A Churnkey, saas.group & usersnap Report
A Churnkey, saas.group
& usersnap Report
State of Retention2024
State of Retention2024
State of Retention2024
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Hey, all —
I’m Scott Hurff, one of Churnkey’s founders.
I’m Anna Nadeina, Head of Growth at saas.group.
And I'm Klaus-M. Schremser, co-founder of Usersnap.
We’re excited to bring you this joint report on all things churn. Because as the SaaS economy continues to morph and grow and evolve into an industry more focused on efficiency, retention will become more important than ever.
Let’s review how we got here. In 2020, SaaS reorganized itself to meet the challenge of an isolated world due to the COVID-19 pandemic. In 2021, those bold investments from 2020 seemed to have paid off. But as the world opened up in late 2021, early 2022—and economies grappled with their new realities—uncertainty ran rampant. Enter 2023: the year of efficiency, leanness, and optimization.
The theme of 2024 is: your destiny is up for grabs. Will rationality reign? Will further efficiencies be demanded? Will you be able to emerge more dominant in your market segment, or go into 2025 worse off?
What we do know is that now is the time for decisive action. Everything is up for grabs. And our hope is that, with this data, you can begin to make more precise decisions for your retention efforts across product, marketing, and finance.
Thanks, and we’re honored that you’re here. Hope this report helps.
Scott Hurff
Co-founder and Chief Product Officer Churnkey
Anna Nadeina
Head of Growth
saas.group
Klaus-M. Schremser
Co-founder of
Usersnap
Hey, all —
I’m Scott Hurff, one of Churnkey’s founders.
I’m Anna Nadeina, Head of Growth at saas.group.
And I'm Klaus-M. Schremser, co-founder of Usersnap.
We’re excited to bring you this joint report on all things churn. Because as the SaaS economy continues to morph and grow and evolve into an industry more focused on efficiency, retention will become more important than ever.
Let’s review how we got here. In 2020, SaaS reorganized itself to meet the challenge of an isolated world due to the COVID-19 pandemic. In 2021, those bold investments from 2020 seemed to have paid off. But as the world opened up in late 2021, early 2022—and economies grappled with their new realities—uncertainty ran rampant. Enter 2023: the year of efficiency, leanness, and optimization.
The theme of 2024 is: your destiny is up for grabs. Will rationality reign? Will further efficiencies be demanded? Will you be able to emerge more dominant in your market segment, or go into 2025 worse off?
What we do know is that now is the time for decisive action. Everything is up for grabs. And our hope is that, with this data, you can begin to make more precise decisions for your retention efforts across product, marketing, and finance.
Thanks, and we’re honored that you’re here. Hope this report helps.
Scott Hurff
Co-founder and Chief Product Officer Churnkey
Anna Nadeina
Head of Growth
saas.group
Klaus-M. Schremser
Co-founder of
Usersnap
Hey, all —
I’m Scott Hurff, one of Churnkey’s founders.
I’m Anna Nadeina, Head of Growth at saas.group.
And I'm Klaus-M. Schremser, co-founder of Usersnap.
We’re excited to bring you this joint report on all things churn. Because as the SaaS economy continues to morph and grow and evolve into an industry more focused on efficiency, retention will become more important than ever.
Let’s review how we got here. In 2020, SaaS reorganized itself to meet the challenge of an isolated world due to the COVID-19 pandemic. In 2021, those bold investments from 2020 seemed to have paid off. But as the world opened up in late 2021, early 2022—and economies grappled with their new realities—uncertainty ran rampant. Enter 2023: the year of efficiency, leanness, and optimization.
The theme of 2024 is: your destiny is up for grabs. Will rationality reign? Will further efficiencies be demanded? Will you be able to emerge more dominant in your market segment, or go into 2025 worse off?
What we do know is that now is the time for decisive action. Everything is up for grabs. And our hope is that, with this data, you can begin to make more precise decisions for your retention efforts across product, marketing, and finance.
Thanks, and we’re honored that you’re here. Hope this report helps.
Scott Hurff
Co-founder and Chief Product Officer Churnkey
Anna Nadeina
Head of Growth
saas.group
Klaus-M. Schremser
Co-founder of
Usersnap
Table of contents
Introduction
Welcome to the first-ever report covering voluntary and involuntary churn behavior at scale.
We’ve analyzed mountains of data across millions of cancellation sessions and failed payments, and unraveled it all to figure out why customers cancel, how they feel when they leave, and the most common reasons why card payments fail.
This data was sampled from across the globe throughout the year from over a thousand businesses.
Introduction
Welcome to the first-ever report covering voluntary and involuntary churn behavior at scale.
