Understanding the difference between voluntary and involuntary churn is crucial for effective segmentation. Voluntary churn, which is often preventable, can be addressed quickly to improve retention rates. In contrast, involuntary churn presents a more complex, nuanced challenge that requires careful analysis to resolve.
Involuntary churn
Involuntary churn occurs when a customer wants to buy from you again, but is prevented from doing so for reasons beyond their control. This can happen for many reasons, including:
- Their company is going out of business
- Their business was acquired and forced to adopt the existing tech stack
- A change of leadership and company strategy
- Their automated renewal failed because their credit card information was outdated
None of these reasons reflect dissatisfaction with your product or service.
Voluntary churn
In contrast, voluntary churn indicates that customers chose not to continue doing business with you for reasons such as:
- They didn’t achieve the goals they were hoping for when they purchased your product or service.
- They didn’t find your product design user-friendly.
- They don’t utilize all their licenses to justify continuing.
- They had a bad experience when looking for support and enablement.
- They decided to buy from a competitor instead.
These reasons involve a conscious decision by your customer not to buy from you again. Both involuntary and voluntary factors can cause a customer to churn.