Track churn in OpenPay

Understanding churn is crucial for businesses with subscription models as it helps measure customer retention, identify potential issues in the product or service, and develop strategies to minimize losses.

Calculating churn rateCopied!

Customer churn rateCopied!

$\text{Customer Churn Rate} = \left( \frac{\text{Number of Churned Customers}}{\text{Number of Customers at the Beginning of the Period}} \right) \times 100$

Let's say at the beginning of January you have 200 customers. During the month, 31 customers churn.

• Customers at the start of the month: 200

• Customers churned: 31

$\text{Customer Churn Rate} = \left( \frac{31}{200} \right) \times 100 = 15.5\%$

Net MRR churn rateCopied!

$\text{Net MRR Churn Rate} = \left( \frac{(\text{Churned MRR} + \text{Contraction MRR}) - (\text{Reactivation MRR} + \text{Expansion MRR})}{\text{MRR at the Beginning of the Period}} \right) \times 100$

Let's say at the start of the month, you have $500 in MRR. During the month, you lose $50 to churn and $15 to contraction, while one customer increases their MRR by $10.

• Starting MRR: $500

• Churned MRR: $50

• Contracted MRR: $15

• Expanded MRR: $10

• Reactivated MRR = $0

$\text{Net MRR Churn Rate} = \left( \frac{(50 + 15) - (10 + 0)}{500} \right) \times 100 = 11\%$

Differentiating churnCopied!

Voluntary churn and delinquent churn are two distinct types of customer churn that are based on the reason or cause of the churn. Both types of churn impact MRR, but they require different strategies to address. Voluntary churn is often a signal of customer dissatisfaction, while delinquent churn is typically a payment issue that may be resolved without losing the customer long-term.

Voluntary churnCopied!

Voluntary churn refers to customers who intentionally cancel or stop using a service. These customers actively decide to leave due to various reasons, such as dissatisfaction, a change in needs, or finding a better alternative.

Examples:

• A customer unsubscribing from a software service because they no longer find it useful.

• A customer switching to a competitor due to better pricing or features.

Delinquent churnCopied!

Delinquent churn refers to customers who stop paying due to issues like payment failures, expired credit cards, or financial difficulties, but they might still be interested in the product or service. These customers technically "churn" because their payments are not processed, but they could return if their payment issues are resolved.

Examples:

• A customer who forgot to update their payment information, causing their subscription to be canceled.

• A customer who misses a payment due to financial difficulties but still intends to continue using the service.