What churn rate can you expect for your subscription box business?
What’s a good churn rate? What’s a bad churn rate? If you haven’t yet launched, what number should you put in your business plan?
I wrote in a previous post about typical subscription e-commerce retention rates and how, when considering launching a subscription box businesses, your assumptions about retention rates are critical to whether or not the business looks like it’ll be profitable.
To help you choose a realistic number, here are the retention rates and churn rates of a few subscription box businesses based on information that has been shared online:
- According to this interview with Andrew Warner of Mixergy, one of the founders of Foodzie (selling monthly tasting boxes of artisan food) said they had average subscription lengths of 6-8 months. That implies a churn rate of around 14% (and a retention rate of 86%).
- BarkBox (selling monthly boxes of toys, gifts and treats for dogs) reportedly boasted a 93-95% retention rate in their first year. I assume that’s a monthly retention number. Taking the midpoint of 94% retention rate, that equates to a 6% monthly churn rate or an average subscription length of around 17 months.
- UmbaBox (selling monthly boxes of curated handmade goods) reportedly claimed a retention rate of 90% (churn rate of 10%) a few months after their launch, with a not-insignificant $18,000 in monthly revenue. That’s equivalent to an average subscription length of 10 months.
It would be dangerous to read too much into these numbers, especially the ones for businesses in their early stages, but they at least give some ballpark numbers that you might find useful.
Note: do bear in mind that there may be some survivorship bias here – businesses with low retention rates would have been less likely to raise money and get written about. So these numbers may be on the optimistic side.
Have you come across any other published numbers for subscription box churn rates or retention rates?
For more information about subscription commerce, see Subscription Commerce Insider.
Photo by ceonyc