Subscription churn Walkthrough

How to read the Subscription churn report

The Subscription churn report is similar to the Cohorts report, although it focuses on your Subscription data from Recharge.
It's similar to the Cohorts reports because the way to interpret it is mostly the same: it shows customers grouped by the month they first signed up for a subscription and how their value changes over the preceding six months (by default).

Here’s an example from one of our test stores:

Analyzing data for a single cohort

Let’s start by breaking down the components of the report for just one cohort:

1

The first cell of every row identifies the cohort that you’re looking at. In this case, the cohort consists of customers who first signed up for their subscription in January 2024.

2

The second column shows the number of New subscription customers for that cohort. In the example above, we see that the January 2024 cohort consists of 57 new subscription customers.

3

The following cells show how many customers from the January 2024 cohort continue having an active subscription from months 0 until 6. In the example above, although 61% of the 57 customers from the January 2024 cohort still had an active subscription by month 3, only 7% continued to do so from month 4 and onwards.

👉 Without cohort analysis, this insight would be harder to uncover. Although this might be an exaggerated example, it's easy to overlook the behavior of a specific cohort and how it reacts to a given acquisition strategy or marketing campaign.Let’s look at another example of a report:

Let's look at another report as an example:In column “0” we see a value of 100%. This states the obvious that all customers were in the cohort on month 0 but sets the baseline for the following columns - the percentage (or number) of customers who are still active evolves as time goes by, with the January 2024 cohort only maintaining less than half as many customers (47.7%) on month 8 compared to month 1.

As we continue to the right (looking at each row), it's normal to see the numbers decrease month-to-month as some customers cancel their subscription. This means the lower the decrease, the stickier the subscription, as only a small amount of customers cancel per month. In the example above, by month 8 after first signing up for a subscription, only 47.7% remain active, which may reflect that cohort's retention could be improved. (To be totally clear, each cell in the row is the number of customers who remain, compared to the number of New subscription customers for that month).

👉 Use case: Imagine this sample report came from your store. What would you do with the above information? While it’s hard to reach any firm conclusions by looking at just one cohort, the data here can suggest which reports to run, which filters to apply, and which cohorts to compare in order to learn valuable information about your customers.

For example, we know that the 36% of repurchasing customers from our May 2020 cohort generated high sales totals in the six months after their first orders. Do these customers have something in common? Are most of them coming from the same marketing channel? The same country? Did they sign up for a loyalty program? Because these customers are so valuable, you would want to run new reports with various filters to try to build a profile of your best customers.

For example, comparing January 2024 with May 2024 shows us a 3x increase in number of New subscription customers, although the number of customers who ordered up to month 3 is lower, from 82% to 65%. This might mean that although we're acquiring more subscription customers, their retention is lower. Which is expectable to some degree and depending on your cost of acquisition, can even mean you can acquire more customers and still maintain a healthy retention rate.

How to customize your Subscription churn report

The top banner of the Subscription churn report includes a number of settings you can customize to dig deeper into your customer data. Let’s take a closer look at what you can learn by adjusting each of these settings.

Time period

The default Subscription churn report displays customer data from the previous six months. If you’d prefer to see a different time range, click on the box marked “Time period”. You’ll see options to reach as far back as four years, or you can define your own custom date range.

When does it make sense to look at reports with shorter vs longer time periods?

Shorter time periods may make more sense for you if your customer base is dynamic, meaning that new customer cohorts may behave very differently in comparison to previous cohorts.

Reports with longer time periods, however, will be better-suited for businesses where customer behavior has held relatively steady over time.

Timeframe

In the next box to the right, you can choose to separate your customers into cohorts based on the week, month or year in which they first signed up for a subscription.

When does it make sense to split customers into smaller cohorts (grouped by week or month of first order) vs larger cohorts (grouped by quarter or year)?

As with time periods, shorter timeframes (which result in smaller cohorts) may make more sense if you have a dynamic customer base and/or if you’re trying to quickly draw conclusions about a new group of customers.