We’ve analyzed mountains of data across millions of cancellation sessions and failed payments, and unraveled it all to figure out why customers cancel, how they feel when they leave, and the most common reasons why card payments fail.
This data was sampled from across the globe throughout the year from over a thousand businesses.
Introduction
Welcome to the first-ever report covering voluntary and involuntary churn behavior at scale.
We’ve analyzed mountains of data across millions of cancellation sessions and failed payments, and unraveled it all to figure out why customers cancel, how they feel when they leave, and the most common reasons why card payments fail.
This data was sampled from across the globe throughout the year from over a thousand businesses.
Table of contents
SECTION 01
Cancellation Behavior
What can millions of cancellation sessions tell you?
After analyzing millions of cancellation sessions, a number of clear trends emerged. What we discovered can help you build better products, prepare you for opportunities to improve your pricing, and refine your ideal customer if your churn feels like it’s out of control.
SECTION 01
Cancellation Behavior
What can millions of cancellation sessions tell you?
After analyzing millions of cancellation sessions, a number of clear trends emerged. What we discovered can help you build better products, prepare you for opportunities to improve your pricing, and refine your ideal customer if your churn feels like it’s out of control.
SECTION 01
Cancellation Behavior
What can millions of cancellation sessions tell you?
After analyzing millions of cancellation sessions, a number of clear trends emerged. What we discovered can help you build better products, prepare you for opportunities to improve your pricing, and refine your ideal customer if your churn feels like it’s out of control.
How did cancellations trend over 2023?
Over the last year, cancellations decreased slightly at a rate of .6%, reaching their lowest rates in December 2023.
We were surprised by this trajectory given general economic uncertainty, inflationary pressure, credit card burdens, and layoffs. But on the whole, general unemployment remained low and wages increased.
How did cancellations trend over 2023?
Over the last year, cancellations decreased slightly at a rate of .6%, reaching their lowest rates in December 2023.
We were surprised by this trajectory given general economic uncertainty, inflationary pressure, credit card burdens, and layoffs. But on the whole, general unemployment remained low and wages increased.
How did cancellations trend over 2023?
Over the last year, cancellations decreased slightly at a rate of .6%, reaching their lowest rates in December 2023.
We were surprised by this trajectory given general economic uncertainty, inflationary pressure, credit card burdens, and layoffs. But on the whole, general unemployment remained low and wages increased.
Rate of Cancellations Over Time In The Cancellation Flow (Percentage)
CANCELLATION RATE [%]
80.0
79.8
79.6
79.4
79.2
79.0
78.8
78.6
JAN
JAN
FEB
FEB
MAR
MAR
APR
APR
MAY
MAY
JUN
JUN
JUL
JUL
AUG
AUG
SEP
SEP
OCT
OCT
NOV
NOV
DEC
DEC
Cancellation Rate
Trend Line
Our conclusion is that general economic uncertainty began to subside in Q4, while Churnkey customers sought to alleviate economic concerns by deploying more aggressive retention measures during those months.
Cancellations spiked before and after major holidays, not during them. This suggest that customers are generally unfocused during major cultural events and tend to assess their spending well before or after they occur.
Our conclusion is that general economic uncertainty began to subside in Q4, while Churnkey customers sought to alleviate economic concerns by deploying more aggressive retention measures during those months.
Cancellations spiked before and after major holidays, not during them. This suggest that customers are generally unfocused during major cultural events and tend to assess their spending well before or after they occur.
Our conclusion is that general economic uncertainty began to subside in Q4, while Churnkey customers sought to alleviate economic concerns by deploying more aggressive retention measures during those months.
Cancellations spiked before and after major holidays, not during them. This suggest that customers are generally unfocused during major cultural events and tend to assess their spending well before or after they occur.
Why do customers cancel?
Over the last year, cancellations decreased slightly at a rate of .6%, reaching their lowest rates in December 2023.
We were surprised by this trajectory given general economic uncertainty, inflationary pressure, credit card burdens, and layoffs. But on the whole, general unemployment remained low and wages increased.
Why do customers cancel?
Over the last year, cancellations decreased slightly at a rate of .6%, reaching their lowest rates in December 2023.
We were surprised by this trajectory given general economic uncertainty, inflationary pressure, credit card burdens, and layoffs. But on the whole, general unemployment remained low and wages increased.
Why do customers cancel?
Over the last year, cancellations decreased slightly at a rate of .6%, reaching their lowest rates in December 2023.
We were surprised by this trajectory given general economic uncertainty, inflationary pressure, credit card burdens, and layoffs. But on the whole, general unemployment remained low and wages increased.
Reasons categories for each Survey Choice Value
0
5%
10%
15%
20%
25%
30%
Churnkey’s unobtrusive exit surveys during the cancellation flow can change the trajectory of a business. Acting on this data can align a product with one’s best customers while reconfiguring acquisition efforts.
