Recurring revenue and churn are closely connected — and for SaaS companies, keeping churn under control helps maintain healthy recurring revenue streams and meet growth goals. 

While some turnover is unavoidable, it doesn’t have to derail your business. By identifying the reasons behind customer churn, you can manage and reduce it effectively.

Why Do SaaS Customers Churn?

Before you strategize how to prevent churn, you must understand its root causes. Is your software or app user retention declining due to unmet expectations, poor engagement, or issues like payment failures? Pinpointing these factors is the first step toward actionable solutions. 

To understand the reason behind churn, it’s helpful to categorize it. Churn can be broadly categorized into two types, each requiring different mitigation strategies.

Voluntary Churn

Voluntary churn happens when customers intentionally cancel their subscriptions, typically due to dissatisfaction, a lack of perceived value, price sensitivity, or misaligned expectations. 

Voluntary churn stems from factors such as:

• Unmet expectations — including poor onboarding, customer support, or even issues with the entire end-to-end customer experience
• Lack of engagement
• Pricing concerns, including high costs or unexpected price increases
• Product issues, including a bad product-market fit, or even product quality and performance issues

Mitigating voluntary churn requires aligning customer expectations, delivering consistent value, and fostering engagement throughout the full customer lifecycle. Learn more.

Involuntary Churn

Involuntary churn is when the customer’s renewal fails unintentionally, often due to incorrect information, expired credit cards, or insufficient funds.

You can reduce involuntary churn by streamlining renewal processes and improving payment experiences. Learn more.

What’s a Good Churn Rate?

Churn rates can vary widely, even within the SaaS industry itself. On average, software businesses experience a monthly churn of around 3.5%. Due to volatility among SMBs, SaaS products who focus there tend to experience higher churn. And because enterprise SaaS products often require long-term contracts, they tend to experience lower churn rates.

Renewals Amplify Churn Risk

Renewals represent a moment of risk in the life of a SaaS contract, with both voluntary and involuntary churn coming into play

Monitor and analyze your customer churn data. Understanding the types and causes of your churn lays the groundwork for proactive strategies for customer retention, especially during renewal windows. 

According to Gartner’s 2024 software buying trend report, some of the main reasons buyers cancel or switch to a competitor include:

• The competitor’s solution is more attractive
• High costs
• Poor integration
• Buggy performance
• Failure to deliver advertised benefits
• Reduced budget (though many buyers are increasing their software budget in 2025)

During the renewal process, customers may also encounter logistical barriers like payment issues. In addition to the involuntary churn issues it may cause, a difficult payment process can easily tip the scales toward voluntary cancellation if they’re already on the fence. 

Addressing churn at this critical stage requires proactive planning and clear communication throughout the customer lifecycle. 

Preventing cancellations during renewals starts with early, thoughtful customer engagement. By prioritizing proactive communication and transparent pricing, you can build trust and address concerns before they lead to churn.

Ensure Personalized, Proactive Communication

To reduce the likelihood of last-minute cancellations, engage customers well before the renewal period. Early outreach allows you to address potential concerns, demonstrating to your customers that you value their experience and are invested in their success. And analyzing customer data allows you to create personalized communications.

As you craft a communication strategy, consider:

• Reaching out to users who haven’t engaged with your product recently and offering to help them extract more value
• Sending timely reminders about upcoming renewals or feature changes
• Using these touchpoints to highlight opportunities for upselling or cross-selling

Offer Transparent Pricing

Surprising customers with pricing changes at renewal undermines trust and heightens churn risk. Instead, sending an email or notification well before the renewal date allows you to demonstrate transparency and clearly explain the reasons behind any price increases — and to highlight any new features or improvements that will further entice them to renew.

Provide High-Quality Customer Service

A customer’s renewal decision often reflects their overall experience with your company. Poor customer service can drive them to competitors, while consistent, high-quality support builds trust and loyalty.

Key elements of high-quality customer service include:

• 24/7 availability to meet customer needs anytime
• Personalized and proactive outreach tailored to individual users
• Knowledgeable agents who resolve issues on the first contact.
• Easily accessible support on the platforms your customers use most

Use Data to Identify Churn Risks

With the power of machine learning and AI, you can use predictive analytics to identify behaviors that signal potential churn risk, such as increasing customer support interactions, lack of engagement with new features, or long periods of inactivity.

Once you identify high-risk customers, reach out with personalized offers and communications to keep them in the loop and reduce subscriber churn.

If you're not sure where to start when collecting or using this data, an outsourced churn management partner can provide expertise and strategy to optimize your approach.

Provide a Positive Onboarding Experience

Churn during renewals often arises from a lack of perceived value. Sometimes this signals the need for a more customer-centric product strategy, but it can also result from poor communication or an inefficient onboarding process. 

A strong onboarding experience — one that features clear and consistent processes, a wide variety of easily accessible resources, and ample follow-up — helps customers understand and gain value from your services, boosting your user retention rate and increasing the likelihood they’ll renew their subscription.

Personalize Renewal Touchpoints

Personalization can add a human touch to the experience by aligning renewal content with customer usage, industry, and behaviors. 

For example, in a renewal reminder email, you might include data-driven insights showing how your product has delivered tangible ROI during their subscription period, or highlight new features that could enhance their workflows.

Offer Loyalty Programs / Incentives 

Adding loyalty programs and incentives help increase retention and customer lifetime value by encouraging repeat purchases, early renewals, and ongoing subscriptions. 

Consider offering rewards like discounts or exclusive perks (such as free add-ons or 24/7 customer support) for early renewals and long-term subscribers.

Collect and Address Customer Feedback

Unhappy customers don’t always voice their concerns unless prompted, which means you could miss vital opportunities to improve their experience before they churn.

Regularly request and act on feedback so dissatisfaction doesn’t go unnoticed —  you create a channel for open communication, allowing you to address problems early.

If customers do ultimately churn, however, the same principle applies — exit surveys uncover patterns like dissatisfaction with pricing, product limitations, or customer support gaps, arming you with insights to make meaningful changes. 

Structured systems and automation play a critical role in preventing involuntary churn.

Proactively Ask Customers to Update Their Payment Information

Encouraging customers to update their payment information before it expires can prevent interruptions to service and reduce avoidable churn. Ensure these communications are clear, accessible, and easy to act on — and if customers don’t respond to your initial reminder, follow up with additional messages.

Send Automated Renewal Reminders

Keep your customers informed about upcoming payments, giving them ample notice. Include key details like renewal date, subscription benefits, and pricing so customers have all the information they need to make the decision to renew. 

Provide Transaction Failure Notifications

When a payment attempt fails, send a timely notification with clear, actionable steps for correcting it, such as updating payment details or calling customer support for assistance. 

Implement a Dunning Process

A structured dunning process — a systematic method of communicating to recover overdue payments from customers — can significantly reduce involuntary churn. For failed transactions, follow up with multiple reminders over a designated grace period, using clear messaging combined with flexible payment resolution options to ensure the customer feels supported, not pressured.

Get Ahead of the Churn

Churn is unavoidable, but it doesn’t have to devour your recurring revenue. If you understand why your customers churn and address those root causes, you’ll improve retention and CLTV — and feel less pressure to constantly acquire new customers. 

Whether you want to bring down your churn rate, optimize your renewals management processes, or transform your entire customer journey, SupportNinja can help with solutions that enhance every touchpoint in the customer experience.

Learn about our full-lifecycle CX solutions