What is Involuntary Churn?

Involuntary churn refers to the unintended loss of customers from a service or product due to factors beyond the customer's control. Unlike voluntary churn, where customers actively choose to discontinue a service, involuntary churn happens without the customer's direct intent, often resulting in service interruptions and lost revenue for businesses. 

In this blog, we’ll explore what causes involuntary churn, how it impacts businesses, and strategies your Customer Success (CS) team can implement to prevent it.

Causes of involuntary churn

Involuntary churn is a silent challenge for many CS teams. These unforeseen circumstances can disrupt even the best customer relationships and impact your retention rates.

In order to address these issues, you need to understand what leads to them. Here are three common causes of involuntary churn:

1. Payment failures

Payment failures are one of the primary causes of involuntary churn. These failures can occur for several reasons such as,

• Insufficient funds: Customers may not have enough money in their account to cover the subscription cost, resulting in a declined transaction.
• Incorrect billing information: Errors in billing details, such as wrong card numbers or outdated information, can cause payment attempts to fail.
• Payment gateway issues: Technical problems with the payment processing system can lead to unsuccessful transactions.

2. Expired credit cards

Another common cause of involuntary churn is expired credit cards. When a customer's credit card expires, and they do not update their payment details promptly, the next billing attempt will fail. 

This automatic interruption of service can lead to the customer being unintentionally removed from the subscription.

3. Technical glitches

Technical glitches within a company's billing system or software can also lead to involuntary churn. Such issues can cause payments to be incorrectly flagged as failed, resulting in unintended service cancellations. These glitches can include:

• Software bugs: Errors in the billing software can misinterpret payment information or fail to process transactions correctly.
• System downtime: Scheduled or unscheduled maintenance can prevent transactions from being processed in a timely manner.
• Transaction processing errors: Mistakes in the way transactions are handled by the system can lead to incorrect payment failures.

Each of these instances can lead to a customer churning against their will. Now that you know what causes involuntary churn, let’s get into how it impacts your business.

How involuntary churn impacts businesses

By understanding how involuntary churn impacts businesses, you can better prepare to address and mitigate it in your own organization. Here are three significant impacts you may face:

1. Revenue loss

Each instance of involuntary churn represents a loss of recurring revenue that the company was expecting to receive. Over time, these losses can add up, affecting the overall financial health of the business.

2. Strained customer relationships

Customers who are unintentionally removed from a service may experience frustration and dissatisfaction. They may view the interruption as a failure on the part of the company, even if the issue was beyond the company's control. This can damage the trust and loyalty that the customer has towards the business.

3. Increased operational costs

Addressing involuntary churn often requires additional resources. Customer service teams may need to spend time resolving payment issues, reinstating accounts, and reassuring customers. These efforts increase operational costs and can divert resources away from other important tasks.

Understanding how involuntary churn impacts your business is crucial, but knowing how to address it is even more important. In the next section, we will explore effective strategies for mitigating involuntary churn. 

Strategies to mitigate involuntary churn

While involuntary churn can have a significant impact on your business – there are ways around it. By implementing these approaches, you can reduce its negative effects and enhance customer retention. 

Here are three practical solutions that can help you keep your customers engaged and loyal:

1. Proactive communication

Businesses can reduce involuntary churn by proactively communicating with customers about potential issues. 

This can include sending reminders before credit cards expire, notifying customers of payment failures, and providing easy ways to update billing information. If you’re using a CS tool like Velaris, these processes can be automated.

By keeping customers informed, businesses can help prevent involuntary churn from occurring.

2. Flexible payment options

Offering a variety of payment methods can help minimize the risk of payment failures. Businesses can provide options such as credit and debit cards, PayPal, direct bank transfers, and even newer methods like digital wallets. 

Having multiple payment options ensures that customers can choose the most convenient and reliable method for them.

3. Regular system audits

Regular audits of the billing system can help identify and rectify technical issues that might cause involuntary churn. These audits can involve checking for software bugs, ensuring system uptime, and verifying that transaction processes are functioning correctly. 

Key takeaways

• Involuntary churn is the unintentional loss of customers due to factors beyond their control.
• Common causes include payment failures, expired credit cards, and technical glitches.
• Involuntary churn results in lost revenue, strained customer relationships, and increased operational costs.
• Proactive communication helps prevent involuntary churn by keeping customers informed about payment issues.
• Offering multiple payment options can reduce the risk of payment failures.
• Regular system audits can identify and fix technical issues that cause involuntary churn.