn't the first stuff you code when building your SaaS.

[Tweet “Don't build your SaaS without thinking about involuntary churn.”]

So don't make this mistake:

Don't  build your SaaS without thinking about involuntary churn.

If you don't want to code it yourself, there's good news.

Check out Churn Buster and they'll take care of everything for you. No code written on your part.