However, don't assume that feedback collection ends there. Proactively engaging with users in-app presents a unique opportunity to gauge sentiment at pivotal moments in the user experience, which can help teams validate decisions and generate new ideas. Using a tool like Usersnap provides easy feedback submission, streamlines workflows, and empowers teams to efficiently organize, amplify, and respond to users.
“User feedback is our secret sauce for beating churn. It's simple: listen, adapt, and watch your users turn from casual browsers into die-hard fans. It's all about making those connections stronger, one piece of feedback at a time," says Klaus-M. Schremser, Co-founder & CRO at Usersnap.
From our data, “Budget Limitations” was a dominant theme in 2023 for customers cancelling. While this can seem like an unresolvable scenario, the most successful companies on Churnkey utilize this as a chance to reset the relationship with their customers and establish a new equilibrium.
Can’t afford us right now? Take a pause, try a cheaper plan, or take a temporary discount. Survey responses in this category offer companies the greatest opportunity to empathize with their customers in the most direct way.
As for “Infrequent Usage” and “Expectations Not Met,” these responses serve as warning signs: you’re building for the wrong customer.
To put it another way, your customer isn’t who you think they are. This is an opportunity for your product and marketing teams to get closer to your audience, perform difficult but necessary research, and rethink what your product is, does, and how it’s marketed. Once you’ve addressed these expectations, you have a fresh opportunity to re-engage these former customers with win-back campaigns.
Luckily the final three survey responses warrant straightforward fixes: your product has quality problems. Whether or not your team chooses to address those is a whole exploration unto itself.
Finally, let’s address the dominant “Other Reasons” category.
This is a catch-all from across all of our organizations that encompasses highly-specific survey responses that apply to their businesses. For example, responses like “Not Dropshipping Anymore,” “False Positives,” and “Moving Out of The Area” were typical. As we see it, this is testament to the power of gathering business-specific data during the cancellation process.
Churnkey’s unobtrusive exit surveys during the cancellation flow can change the trajectory of a business. Acting on this data can align a product with one’s best customers while reconfiguring acquisition efforts.
However, don't assume that feedback collection ends there. Proactively engaging with users in-app presents a unique opportunity to gauge sentiment at pivotal moments in the user experience, which can help teams validate decisions and generate new ideas. Using a tool like Usersnap provides easy feedback submission, streamlines workflows, and empowers teams to efficiently organize, amplify, and respond to users.
“User feedback is our secret sauce for beating churn. It's simple: listen, adapt, and watch your users turn from casual browsers into die-hard fans. It's all about making those connections stronger, one piece of feedback at a time," says Klaus-M. Schremser, Co-founder & CRO at Usersnap.
From our data, “Budget Limitations” was a dominant theme in 2023 for customers cancelling. While this can seem like an unresolvable scenario, the most successful companies on Churnkey utilize this as a chance to reset the relationship with their customers and establish a new equilibrium.
Can’t afford us right now? Take a pause, try a cheaper plan, or take a temporary discount. Survey responses in this category offer companies the greatest opportunity to empathize with their customers in the most direct way.
As for “Infrequent Usage” and “Expectations Not Met,” these responses serve as warning signs: you’re building for the wrong customer.
To put it another way, your customer isn’t who you think they are. This is an opportunity for your product and marketing teams to get closer to your audience, perform difficult but necessary research, and rethink what your product is, does, and how it’s marketed. Once you’ve addressed these expectations, you have a fresh opportunity to re-engage these former customers with win-back campaigns.
Luckily the final three survey responses warrant straightforward fixes: your product has quality problems. Whether or not your team chooses to address those is a whole exploration unto itself.
Finally, let’s address the dominant “Other Reasons” category.
This is a catch-all from across all of our organizations that encompasses highly-specific survey responses that apply to their businesses. For example, responses like “Not Dropshipping Anymore,” “False Positives,” and “Moving Out of The Area” were typical. As we see it, this is testament to the power of gathering business-specific data during the cancellation process.
Churnkey’s unobtrusive exit surveys during the cancellation flow can change the trajectory of a business. Acting on this data can align a product with one’s best customers while reconfiguring acquisition efforts.
However, don't assume that feedback collection ends there. Proactively engaging with users in-app presents a unique opportunity to gauge sentiment at pivotal moments in the user experience, which can help teams validate decisions and generate new ideas. Using a tool like Usersnap provides easy feedback submission, streamlines workflows, and empowers teams to efficiently organize, amplify, and respond to users.
