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Customer Churn and Retention: Top 25 Stats You Need to Know – Gravy */

As a subscription business owner, ‘customer churn’ is a term you’re all too familiar with. No one likes to think about the rate at which they’re losing customers. But, in order to 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.

We’re not just talking about the numbers relating to your SaaS or other subscription-based business. Having a general overview of customer churn stats 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.

Before looking at the customer churn numbers outside of your business, are you sure about what’s happening in your business?

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 want help reducing it, book a free coaching session with us today. Read our no-nonsense guide to customer churn for a quick-fire run down of this critical business metric.

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

What is Customer Retention?

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

Customer Retention Stats

If you can easily acquire new customers, you might think ask why you should bother focusing on retention. 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 and satisfying the customers you already have as it’s less costly to keep those customers happy. This means more profit added to your bottom line.

So, what can you do to improve your customer retention? Here are some statistics to give you some food for thought:

1. Forrester Research, Inc. found that 69% of people surveyed said that they choose to shop more frequently at retailers with consistent customer service.

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 bad experience, consumers would stop doing business with a brand or company they’d previously loved.

4. Not only does providing a great experience help you to keep customers but you can also charge more for your service. According to PWC, companies that are excellent at creating brilliant customer experiences charge a 16% 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.

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 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.

So, to summarize, if you give your customers quick, high-quality, consistent customer service – manned by people who value customer time and concerns – you’re well on your way to achieving higher customer retention (woohoo!).

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 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 66% of consumers had terminated their relationship with a company due to poor customer service.

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

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.

12. After a customer has a negative reaction, 58% of them wouldn’t bother going back to that company.

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.

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 with a great customer experience and a reduction in churn.

SaaS Churn

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 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.

15. McKinsey found that 92% of SaaS companies that grew less than 20% annually failed.

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 churn rates 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. Forentrepreneurs found that companies that sold SaaS contracts lasting two years or more were more likely to report less annual churn.

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

22. More than one-third (36%) of SaaS businesses were able to reduce revenue churn 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 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 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.

The bottom line is that you can’t afford to overlook involuntary churn in favour 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 will fail.

24.  In general, only about 15% of payment failures from credit cards are recovered every month.

25.  A staggering 85% of customers fail to respond to the run-of-the-mill dunning emails that remind them to update their card details.

Watch this short video (under two minutes) by our CEO, Casey Graham, for some more interesting facts about failed credit card payments — and how we can help your business to recover what it’s owed.

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 from being enticed by your competitors.


The stats above should spur you on to take action to tackle churn in your SaaS or other type of subscription-based business. Whether you’re losing money to voluntary or involuntary churn, it results in the same thing – a negative effect on your bottom line. 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. That’s where Gravy comes in. We’re experts in recovering failed payments to boost your profits and customer retention. Our retention specialists present a human face to the automation of Dunning software.

We’re pleased to say that we help SaaS and subscription-based businesses like yours recover payments on a daily basis. If you want to find out how partnering with Gravy can give your payment recovery efforts the boost it needs, book a free coaching session today.

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