---
title: "State of Retention 2025"
description: "Annual research report analyzing $3B+ in subscription revenue, 3 million cancellation sessions, and 6 million failed payments to reveal why customers cancel, how they respond to retention offers, and how failed payments behave worldwide."
canonical: "https://churnkey.co/reports/state-of-retention-2025"
category: "reports"
related:
  - /feature/cancel-flows.html.md
  - /feature/payment-recovery/index.html.md
  - /feature/payment-recovery/payment-retries/index.html.md
  - /feature/payment-recovery/dunning-campaigns/index.html.md
  - /feature/dynamic-offers.html.md
  - /feature/subscription-pauses.html.md
  - /blog/hard-soft-declines.html.md
last_updated: "2026-09-11"
---

# State of Retention 2025

The best insights for voluntary and involuntary churn behavior at scale.

## Dataset

Since last year's report, Churnkey analyzed over **$3 billion in subscription revenue**. That includes:

- 15 million subscriptions
- 3 million cancellation sessions
- 6 million failed payments
- $250M of revenue recovered by Churnkey

---

## Section A: Churn Trends

### The Two Types of Churn

While voluntary churn gets more attention — since it's comprised of painful subscription cancellations — **involuntary churn** is often overlooked because it fails quietly in the background.

When a subscription is cancelled because the payment failed, this is considered involuntary churn. Involuntary churn can easily comprise 40% of your churn, if not more, making it critical to address.

**Within involuntary churn, there are two sub-types:**

- **Soft declines**: Temporary issues (e.g., insufficient funds, credit limit exceeded) that can typically be resolved through card retries, payment walls, and dunning recovery campaigns.
- **Hard declines**: Permanent issues (e.g., stolen cards, business closures) that require recovery (or dunning) campaigns, card update forms, and payment walls. Automated card retries are not allowed for hard card declines, and card issuers will penalize businesses who attempt to retry hard declines.

### How Did Churn Trend in 2024?

For over a thousand companies spread across the globe:

- **Voluntary churn** generally hovered around **7%** monthly
- **Involuntary churn** centered around **1%** monthly
- **Overall churn** hovered near **10%** throughout the year, increasing in the waning months of 2024

**Key insight**: Churn rates are deceiving. Even a seemingly low monthly churn rate of **5%** results in losing nearly half (**46%**) of one's customers annually. Monthly churn rates above 10% lead to annual churn rates over **70%**, which would be catastrophic for most businesses — you're effectively replacing your entire customer base each year.

**Monthly churn rate in 2024 by type:**

| Month | Total churn | Voluntary churn | Involuntary churn |
|---|---|---|---|
| Jan | 9.63% | 7.14% | 0.74% |
| Feb | 9.44% | 7.16% | 0.45% |
| Mar | 9.59% | 7.15% | 0.62% |
| Apr | 8.55% | 6.725% | 0.48% |
| May | 9.44% | 7.31% | 0.64% |
| Jun | 9.505% | 7.07% | 0.535% |
| Jul | 9.845% | 7.105% | 0.965% |
| Aug | 9.465% | 6.815% | 1.315% |
| Sep | 9.69% | 6.52% | 1.28% |
| Oct | 9.98% | 7.105% | 1.05% |
| Nov | 9.64% | 7.24% | 0.92% |
| Dec | 9.73% | 7.035% | 0.83% |

**How monthly churn compounds into annual churn:**

| Annual churn rate | Equivalent monthly churn rate |
|---|---|
| 10% | 0.87% |
| 14% | 1.25% |
| 18% | 1.64% |
| 22% | 2.05% |
| 26% | 2.48% |
| 30% | 2.93% |
| 34% | 3.40% |
| 38% | 3.91% |
| 42% | 4.44% |
| 46% | 5.01% |
| 50% | 5.61% |
| 54% | 6.27% |
| 58% | 6.97% |
| 62% | 7.75% |
| 66% | 8.60% |
| 70% | 9.55% |
| 74% | 10.62% |
| 78% | 11.85% |
| 82% | 13.32% |
| 86% | 15.11% |
| 90% | 17.46% |

> "Once you've got customers hooked, many people stop there. But it's a mistake. Keeping paying customers long-term usually requires active defence against churn. And this matters. It's far cheaper to keep existing customers than to acquire new ones." — **Aakash Gupta**, author of Product Growth and ex-VP of Product at Apollo.io

---

## Section B: Cancellation Trends

### What You Can Learn from Three Million Cancellation Sessions

After analyzing nearly three million cancellation sessions, hundreds of thousands of customer-centric offers, and saving nearly two million subscriptions from cancellation, we noticed a number of clear trends.

