Membership Churn: Benchmarks, Calculator and Best Practices to Improve Churn

What is Membership Churn?

Membership churn refers to the percentage of members who cancel or do not renew their subscriptions over a given period.

Here's how it applies to different types of membership-based businesses:

• Fitness clubs: gym-goers quitting due to lack of use
• Co-working memberships: users shifting to remote work
• Professional clubs: professionals leaving associations due to reduced value, or
• Retail memberships: Costco shoppers opting out after finding better deals elsewhere.

Some membership businesses have auto-renew turned on while others don't.

Membership Churn Rates Benchmarks

Gyms will have a higher annual churn. The average length of gym membership is 3 years in the US and has an annual retention rate of 70%.

Costco’s membership renewal rate is at 92.6% in the United States.

Amazon Prime's membership has also been high, even higher than that of Costco.

WeWork had roughly 512,000 memberships on June 30. On March that year, they had 527,000 memberships. So, over that quarter, WeWork lost 15,000 memberships. That's a logo churn of 2.85% for the quarter or ~11% annually.

How To Analyze Membership Churn Rates

1. Do you lose users in Month 1, Month 12 or somewhere else? Map your retention cohort and see the drop.
2. Do cohorts of users perform differently based on when they were acquired or which plan they were on? A cake chart or retention curve chart would help answer this.
3. What's the split between involuntary churn due to failed payments and voluntary churn due to active cancellations?
4. What % of your existing customer base is at-risk vs healthy? At-risk means these members are at risk of churning since they pay revenue but aren't activated yet.
5. What's your gross vs net churn? Account for expansion revenue and downgrades.

How To Calculate Membership Churn Rates?

Option 1: Use this live, interactive calculator for simple calculation.

Option 2: Or use Churn Metrics by Churnkey (recommended)

Churnkey creates a free, visual analysis of your churn metrics. Simply connect your billing provider to visualize:

• Gross and new churn rates by date.
• Involuntary and voluntary churn rates.
• Revenue vs logo churn.
• Retention cohort analysis.
• New vs. old churn.
• Churn cake charts.

How To Improve High Membership Churn Rates

Churn is a solved problem which means there are lots of solutions out there. You can use something in-house or set up Churnkey. Typically, your retention strategies depend on what's causing churn in the first place.

1. Exit Surveys

Why do people churn? How have those reasons trended in the past? When they switch to a competitor, which one do they switch to? Learn more about setting up exit surveys.

2. Reactivate Churned Customers

Every one of your customers left for a reason. Use those reasons as the foundation of your reactivation campaigns to address why they left and how you resolved their objections. Then sit back and watch your MRR grow.

3. Dunning Campaigns via SMS and Email

Just tell people their payment failed. Set up incredible dunning campaigns in all its glory. Personalized with custom variables. Segmented based on plan type. Sent out in user's time zones. From multiple senders or local numbers.

4. Precision Retries

Customer intervention is not always necessary. Payment retries are very powerful on their own. Plus, they require almost zero engineering lift.

5. Failed Payment Wall

Dynamically block feature access while asking your customers to update their payment details directly inline.

6. Offer Customer Support

Offer dedicated support for churn. Have an account manager or customer support executive reach out based on the reasons you see in your churn dashboard. You might want to train your CS team to look for the decline code associated with a payment.

7. Easy Card Updates

No passwords, no logging in: let your customer enter a new card with just one click. If you're offering a special discount, ensure that that discount auto-applies.

8. Allow Plan Switches

Let people upgrade or downgrade to a different plan easily. You can display hidden cheaper plans when users cancel. Amazon Prime will use several of these hidden plan tactics.

9. Customer Risk Modelling

Be more strategic with your team's time: know when to engage your best customers, predict at-risk revenue, and track trends in feedback. Get ahead of your high churn with advanced churn propensity modelling.

10. Trial Extensions / Offers

Offer trial extensions, discounts, and other benefits to customers as they churn. Especially helpful if you have heavy M1 churn.

and lots more!

Fixing Membership Churn with Churnkey

Churnkey is a complete churn reduction platform, catering to some of the largest membership based businesses. Our churn suite of products include:

1. Churn metrics
2. Omni channel dunning campaigns
3. Precision retries
4. Failed payment recovery wall
5. Customer health scoring
6. Cancel flows
7. Reactivations
8. Insights AI

and more!

We natively integrate with most billing providers and support companies at all stages of their growth. To get started, sign up for Churnkey or book a demo.

Thanks for reading and good luck managing membership churn! You've got this. 💪