“User feedback is our secret sauce for beating churn. It's simple: listen, adapt, and watch your users turn from casual browsers into die-hard fans. It's all about making those connections stronger, one piece of feedback at a time," says Klaus-M. Schremser, Co-founder & CRO at Usersnap.
From our data, “Budget Limitations” was a dominant theme in 2023 for customers cancelling. While this can seem like an unresolvable scenario, the most successful companies on Churnkey utilize this as a chance to reset the relationship with their customers and establish a new equilibrium.
Can’t afford us right now? Take a pause, try a cheaper plan, or take a temporary discount. Survey responses in this category offer companies the greatest opportunity to empathize with their customers in the most direct way.
As for “Infrequent Usage” and “Expectations Not Met,” these responses serve as warning signs: you’re building for the wrong customer.
To put it another way, your customer isn’t who you think they are. This is an opportunity for your product and marketing teams to get closer to your audience, perform difficult but necessary research, and rethink what your product is, does, and how it’s marketed. Once you’ve addressed these expectations, you have a fresh opportunity to re-engage these former customers with win-back campaigns.
Luckily the final three survey responses warrant straightforward fixes: your product has quality problems. Whether or not your team chooses to address those is a whole exploration unto itself.
Finally, let’s address the dominant “Other Reasons” category.
This is a catch-all from across all of our organizations that encompasses highly-specific survey responses that apply to their businesses. For example, responses like “Not Dropshipping Anymore,” “False Positives,” and “Moving Out of The Area” were typical. As we see it, this is testament to the power of gathering business-specific data during the cancellation process.
How do customers react to offers when completing cancel flows?
Understanding how customers respond to different types of offers can help you refine the cancellation process for your own business.
How do you want your customers to feel as they depart? How invested are they in your business, and how much have you invested in them? What are the realities of their usage and how well do you understand them?
How do customers react to offers when completing cancel flows?
Understanding how customers respond to different types of offers can help you refine the cancellation process for your own business.
How do you want your customers to feel as they depart? How invested are they in your business, and how much have you invested in them? What are the realities of their usage and how well do you understand them?
How do customers react to offers when completing cancel flows?
Understanding how customers respond to different types of offers can help you refine the cancellation process for your own business.
How do you want your customers to feel as they depart? How invested are they in your business, and how much have you invested in them? What are the realities of their usage and how well do you understand them?
Offer Types: Offered vs Accepted
0
10%
20%
30%
40%
Offered
Accepted
Who does your business serve? What are their realities, patterns, seasons? If there’s one last hope you have to retain customers, it’s empathizing with them. Using familiar language, thoughtful solutions, and offers that reflect the extent of your customer's journey with you. And, ultimately, it's a chance to find a new equilibrium in your relationship.
“Contact Us” and support-related redirects performed great on a relative basis. We’ve found that these offers work particularly well when there’s a personal, communal connection forged between product and customer.
Pauses and plan changes worked best when deployed for products with seasonal usage patterns.
Discounts were deployed most and were accepted most in sheer volume. But we caution companies—offering discounts blindly is a good way to start out with a cancel flow—but it’s not the best long-term strategy. Over time, customers become immune to them and come to expect a discount.
Who does your business serve? What are their realities, patterns, seasons? If there’s one last hope you have to retain customers, it’s empathizing with them. Using familiar language, thoughtful solutions, and offers that reflect the extent of your customer's journey with you. And, ultimately, it's a chance to find a new equilibrium in your relationship.
“Contact Us” and support-related redirects performed great on a relative basis. We’ve found that these offers work particularly well when there’s a personal, communal connection forged between product and customer.
Pauses and plan changes worked best when deployed for products with seasonal usage patterns.
Discounts were deployed most and were accepted most in sheer volume. But we caution companies—offering discounts blindly is a good way to start out with a cancel flow—but it’s not the best long-term strategy. Over time, customers become immune to them and come to expect a discount.
Who does your business serve? What are their realities, patterns, seasons? If there’s one last hope you have to retain customers, it’s empathizing with them. Using familiar language, thoughtful solutions, and offers that reflect the extent of your customer's journey with you. And, ultimately, it's a chance to find a new equilibrium in your relationship.
“Contact Us” and support-related redirects performed great on a relative basis. We’ve found that these offers work particularly well when there’s a personal, communal connection forged between product and customer.
Pauses and plan changes worked best when deployed for products with seasonal usage patterns.
Discounts were deployed most and were accepted most in sheer volume. But we caution companies—offering discounts blindly is a good way to start out with a cancel flow—but it’s not the best long-term strategy. Over time, customers become immune to them and come to expect a discount.
How long can you hold customers’ attention within cancel flows?
Cancel flows should always be customer-centric and user-friendly. There shouldn't be more steps than necessary, no insider or confusing language, and no limitations that come across as arbitrary or limiting.
