How to Reduce Churn in Recurring Payment Models

Reducing churn in subscription-based businesses isn’t just about keeping customers happy, it’s about protecting recurring revenue, lowering acquisition costs, and driving profitability over time. Bain & Company reports that a 5% increase in retention can increase profitability by 25% to 95% over time In recurring payment models, this makes churn a core business challenge, not just a support issue.

Understanding Churn in B2B SaaS

Churn in B2B SaaS refers to customers discontinuing their services, often resulting in a significant impact on recurring revenue. It’s categorised into:

• Voluntary churn—when customers cancel due to dissatisfaction, product mismatch, or cost issues.
• Involuntary churn—when customers are lost due to payment failures or expired billing credentials.

Research suggests this distinction is critical for creating targeted churn reduction strategies. 

Involuntary churn is especially damaging because it occurs without intent, making it harder to detect unless systems for failed payment recovery are in place

This makes it essential for teams to separately track both customer churn and revenue churn, since enterprise customers may churn less frequently but account for larger losses

1. Aligning Customer Success with Retention

Customer success is more than just good support—it’s about proactively helping clients achieve value. McKinsey’s analysis of 75 SaaS businesses found that top performers in revenue growth consistently tracked churn metrics and invested heavily in customer success.

Key practices include:

• Frequent communication to understand evolving customer needs
• Continuous value delivery through product updates and support
• Personalised support models for different account sizes (e.g., enterprise vs. SMB)

McKinsey notes that while net-revenue churn is critical, the top-performing companies reduce it primarily by improving gross-revenue churn.

2. Predictive Analytics and Churn Forecasting

For B2B SaaS businesses with recurring payments, identifying churn risk early is critical to protect long-term revenue.

Predictive analytics helps detect customers at risk of churn by tracking patterns in:

• Login and usage frequency
• Payment delays, declines, or upcoming card expiries
• Drop in product engagement or support activity
  

These indicators can be used to trigger retention actions, like personalised follow-ups, discounts, or customer success outreach, before churn happens.

When integrated with your subscription billing and payment platform, these models can automate interventions. Platforms like Cashfree help connect payment signals (like failed transactions or UPI declines) with retry logic, alerts, and recovery workflows, reducing involuntary churn without manual effort.

Source:  Bain & Company – Prescription for Cutting Costs.

3. Optimise Onboarding to Reduce Early Churn

Poor onboarding is one of the top causes of early churn. A well-structured onboarding process ensures that customers quickly realise the value of a product or service, leading to higher satisfaction and retention rates.

The Impact of Onboarding on Customer Retention

Studies have shown that a significant portion of customer churn can be attributed to inadequate onboarding experiences. For instance, over 50% of churn can be linked to poor onboarding processes.

Onboarding Strategies to Reduce Churn

1. Personalised Onboarding Experiences 
2. Clear Communication of Value
3. Comprehensive Training and Resources
4. Regular Check-Ins and Feedback Loops

4. Improving Payment Success Rates with Localised Billing Infrastructure 

Improving payment success rates with localised billing infrastructure can have a direct and measurable impact on subscription churn. 

One of the most common reasons for involuntary churn is failed transactions—cards being declined due to currency mismatches, international transaction blocks, or non-compliance with local banking regulations. 

By implementing a localised billing infrastructure, businesses can reduce these friction points by charging users in their local currency, routing payments through local acquirers, and supporting region-specific payment methods like UPI in India, SEPA in Europe, or Konbini in Japan. This increases the likelihood of successful payments and ensures that subscribers aren’t unintentionally dropped due to technical or regional limitations. 

When customers experience seamless renewals without interruptions, trust in the service deepens. Over time, this reduction in involuntary churn improves overall customer lifetime value and helps stabilise recurring revenue.

5. Pricing Strategy and Value Perception

A well-structured pricing model not only attracts customers but also ensures they remain engaged over time

Key Pricing Models and Their Impact on Churn:

• Tiered Pricing: Offering multiple packages at different price points caters to diverse customer needs and budgets. This flexibility allows customers to select a plan that aligns with their requirements, potentially enhancing satisfaction and reducing churn.
  
• Usage-Based Pricing: Also known as pay-as-you-go, this model charges customers based on their actual service usage. While it lowers the entry barrier and can attract customers with variable needs, it may lead to unpredictable costs for users, potentially increasing churn if not managed transparently. ​
  
• Freemium Models: Providing basic features for free while charging for advanced functionalities can attract a broad user base. However, if the free version is too feature-rich, users may lack the incentive to upgrade, resulting in higher churn rates without corresponding revenue generation. ​
  

Strategies to Optimise Pricing and Enhance Retention:

• Align Pricing with Customer Value Perception
• Transparent Communication
• Flexible Payment Terms

6. Support and Relationship Building

Customers don’t always leave because of the product — they often churn due to poor post-sale experience. In subscription models, support isn’t a cost centre; it’s a retention engine.

Here’s what effective support looks like in the context of reducing churn:

• Multiple touchpoints: Offer support via email, chat, call, and even WhatsApp. Customers expect convenience.
  
• Faster resolution: Subscription businesses risk involuntary churn when billing issues go unresolved, especially near renewal dates.
  
• Accountability: Assigning a dedicated success manager or relationship lead (especially for high-value accounts) can prevent escalations.

Conclusion

Reducing churn in subscription-based businesses isn’t about one-time fixes—it’s about building consistent, system-led experiences that prevent drop-offs at every stage of the customer lifecycle.

Platforms like Cashfree enable businesses to automate critical retention touchpoints—from real-time payment retries and UPI AutoPay to alerts and analytics—so that revenue isn’t lost to preventable failures.

Reducing churn is retention, revenue, and reputation rolled into one. And the sooner it’s addressed, the faster long-term growth compounds.

Cashfree also allows businesses to manage the full subscription lifecycle—initiate, pause, cancel, or update mandates—through a single API, making it easier to recover failed payments and retain high-value customers without manual intervention.