Active vs passive churn, and why the split matters

Passive churn is when a customer leaves without meaning to, most often because a payment failed. Active churn is when a customer makes a conscious decision to cancel. The two look identical in your churn rate but have nothing in common underneath, which is why they need different fixes. In this mini-episode of Datadrivet, Joni Lindgren and Jasmin Yaya split churn along exactly this line.

Active churn is a deliberate act. Jasmin’s example is cancelling her own Netflix subscription: the customer decides they no longer want to be a customer and stops paying.

Passive churn, which the hosts also call unintentional churn, happens without the customer even knowing they’ve left. The classic cause is a failed payment, for example a credit card that expired while the customer still wants the service.

The reason to keep these two apart is that the cause is different, so the fix is different. A customer who decided to leave has a value problem you have to address before they reach the cancel button. A customer who left by accident has a billing problem you can often recover with a reminder or a card-update prompt, no persuasion required. Lumping both into one churn rate hides which one is actually draining you.

The takeaway: before you try to lower churn, separate the customers who chose to go from the ones who slipped away by accident, because you can’t fix both with the same move.

The hosts invite listeners to share how their own companies measure and reduce churn over on LinkedIn.

Listen to the full episode of Datadrivet for the full breakdown. If you want to know whether your churn rate is normal for your model, that is what the benchmark tool is for: https://benchmark.scilla.studio