Preventing Subscription Churn

in Professional Software purchases

Context

At a professional software platform company, executives were increasingly concerned about rising churn rates as the business transitioned from traditional licensing to subscription and token-based models.

The core strategic question was:

  • How can we retain current customers, better understand their needs, and reduce churn in the long run?

This initiative was critical because churn not only meant lost revenue, but also risked eroding long-term customer trust in a high-cost, business-essential product.

 

Action

I led a multi-phase research initiative to understand the drivers of churn. My approach combined:

  • Behavioral data analysis to identify patterns in cancellations and upgrades.

  • Survey insights from NPS (Net Promoter Score) and CES (Customer Effort Score).

  • Customer intercepts and interviews with users at key decision points.

  • Follow-up surveys layered with known account data to validate trends.

This mixed-method approach gave us both the quantitative scale and qualitative depth needed to uncover hidden friction points in the subscription experience.

 

Results

The research revealed two main churn drivers:

  • False Churn (System-Induced Cancellations)

    • Many “cancellations” were not true churn. Customers were being forced to cancel subscriptions in order to upgrade or make changes.

    • This design flaw inflated churn numbers and frustrated customers.

    • Once surfaced, the client changed subscription management in the customer portal, reducing unnecessary cancellations.

  • True Churn (Project-Based Behavior)

    • For customers who were actually canceling, the main driver was the project-based nature of their own businesses.

    • Smaller SMB customers canceled in between projects to cut costs, since the software represented one of their largest expenses.

    • Tokens, designed to provide flexibility, were not widely adopted due to:

      • Lack of awareness.

      • Confusion about mechanics.

      • Rigid expiration dates misaligned with unpredictable project cycles.

Follow-on research clarified that customers valued flexibility over cost savings and were more willing to cancel and resubscribe than to use a model that felt restrictive.

Business Impact:

  • Improved subscription management flows to prevent false churn.

  • Adjusted token terms and expiration policies.

  • Created better educational resources and in-product calculators to help customers understand and compare subscription models.

 

Learning

Customer flexibility is paramount. SMBs manage volatile revenue streams and align software usage with their own client projects. Subscription models must adapt to this rhythm.

  • System design can distort churn data. By forcing cancellation as part of an upgrade path, the company misread customer behavior and inflated risk metrics.

  • Awareness ≠ adoption. Even when flexible models exist, customers won’t use them if they are confusing, rigid, or poorly communicated.

  • Balance is key. While the product was essential, its cost demanded solutions that respected customer budgets and cash flow realities.

This study not only improved the accuracy of churn reporting but also shaped more customer-centric subscription models, helping the company balance revenue goals with real-world customer needs.