Involuntary Churn, Why should you care?

Simply put, churn rate is the rate at which you are losing customers.

(# of customers at the end of a period/ # of customers at the start of a period)*100%.

Customer churn can be broken down into 2 essential parts, voluntary and involuntary churn, and here’s the difference between them.

Voluntary or active churn most of the time has to do with customer satisfaction and customer experience. If your services are not exactly what the customer wants, or your prices are high or if they are not in need of your services anymore, they’ll churn, but as long as they’re satisfied with the service and the price in addition to the relationship in general, your customers won’t churn actively.

Involuntary churn is the part where a customer has no problem with the services they’re being provided with but they get their subscription canceled mainly due to expired credit / debit cards and out-of-date billing information. This type of customer churn is mostly overlooked because it doesn’t largely affect companies at the beginning and doesn’t impose a serious threat in a short period of time.

Why Should you care about Involuntary Churn?

For the SaaS industry, churn rate averages at 6.19%.

1.67% of which is involuntary, and we’ll discuss what it mainly affects and how it will be eliminated by Saascoin.

Number of customers affected :

As we all know, the credit or debit card expires after 3 years. Meaning that in the span of 18 months, a business would lose approximately 50% of its customers. But the reason involuntary churn is most of the time neglected, is because this 50% of customer loss does not happen at once, but it’s always building up unnoticed.

Revenue :

It’s simple, with the loss of customers comes the loss in revenue to mess with your unit economics and LTV:CAC ratio. In a try to adjust the ratio, a business may lower their Customer Acquisition Cost(CAC) or raise Life Time Value(LTV) by increasing the prices. But this won’t work because more customers will now actively churn because of unjustified increases in price.

Customer experience:

Customers nowadays are becoming more demanding due to many reasons such as competition in the market in addition to their experience and knowledge. In such a competitive environment, a service provider will want to hold their customers and minimize any errors that may occur, and lead the customers to change their service provider.

Rejected payments can really affect and worsen the relationship between a customer and the business even though it’s not the service provider’s problem.

How Saascoin will eliminate the problem:

As this problem of involuntary or passive churn goes by without attention, a business will be in a ceaseless deterioration if it doesn’t find a proper solution. As founders of a SaaS business (Dakwak) ourselves and as we have experienced the problems that involuntary churn might bring, we created Saascoin to eliminate them.

Saascoin’s wallets are tailored to the SaaS industry, they do not expire therefore, the customer churn due to expired credit cards is eliminated. in addition to a decline rate of 0.00% meaning that there will be no services cut off of customers because their payment didn’t get through as all payments will get through which will enable you as a SaaS business to maintain a healthy relationship with your customers, and be in full control of your payment system.

For more Read Whitepaper.