### Why Customers Cancel

Customers are generally satisfied with the product to which they're subscribed. Cancellations are driven primarily by practical factors like budget and usage frequency — but that's not the entire picture.

**Top reasons customers cancel, 2023 vs 2024 (% of voluntary churn):**

| Cancellation reason | 2023 | 2024 |
|---|---|---|
| Budget Limitations | 35.1% | 32.97% |
| Infrequent Usage | 27.1% | 30.6% |
| Other Reasons | 16.43% | 17.85% |
| Expectations Not Met | 11.05% | 8.63% |
| Alternative Solution | 4.66% | 4.28% |
| Technical Issues | 3.61% | 4.69% |
| Usability Challenges | 2.06% | 0.98% |

#### Budget Limitations (33%)

Budget limitations remained the **leading cause of voluntary churn at 33%**. However, after analyzing millions of freeform follow-up questions, so-called "budget limitations" can frequently be used as a repository for product frustration, disillusionment, or bad experiences. Targeting price has historically been the easiest way for customers to express dissatisfaction.

If your cancellation survey is flooded with budget concerns, experiment with your pricing and feature mix. Budget limitations also indicate a perceived value mismatch and can signal issues with product/market fit.

#### Infrequent Usage

Infrequent usage remains the **second-highest cancellation reason**, with **3% more users citing it in 2024** compared to last year. These typically occur in businesses with seasonality, low switching costs, or an on-and-off use case. Offering pauses, discounts, and "lite" versions of plans are effective mitigation strategies.

#### Unmet Expectations

Cancellations due to unmet expectations point to potential misalignment between product promise and delivery:

- **Overpromised features**: Users expect capabilities that don't align with the product
- **Underutilized features**: Customers may not fully understand the product due to poor onboarding or lack of feature visibility

#### Alternative Solutions (~4%)

While slightly declining as a cited cancellation reason, "alternative solutions" still remained slightly higher than **4%**, flagging competition as a persistent churn vector. Churn to competitors suggests gaps in differentiation.

---

### How Customers React to Retention Methods

**Acceptance rate by voluntary retention offer type:**

| Retention offer | Acceptance rate |
|---|---|
| Discount | 53.9% |
| Pause | 19.2% |
| Plan Change | 6.7% |
| Other | 20.2% |

#### Discounts (53% of accepted offers)

Discounts accounted for **53% of all acceptance offers** and are the most widely accepted offer among customers. Common strategies include:

- One-time discounts
- Coupons for a fixed period (e.g., "20% off for 3 months")
- Lifetime discounts (rare)

**Insight**: If customers cite budget constraints, it might be tempting to race to zero on price. But for many businesses this isn't sustainable and can cheapen the product. We recommend rolling out reasonably-sized one-time discounts first, then gradually increasing generosity if offer acceptance is low. Think of discounts as a journey to achieving price equilibrium.

**Strategic discounting** — tailoring offers based on customer segments such as early vs. late churners or trialing vs. active customers — can reduce revenue churn and help you achieve stronger pricing alignment.

#### Pauses (19% acceptance rate)

Pauses had a **19% acceptance rate** across all cancellation sessions. Offering customers the option to pause rather than cancel outright is a fantastic opportunity to retain a customer.

Key scenarios where pauses work well:

- **Seasonal businesses**: Most businesses have an off-season when customers tend to cancel (e.g., event management software outside wedding season)
- **On-and-off use cases**: Products like photo asset libraries where customers cancel and renew per project
- **Lower AOV / B2C**: Companies with lower switching costs benefit from offering a pause instead of a direct cancellation

From the research, a significant number of customers prefer to pause/unpause to avoid the hassle of re-entering card details. Without a pause option, some may never return and instead switch to a competitor.

**Pause structure matters**: Longer pauses increase the risk of disputes or immediate cancellation when charged again. A good default (e.g., one month) with the option to extend gives customers control while keeping them in the ecosystem.

#### Plan Changes (~7% acceptance)

Customers accepted new plans nearly **7% of the time**. Hidden or exclusive plans surfaced during cancellation — such as "lite", weekly, or daily options — can provide an alternative to full cancellation while preserving usage and account data.

