What is Involuntary Churn?
- Khushi Lunkad
- May 7
- 2 min read
Updated: 2 days ago
This article is a part of my Churn Combat Kit. Read the rest of the chapters here.
Churn has two parts:
Voluntary
Involuntary
Voluntary churn occurs when people raise their hand and wave goodbye. They exit via a cancel flow or via customer support.
Involuntary is when they silently churn. When you go to charge their card, the payment fails.
In Stripe, you will see error codes like 'do not honor', or 'transaction not allowed', or 'card expired'.
There are lots of payment failure codes. Each country and each bank has their own way of sending these codes. Some do a good job, and some don't. It's getting better each year though.
Involuntary churn has two parts:
Hard declines
Soft declines
A) Hard declines
Hard declines are cards that get declined permanently. You cannot make another charge without the customer's intervention.
For example, the customer reports that their card is stolen. Or if the card expires. No matter what you do, you cannot draw a payment.
B) Soft declines
Soft declines are easier. They're more common than hard declines. You can retry the card and fix the problem, without involving the customer.
For example, the bank's server was down at a given period. Or, if the customer's bank had insufficient funds. Do not honor is a blanket catch all, when banks don't give you a clear reason. So, you can retry!
Visa and Mastercard both have limits on how many times you can retry a charge. If you exceed those limits, you'll invite fines up to 15k USD.
Questions for you
What percentage of your revenue churn is involuntary? (important to measure but no easy way)
What is the split between hard and soft declines? (not critical to measure)
What is the split between different reasons like do not honor vs insufficient funds? (easy to measure in most billing providers)
Do you have retries enabled in your billing provider? (it's easy to enable but hard to test/improve)
Do you have a 3rd party tool to recover an additional ~20% of involuntary churn? (don't DIY this without a tool)
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