How long can you hold customers’ attention within cancel flows?
Cancel flows should always be customer-centric and user-friendly. There shouldn't be more steps than necessary, no insider or confusing language, and no limitations that come across as arbitrary or limiting.
How long can you hold customers’ attention within cancel flows?
Cancel flows should always be customer-centric and user-friendly. There shouldn't be more steps than necessary, no insider or confusing language, and no limitations that come across as arbitrary or limiting.
Number of Steps Viewed vs Status (Outliers Removed)
20.000
Cancelled
Bounced
Aborted
20.000
8
6
4
2
0
From our sampling, customers who are unsure about cancelling their subscription will tend to react quickly.In this sample, customers who “aborted” are ones who explore a cancel flow without cancelling or accepting an offer, while “bounced” customers open the flow and effectively choose to abandon the flow.
Total Duration in Seconds vs Status (Sampled, Outliers Removed)
80.0
79.8
79.6
79.4
79.2
79.0
78.8
78.6
0
20
40
60
80
Cancelled
Bounced
Aborted
For customers who are likely to cancel, their decision can take up to 80 seconds, while their typical tolerance for friction peaks at five steps.
For customers who are likely to cancel, their decision can take up to 80 seconds, while their typical tolerance for friction peaks at five steps.
How do cancel flow acceptance rates vary between B2C and B2B companies?
Acceptance rates shift wildly between B2C and B2B companies, with B2C companies seeing a typical retention rate between 20-22%. B2B companies, on the other hand, saw upwards of 40% retention rates through 2023.
How do cancel flow acceptance rates vary between B2C and B2B companies?
Acceptance rates shift wildly between B2C and B2B companies, with B2C companies seeing a typical retention rate between 20-22%. B2B companies, on the other hand, saw upwards of 40% retention rates through 2023.
How do cancel flow acceptance rates vary between B2C and B2B companies?
Acceptance rates shift wildly between B2C and B2B companies, with B2C companies seeing a typical retention rate between 20-22%. B2B companies, on the other hand, saw upwards of 40% retention rates through 2023.
Rate of Saves Over Time in 2023 (Percentage)
SAVE RATE
0.40
0.35
0.30
0.25
0.20
JAN
JAN
FEB
FEB
MAR
MAR
APR
APR
MAY
MAY
JUN
JUN
JUL
JUL
AUG
AUG
SEP
SEP
OCT
OCT
NOV
NOV
DEC
DEC
B2B
B2C
In 2023, we saw that B2C customers were more demanding and less receptive to cancel flow offers. But they behaved most consistently. On the contrary, B2B subscribers were more cyclical but were also more receptive to recalibrating their relationships.
B2B companies that are missing out on leveraging this offer-acceptance customer behavior and addressing churn directly should start taking action. Analyzing and creating compelling retention flows is a key piece of this process.
From the data we're seeing at Usersnap, customers with the greatest retention numbers gathering feedback earlier in the customer journey. For these customers, collecting and extracting customer insights—through segmented micro surveys—are phenomenal sources of insight for improving product direction and crafting retention offers.
In 2023, we saw that B2C customers were more demanding and less receptive to cancel flow offers. But they behaved most consistently. On the contrary, B2B subscribers were more cyclical but were also more receptive to recalibrating their relationships.
B2B companies that are missing out on leveraging this offer-acceptance customer behavior and addressing churn directly should start taking action. Analyzing and creating compelling retention flows is a key piece of this process.
From the data we're seeing at Usersnap, customers with the greatest retention numbers gathering feedback earlier in the customer journey. For these customers, collecting and extracting customer insights—through segmented micro surveys—are phenomenal sources of insight for improving product direction and crafting retention offers.
In 2023, we saw that B2C customers were more demanding and less receptive to cancel flow offers. But they behaved most consistently. On the contrary, B2B subscribers were more cyclical but were also more receptive to recalibrating their relationships.
B2B companies that are missing out on leveraging this offer-acceptance customer behavior and addressing churn directly should start taking action. Analyzing and creating compelling retention flows is a key piece of this process.
From the data we're seeing at Usersnap, customers with the greatest retention numbers gathering feedback earlier in the customer journey. For these customers, collecting and extracting customer insights—through segmented micro surveys—are phenomenal sources of insight for improving product direction and crafting retention offers.
Like this? We can tell you when we release new research projects.
Like this? We can tell you when we release new research projects.
Like this? We can tell you when we release new research projects.
What do customers mention during the cancellation process?
Offering an open text field during the cancellation process can make one feel vulnerable: judgment comes easy on the internet, and in 2023, subscribers weren’t shy. But we filtered out the anger and gibberish and uncovered a set of useful patterns.