#### Other Offers

Includes trial extensions, customer redirection to Support, and custom offers like team seat handoffs. Some of the highest-performing Cancel Flows use these "niche" offers that speak directly to the subscriber base with well-defined segmentation.

---

## Section C: Failed Payment Trends

### Why Payments Fail

Payments largely fail for transactions both parties want completed because of:

- **Insufficient funds**: nearly half of all declines
- **Risk management reasons**: 25-30% of all declines
- **Card-related issues** (expirations, lost cards, stolen cards): 10-15% of all declines

**Full breakdown of decline reasons (% of all failed payments):**

| Decline reason | Share of declines |
|---|---|
| Insufficient Funds | 42.3% |
| Highest Risk Level | 9.7% |
| Transaction Not Allowed | 8.5% |
| Do Not Honor | 8.1% |
| Generic Decline | 5.1% |
| Previously Declined | 4.3% |
| Try Again Later | 4.3% |
| Incorrect Number | 3.9% |
| Invalid Account | 3.0% |
| Partner Insufficient Funds | 2.0% |
| Rule | 1.2% |
| Expired Card | 1.2% |
| Pickup Card | 1.0% |
| Card Velocity Exceeded | 1.0% |
| Lost Card | 0.8% |
| PayPal Payment Declined | 0.8% |
| Stolen Card | 0.7% |
| Blocklist | 0.5% |
| Link Connection Closed | 0.4% |
| Cash App Payment Declined | 0.4% |
| Incorrect CVC | 0.4% |
| Cash App Customer Request Expired | 0.2% |
| Requested Block on Incorrect ZIP | 0.2% |
| Revocation of Authorization | 0.2% |
| Processing Error | 0.2% |
| Invalid Amount | 0.1% |
| Invalid CVC | 0.1% |
| Reenter Transaction | 0.1% |
| Requested Block on Incorrect CVC | 0.1% |
| Card Not Supported | 0.1% |
| Link Additional Verification Required | 0.1% |
| Invalid PIN | 0.1% |
| Restricted Card | 0.1% |
| Authentication Required | 0.1% |
| Call Issuer | 0.1% |
| Unknown Risk Level | 0.1% |
| Undeliverable Payouts | 0.1% |
| Revocation of All Authorizations | 0.1% |
| Link High Risk | 0.1% |
| High Risk Score | 0.1% |
| Cash App Customer Request Declined | 0.1% |
| PIN Try Exceeded | 0.0% |
| Currency Not Supported | 0.0% |
| Elevated Risk Level | 0.0% |
| Live Mode Test Card | 0.0% |
| Not Permitted | 0.0% |
| Issuer Not Available | 0.0% |
| Stop Payment Order | 0.0% |
| Merchant Rule | 0.0% |
| Withdrawal Count Limit Exceeded | 0.0% |
| Testmode Charges Only | 0.0% |
| Customer Requested | 0.0% |

### How to Deal with Failed Payments

#### 1. Payment Retries

Retries are especially useful for "insufficient funds" codes — moving transaction attempts to dates or times when cards are more likely to be recharged helps more payments succeed.

**Retry limits**: Mastercard allows 35 attempts; Visa allows 15 attempts within 30 days. Exceeding these limits can lead to fines as high as $15,000.

Payment retries are very effective. Churnkey data shows recovery rates as high as **89%** using precision card retries.

#### 2. Customer Intervention (Dunning)

Hard declines (expired or cancelled cards) require customers to update their payment information. To maximize recoveries:

- **Frictionless dunning campaigns**: Email and SMS reminders to prompt card updates without requiring login
- **Inline card updates**: Alert customers to update payment details directly in-app
- **Advanced segmentation**: Tailor dunning messages based on customer attributes (plan type, subscription age)
- **Flexible payment options**: Offer partial payments or temporary discounts
- **Payment walls**: Restrict access to features to nudge users into updating cards

### How Payments Were Recovered

In 2024, Churnkey data showed:

- **70% of all involuntary churn detected was recovered** (one of the highest recovery rates in the industry)
- Among dunning emails and SMS campaigns alone, the average **recovery rate was 42%**, showing the power of intelligent retry technology

**Billing Contact API** provided about a **10% uplift** in email recoveries by targeting billing contacts.

**How failed payments were recovered, by method (% of recoveries):**

| Recovery method | Share of recoveries |
|---|---|
| Precision Retries | 28.1% |
| Billing Contact API | 10% |
| Email | 8.4% |
| Failed Payment Wall | 3.5% |
| SMS | 0.6% |

