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Churned Subscribers

What are churned subscribers?

Churned subscribers are customers that have ended their relationship with a subscription service. Instead of losing a one-time customer, if your business loses a subscription, it is losing out on the monthly recurring revenue (MMR) that is expected over the lifetime of the average subscriber. Because you’re losing out on predictable future revenue, a churned subscriber has a much heavier impact towards your financial health than just losing a customer after a single purchase.

How can I calculate churned subscriber impact?

To figure out how much of an impact losing a subscriber has on your MMR, you first need to calculate your churn rate by dividing the number of subscriptions canceled or lapsed during a time period by the number of subscribers up for renewal during the time periodCustomer churn rate = (Canceled or Lapsed Subs / Number of Renewals)Make sure to use a time period that makes sense for your business. Are the majority of your subscriptions annual or monthly? Choose the one that fits your service best.

Once you have your churn rate, the next piece to this puzzle is customer life expectancy. All you need to do here is divide 1 by your churn rate. Life expectancy = 1 / customer churn rate (as a decimal). Multiply your calculated customer life expectancy by your subscription fee and you now have a general idea of what a canceled or lapsed subscription means to your business.