Ultimately, customers were willing to discuss why they were leaving, what they wished they could have experienced with the product, which competitors were more appealing, and if they felt that they were being billed unfairly. We also found qualitative feedback to be an effective addendum to pricing experiments.
What do customers mention during the cancellation process?
Offering an open text field during the cancellation process can make one feel vulnerable: judgment comes easy on the internet, and in 2023, subscribers weren’t shy. But we filtered out the anger and gibberish and uncovered a set of useful patterns.
Ultimately, customers were willing to discuss why they were leaving, what they wished they could have experienced with the product, which competitors were more appealing, and if they felt that they were being billed unfairly. We also found qualitative feedback to be an effective addendum to pricing experiments.
What do customers mention during the cancellation process?
Offering an open text field during the cancellation process can make one feel vulnerable: judgment comes easy on the internet, and in 2023, subscribers weren’t shy. But we filtered out the anger and gibberish and uncovered a set of useful patterns.
Ultimately, customers were willing to discuss why they were leaving, what they wished they could have experienced with the product, which competitors were more appealing, and if they felt that they were being billed unfairly. We also found qualitative feedback to be an effective addendum to pricing experiments.
use
need
cancel
work
expensive
future
thought
good
think
subscription
feature
great
money
product
service
free trial
make
anymore
work
month
account
future
tool
everything
want
using
cancelling
chat GPT
time
free content
enough
future
use
need
cancel
work
expensive
future
thought
good
think
subscription
feature
great
money
product
service
free trial
make
anymore
work
month
account
future
tool
everything
want
using
cancelling
chat GPT
time
free content
enough
future
SECTION 02
Failed Payment Trends
Here’s what you can learn from the millions of failed payments Churnkey tracked and recovered in 2023.
Banks, credit cards, opaque policies, new laws—they can each affect the 40% (or more!) of your churn that’s involuntary. That’s a lot of lost revenue from people who want to pay you, for reasons you didn’t create. So buckle up. What we found might help you weather this storm.
SECTION 02
Failed Payment Trends
Here’s what you can learn from the millions of failed payments Churnkey tracked and recovered in 2023.
Banks, credit cards, opaque policies, new laws—they can each affect the 40% (or more!) of your churn that’s involuntary. That’s a lot of lost revenue from people who want to pay you, for reasons you didn’t create. So buckle up. What we found might help you weather this storm.
SECTION 02
Failed Payment Trends
Here’s what you can learn from the millions of failed payments Churnkey tracked and recovered in 2023.
Banks, credit cards, opaque policies, new laws—they can each affect the 40% (or more!) of your churn that’s involuntary. That’s a lot of lost revenue from people who want to pay you, for reasons you didn’t create. So buckle up. What we found might help you weather this storm.
Why do payments fail?
The types of payments you accept are largely determined by the business you’re in. B2C? Accept the widest variety of payment sources available. B2B? Can range from the mundane to the arcane.
Why do payments fail?
The types of payments you accept are largely determined by the business you’re in. B2C? Accept the widest variety of payment sources available. B2B? Can range from the mundane to the arcane.
Why do payments fail?
The types of payments you accept are largely determined by the business you’re in. B2C? Accept the widest variety of payment sources available. B2B? Can range from the mundane to the arcane.
B2B Companies
Failed Payments Breakdown by Decline Reason (as percentages)
0
10%
20%
30%
40%
50%
60%
We were surprised to see a large number of “Insufficient Funds” failures in 2023. We attribute this to an industry shift towards virtual card distribution for company staff.
These virtual cards reflect a new reality: their staff need the flexibility to purchase the tools they need, when they need them.
The downside? These virtual cards come with hard spending limits.
This decline reason, combined with the nebulous “Do Not Honor,” help us visualize the scale of virtual cards for businesses. It’s a new reality for which every subscription business in the B2B space needs to plan.
One way to avoid this scenario is to encourage customers to add backup payment methods. Whether it's another card, a processor like PayPal, or even ACH.
We were surprised to see a large number of “Insufficient Funds” failures in 2023. We attribute this to an industry shift towards virtual card distribution for company staff.
These virtual cards reflect a new reality: their staff need the flexibility to purchase the tools they need, when they need them.
The downside? These virtual cards come with hard spending limits.
This decline reason, combined with the nebulous “Do Not Honor,” help us visualize the scale of virtual cards for businesses. It’s a new reality for which every subscription business in the B2B space needs to plan.
One way to avoid this scenario is to encourage customers to add backup payment methods. Whether it's another card, a processor like PayPal, or even ACH.