👉Use case: Let’s say your business is in the CPG industry, and you want to acquire more subscription customers by launching a program where new customers get their first product for just the cost of shipping. This program will only be successful if the average lifetime value of these new customers makes up for the loss you take on their first orders. If new customers don’t subscribe, you risk taking a major hit. In this case, you would want to run reports over short time periods with cohorts separated into weeks. This would help you quickly estimate the CAC payback time of your new subscriber base in order to analyze the viability of the program.

If your customer base has behaved in a relatively stable manner over multiple quarters or years, then selecting longer timeframes can give you a reliable estimate of the lifetime value of your customers.

Choosing which metrics to analyze

The Subscription churn report gives you the option to display two types of metrics in your report. The report will keep the same format regardless of the metric you select, but different metrics will help you reach different insights and conclusions about your data.

By default, your report will display Active subscribers, in percentage (%) or absolute (#) number of customers in comparison to the number of New subscription customers for that cohort. The other option is looking at Revenue generated by these cohorts. To change this metric, simply select one of the metrics from the Metrics drop-down menu (see below), and a new report will instantly generate.

Let’s walk through what each of these metrics is calculating and the value provided by each type of report.

⚠️ Note: All sales-related metrics include taxes and account for both refunds and canceled orders.

💡 Tip: For some of these metrics, it may help to see values represented as a percentage instead of an absolute number. To switch the format to percentages, just click on the % icon in the box marked “Format”.

Active subscribers

Active subscribers retained from customers signing up for their first subscription. Based on customers, not individual subscriptions. If customer changes their subscription product, the customer is still counted as active.

👉 Use case: Let’s say you sell supplements. Because supplements are a consumable product where lifetime values of customers are much higher than first order values, you know you don’t have to be profitable on a first order basis. Let’s say that reports on your existing customers indicate that your business is profitable as long as you make back your CAC in 6 months. Now imagine that you maintain the same CAC while doubling your marketing budget to expand into a new marketing channel. Do these new customer cohorts behave in the same way as previous ones? Will you continue to make back your CAC in 6 months? Generating reports with this accumulated gross margin per customer metric will help you analyze whether this new marketing initiative is profitable.

Revenue

Actual revenue generated during week/month/year from the group of customers signing up for first time subscription. %-values are relative to the number of New subscription customers and is based on actual Recharge orders.

Applying filters for more advanced analysis

On the far right of the settings bar of the report you'll find the filters you can apply to your report. Applying these filters is the most effective way to extract actionable insights from your customer data.

To apply a filter to your report:

Click the filters button (highlighted above)
Decide which filter(s) you want to apply to your report
Click the text box of your selected filter. This will display a drop-down menu of every available measure that you can filter by.
Select one or more options
Click the blue button marked “Apply filters” in the bottom right of the panel.

The following filters are available:

Products

With these filters, you can run reports to:

Only include customers who purchased a certain product with their first subscription order
Only include customers who purchased from a certain collection with their first subscription order
Only include customers who purchased a certain product type with their first subscription order

👉 Use case: Let’s say you sell two types of products. One type has a higher average gross margin, but the other type has a higher repurchase rate. Comparing a report of average customer value for each product type can help you identify which product type is more profitable over the long-term.

Other

Filters in the “Other” category allow you to run reports to:

Only include customers from specific countries

👉 Use case: A country you’ve been selling to issues a new tariff that increases your shipping costs. Analyzing average customer value for residents of this country can help you decide whether to continue selling to the country or whether you need to adjust your prices.

What is cohort analysis and why is it valuable?

Cohort analysis is a decades-old method of studying a customer base by first separating it into groups, and then tracking how each group (or “cohort”) engages with a business over time.

The Subscription churn Report applies this method by grouping your customers into cohorts based on when they first signed up for a subscription with your store. For each cohort, it calculates how many customers still have an active subscription or how much revenue active customers in that cohort generate, and then it continues to update this figure as customers maintain or cancel their subscription. Ultimately, this allows you to estimate the lifetime value and retention of your past and present subscription customers.

The report also offers various parameters, filters, and other settings that you can manipulate to better understand how and why different subsets of customers are worth more to your business than others, and which will help you to confidently make important decisions such as:

How much can I afford to spend to acquire new subscription customers?
Which of my marketing initiatives should I abandon, and which should I scale up?
Which product categories should I expand to maximize long-term profits?