> "Setting up correct payment processing is one of the most important things you can do as a subscription product. [...] Using a vendor like Churnkey's Precision Retries helps optimize retries for soft declines and customer outreach for the hard declines." — **Dan Layfield**, author at Subscription Index, previously at CodeAcademy and UberEats

### Failed Payments by Region

Failed payments behaved differently across the world:

**Top decline reasons by country (% of failed payments):**

| Decline reason | US | Australia | UK | India | Germany |
|---|---|---|---|---|---|
| Insufficient funds | 50.1% | 81.4% | 66% | 4.8% | 62% |
| Do not honor | 12.6% | 4.6% | 7.3% | 24.7% | 11.3% |
| Highest risk level | 20.8% | 3.9% | 0% | 6% | 0% |
| Transaction not allowed | 10.2% | 0% | 12.3% | 62.2% | 10.3% |

**Insufficient Funds** (~60% global average):
- Highest: Australia (81.4%), Poland (80.1%)
- Lowest: Singapore (29.3%), Indonesia (25.0%)
- Higher rates may indicate more debit/prepaid card usage or macroeconomic factors

**High Risk Level**:
- Highest: Singapore (23.6%), United States (20.8%)
- This is a hard decline requiring customer intervention

**Do Not Honor**:
- Highest: India (24.7%), Philippines (24.2%), Indonesia (13.7%)
- Lowest: Netherlands (4.7%), Australia (4.6%)
- Generic decline code; higher rates in developing markets may indicate less granular decline code implementation

**Transaction Not Allowed**:
- Highest: India (62.2%), Indonesia (34.1%)
- May indicate regulatory restrictions (e.g., Reserve Bank of India's subscription policies) or cross-border transaction limits

---

## Section D: Why Retention Matters

Improving retention capabilities isn't a distraction from core subscription business — it's a new language you'll need to speak on an increasing basis.

There's more scrutiny than ever on the specifics of churn: why specific customers cancel, what specific decline codes mean, and where revenue is being lost.

> "Depressingly, your monthly churn stat also tells you how quickly you'll churn through your customers if you do nothing. For example, with an 8% monthly churn, you'll lose almost two-thirds of your customers each year. Even with a 4% monthly churn, you're rebuilding a third of your customer base year after year." — **Lenny Rachitsky**, author of Lenny's Newsletter

Losing one to two-thirds of customers each year is a staggering hill to climb. Marketing teams must acquire even more customers to grow, and customer success teams must upsell existing customers to see healthy net churn.

Churnkey was built to cut churn, improve retention, and do it all in a customer-centric, user-friendly way. Over the past four years, Churnkey has helped companies **save roughly 20-40% of the revenue that would have otherwise been lost to churn**.

> "I spent years of my career acquiring, activating, and converting free customers into paying customers. But working in a high-volume subscription business, my teams missed a huge opportunity to have more impact, and drive more revenue — by reducing churn." — **Andrew Capland**, author at DeliveringValue, Growth Advisor and Coach

---

## About This Report

Authors: Khushi Lunkad (PLG and Marketing), Mert Ozgun (AI Engineer), Scott Hurff (Co-founder and Chief Product Officer) — Churnkey.

## Related

- [Cancel Flows](/feature/cancel-flows.html.md) — Churnkey's customizable cancellation experience
- [Payment Recovery](/feature/payment-recovery/index.html.md) — Automated failed payment recovery
- [Precision Retries](/feature/payment-recovery/payment-retries/index.html.md) — ML-driven retry optimization
- [Dunning Campaigns](/feature/payment-recovery/dunning-campaigns/index.html.md) — Email and SMS recovery campaigns
- [Dynamic Offers](/feature/dynamic-offers.html.md) — Personalized retention offers
- [Subscription Pauses](/feature/subscription-pauses.html.md) — Flexible pause options
- [Soft and Hard Credit Card Declines](/blog/hard-soft-declines.html.md) — The two sub-types of involuntary churn, explained
- [How To Encourage SaaS Customers To Pause Their Subscriptions (Instead of Cancelling)](/blog/how-to-encourage-saas-customers-to-pause-their-subscriptions-instead-of-cancelling.html.md) — Resource linked from the report's pause findings