B2C Companies
Failed Payments Breakdown by Decline Reason (as percentages)
0
10%
20%
30%
40%
50%
60%
While “Insufficient Funds” is the clear leader here for payment failures, we attribute this to B2C businesses’ willingness to accept debit cards. Debit cards and prepaid card transactions are dominant these days, comprising over half of the worldwide payment industry.
If your consumer business needs to accept debit cards, then deploying a payment retry solution that triggers after typical payroll dates can alleviate these failed payments.
Error codes like “Transaction Not Allowed” and “Do Not Honor” in the context of individual cards can have multiple reasons:
The payment might look suspicious
Your customer may have exceeded their daily limit
They may have entered the wrong digit somewhere along the way
The card they’re using might be a part of an account they closed
Generic “Try Again Later” errors tend to come down to network issues—a card issuer’s network might be overloaded with requests and denied the transaction, for example.
While “Insufficient Funds” is the clear leader here for payment failures, we attribute this to B2C businesses’ willingness to accept debit cards. Debit cards and prepaid card transactions are dominant these days, comprising over half of the worldwide payment industry.
If your consumer business needs to accept debit cards, then deploying a payment retry solution that triggers after typical payroll dates can alleviate these failed payments.
Error codes like “Transaction Not Allowed” and “Do Not Honor” in the context of individual cards can have multiple reasons:
The payment might look suspicious
Your customer may have exceeded their daily limit
They may have entered the wrong digit somewhere along the way
The card they’re using might be a part of an account they closed
Generic “Try Again Later” errors tend to come down to network issues—a card issuer’s network might be overloaded with requests and denied the transaction, for example.
While “Insufficient Funds” is the clear leader here for payment failures, we attribute this to B2C businesses’ willingness to accept debit cards. Debit cards and prepaid card transactions are dominant these days, comprising over half of the worldwide payment industry.
If your consumer business needs to accept debit cards, then deploying a payment retry solution that triggers after typical payroll dates can alleviate these failed payments.
Error codes like “Transaction Not Allowed” and “Do Not Honor” in the context of individual cards can have multiple reasons:
The payment might look suspicious
Your customer may have exceeded their daily limit
They may have entered the wrong digit somewhere along the way
The card they’re using might be a part of an account they closed
Generic “Try Again Later” errors tend to come down to network issues—a card issuer’s network might be overloaded with requests and denied the transaction, for example.
Which card brands are most prone to payment failure?
This isn’t about placing blame, it’s just framing for what you can expect when you accept certain card brands in certain contexts.
Which card brands are most prone to payment failure?
This isn’t about placing blame, it’s just framing for what you can expect when you accept certain card brands in certain contexts.
Which card brands are most prone to payment failure?
This isn’t about placing blame, it’s just framing for what you can expect when you accept certain card brands in certain contexts.
B2B Companies
Failed Payments Breakdown by Card Brand (as percentages)
0
10%
20%
30%
40%
50%
60%
Among B2B companies, American Express is more dominant as a payment option than for B2C companies. We attribute these payment failures simply to the overexposure of AMEX to B2B transactions.
As for VISA and MasterCard, this is simply a question of volume and virtual card issuance. Both MasterCard and VISA are dominant players in the virtual card industry, hence their disproportionate representation in these B2B results.
Among B2B companies, American Express is more dominant as a payment option than for B2C companies. We attribute these payment failures simply to the overexposure of AMEX to B2B transactions.
As for VISA and MasterCard, this is simply a question of volume and virtual card issuance. Both MasterCard and VISA are dominant players in the virtual card industry, hence their disproportionate representation in these B2B results.
Among B2B companies, American Express is more dominant as a payment option than for B2C companies. We attribute these payment failures simply to the overexposure of AMEX to B2B transactions.
As for VISA and MasterCard, this is simply a question of volume and virtual card issuance. Both MasterCard and VISA are dominant players in the virtual card industry, hence their disproportionate representation in these B2B results.
B2C Companies
Failed Payments Breakdown by Card Brand (as percentages)
0
10%
20%
30%
40%
50%
60%
American Express really has no dominance when it comes to B2C.
Predictably, it’s MasterCard and VISA, with VISA comprising the worst of the B2C payment failures.
This reflects VISA’s dominance in the debit and prepaid card space: these cards comprise nearly 60% of card transactions, and VISA dominates them all.
American Express really has no dominance when it comes to B2C.
Predictably, it’s MasterCard and VISA, with VISA comprising the worst of the B2C payment failures.
This reflects VISA’s dominance in the debit and prepaid card space: these cards comprise nearly 60% of card transactions, and VISA dominates them all.
American Express really has no dominance when it comes to B2C.
Predictably, it’s MasterCard and VISA, with VISA comprising the worst of the B2C payment failures.
