Why Fixing "Involuntary Churn" Often Increases Total Churn
Involuntary churn feels like leaving free money on the table, because we think that failed payments can be easily recovered.
The founders creating the most engaging products are focusing on a different question: Why do customers' payments fail in the first place?
While most companies focus on payment recovery campaigns, some are discovering that “involuntary” churn often indicates deeper, yet unaddressed, voluntary churn that customers haven’t taken action on yet. This shift changes everything about how you approach retention.
In this post, you will learn:
The simple audit that reveals which failed payments are actually voluntary churn
How to segment payment failures by customer behavior
Email strategies for active versus inactive customer payment failures
When to allow customers to churn naturally (and why it benefits your business)
What Is Involuntary Churn (And Why It’s Misleading)
Before diving in, let’s clarify the basics:
Involuntary churn happens when customers leave because of payment failures, like expired credit cards, insufficient funds, or payment processing problems. The customer didn’t choose to cancel actively, so it feels like a problem that can be fixed.
Voluntary churn occurs when customers intentionally decide to cancel their subscription. They log in, press the cancel button, and leave on purpose.
Most companies treat these as entirely different issues: involuntary churn gets aggressive recovery efforts, while voluntary churn involves exit interviews and retention offers. But here’s the problem: this distinction often overlooks what’s truly happening.
The Uncomfortable Truth About “Involuntary” Churn
Here’s what happens in most SaaS businesses: a customer’s payment fails, and the company immediately begins sending recovery emails. However, there’s a significant difference between a customer who uses your product daily and just had an expired card, versus a customer who hasn’t logged in for months.
When a customer’s Netflix payment fails, they resolve the issue promptly. In contrast, when someone’s unused SaaS subscription fails, they allow it to expire. The payment failure isn’t the real cause - it’s usually because the customer has already decided to leave but hasn’t actively canceled yet.
This creates a problem: you temporarily save the subscription while planning a larger cancellation wave later. These customers, who have reluctantly returned, rarely use the product, need extra support, and ultimately cancel anyway.
The Simple Payment Recovery Audit
Before sending another recovery email, review your last 50 payment failures and categorize them into three groups.
Recently Active Customers
Last login within 7 days of a payment failure
These are usually genuine payment issues, such as expired cards.
Most customers resolve their payment issues quickly when notified.
Occasionally, there are active customers with this pattern.
Last login was 1-4 weeks before a payment failure.
Mixed results—some are genuine issues, others are losing interest.
Response rates vary widely.
Inactive Customers
No login for over 30 days before payment failure.
Often, these customers have already mentally canceled.
They show very low recovery rates and engagement.
Active customers almost always resolve payment issues, while inactive customers rarely do. When they do, they often cancel within a few months anyway.
A Recovery Strategy for Each Category
Stop treating every payment failure the same. Here’s how to get started:
Recently Active Customers
Approach: Help them fix the issue quickly
Email tone: Helpful and urgent
Follow-up: Multiple attempts over several days
Sample email: Hi [Name], your payment didn’t go through - probably because your card has expired. You can update your payment info here: [Link]. Need help? Just reply to this email.
Occasionally Active Customers
Approach: Give them an easy choice
Email tone: Neutral and respectful
Follow-up: Two emails max
Sample email: “Hi [Name], your payment didn’t go through. If you’re still using [Product], you can update your payment here: [Link]. If you’d rather cancel, you can do that here: [Cancel Link].
Inactive Customers
Approach: Make cancellation easy and guilt-free
Email tone: Understanding and helpful
Follow-up: One email only
Sample email: Hi [Name], your payment failed. Since you haven’t used [Product] lately, we’ll cancel your subscription in 7 days. To keep it active: [Link]. Otherwise, no action is needed on your end.
When Payment Recovery Actually Hurts Your Business
Signs you should let a customer churn naturally:
They haven’t logged in for over a month
Their payment has failed multiple times before
They’ve been requesting support to cancel or reduce usage, or they've recently removed or downgraded team members.
What to do instead:
Send a single polite cancellation notice
Offer to assist them in exporting their data
Include a link to reactivate if they decide to return later. Avoid sending multiple recovery emails
Why this helps: You prevent frustrated customers, lessen support workload, and concentrate on customers who truly want to stay.
What to Track Instead of Just Recovery Rates
Most companies only track the number of failed payments they recover. Here’s what matters more:
Customer Health Metrics:
How many recovered customers log in within two weeks?
Do recovered customers use key features after payment recovery?
How many recovered customers remain active after three months?
Business Health Metrics:
What percentage of payment failures comes from inactive customers?
How much support time is allocated to recovered versus regular customers?
Are recovered customers likely to recommend your product?
Early Warning Signs:
More payment failures are caused by inactive customers (product engagement issue)
Low login rates after successful payment recovery indicate you’re retaining customers who don’t want to stay.
High support volume from recently recovered customers shows they’re frustrated about being charged.
In conclusion, I would say that your recovery rate may seem impressive, but involuntary churn often masks voluntary churn that customers have not yet taken action on.
The healthiest approach is to offer different treatments for different customers: work hard to help engaged customers resolve payment issues, but make it easy for disengaged customers to leave. This provides better actual retention, fewer support headaches, and customers who genuinely want to use your product.
What about businesses that don't depend on logins to be useful? Eg, Zapier. You set it up and it works in the background.
Good point. Login tracking doesn't work for background automation tools.
For Zapier, the real engagement signal is: Are your Zaps actually running?
If Zaps ran in the last 30 days → Recover the payment
If nothing's executed in 60+ days, they've already switched tools or don't need it. The principle holds: measure actual usage, not logins.
However, "usage" refers to different things for different products. For set-it-and-forget-it tools, track execution/API calls, not sessions.