This reflects VISA’s dominance in the debit and prepaid card space: these cards comprise nearly 60% of card transactions, and VISA dominates them all.
WRAPPING UP
Conclusion
Leveling up your retention capabilities isn’t distracting, boring, or unserious. On the contrary: it’s a new language you’ll need to speak in the coming years.
We're sure you've heard (or asked) some version of “what’s going on with churn?”
Right now, though, we're hearing that there's more scrutiny than ever before on the specifics of your retention scenario. That means that soon—if you’re not already—you’ll be hearing “why did [customer A] cancel?” or “what does ‘Do Not Honor’ mean, and why are we losing so much money because of it?”
WRAPPING UP
Conclusion
Leveling up your retention capabilities isn’t distracting, boring, or unserious. On the contrary: it’s a new language you’ll need to speak in the coming years.
We're sure you've heard (or asked) some version of “what’s going on with churn?”
Right now, though, we're hearing that there's more scrutiny than ever before on the specifics of your retention scenario. That means that soon—if you’re not already—you’ll be hearing “why did [customer A] cancel?” or “what does ‘Do Not Honor’ mean, and why are we losing so much money because of it?”
WRAPPING UP
Conclusion
Leveling up your retention capabilities isn’t distracting, boring, or unserious. On the contrary: it’s a new language you’ll need to speak in the coming years.
We're sure you've heard (or asked) some version of “what’s going on with churn?”
Right now, though, we're hearing that there's more scrutiny than ever before on the specifics of your retention scenario. That means that soon—if you’re not already—you’ll be hearing “why did [customer A] cancel?” or “what does ‘Do Not Honor’ mean, and why are we losing so much money because of it?”
Thing is, you can be ahead of this. Take what you’ve seen in this report as a baseline for your own company. Growing your business isn’t just about acquiring new customers—it’s about retaining them, too. There’s a revenue growth opportunity hiding in plain sight for SaaS companies like yours.
Most don’t think retention is a problem worth solving. And you know what? That might seem logical.
Nobody wants to hunt down delinquent payments that are less than a hundred dollars a month per customer. It’s just too expensive.
But when you think that this kind of churn is inevitable, you lose tens, hundreds, even millions of dollars per year in revenue. Recovering even a small fraction of it would make you a hero with your CFO, CEO, and Board.
So we hope this report gave you a useful roadmap to retention in your own organization. Because who knows what 2024 will hold?
Thanks, and we’re honored that you read this far. Hope it helps you with whatever you’re working on these days.
Scott Hurff
Co-founder and Chief Product Officer Churnkey
Anna Nadeina
Head of Growth
saas.group
Klaus-M. Schremser
Co-founder of
Usersnap
Thing is, you can be ahead of this. Take what you’ve seen in this report as a baseline for your own company. Growing your business isn’t just about acquiring new customers—it’s about retaining them, too. There’s a revenue growth opportunity hiding in plain sight for SaaS companies like yours.
Most don’t think retention is a problem worth solving. And you know what? That might seem logical.
Nobody wants to hunt down delinquent payments that are less than a hundred dollars a month per customer. It’s just too expensive.
But when you think that this kind of churn is inevitable, you lose tens, hundreds, even millions of dollars per year in revenue. Recovering even a small fraction of it would make you a hero with your CFO, CEO, and Board.
So we hope this report gave you a useful roadmap to retention in your own organization. Because who knows what 2024 will hold?
Thanks, and we’re honored that you read this far. Hope it helps you with whatever you’re working on these days.
Scott Hurff
Co-founder and Chief Product Officer Churnkey
Anna Nadeina
Head of Growth
saas.group
Klaus-M. Schremser
Co-founder of
Usersnap
Thing is, you can be ahead of this. Take what you’ve seen in this report as a baseline for your own company. Growing your business isn’t just about acquiring new customers—it’s about retaining them, too. There’s a revenue growth opportunity hiding in plain sight for SaaS companies like yours.
Most don’t think retention is a problem worth solving. And you know what? That might seem logical.
Nobody wants to hunt down delinquent payments that are less than a hundred dollars a month per customer. It’s just too expensive.
But when you think that this kind of churn is inevitable, you lose tens, hundreds, even millions of dollars per year in revenue. Recovering even a small fraction of it would make you a hero with your CFO, CEO, and Board.
So we hope this report gave you a useful roadmap to retention in your own organization. Because who knows what 2024 will hold?
Thanks, and we’re honored that you read this far. Hope it helps you with whatever you’re working on these days.
Scott Hurff
Co-founder and Chief Product Officer Churnkey
Anna Nadeina
Head of Growth
saas.group
Klaus-M. Schremser
Co-founder of
Usersnap