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👥
The Client
The Client is discovery and booking platform for beauty services, providing the platform to discover places in the area, book appointments and pay for beauty services.
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📌
Problem
We observed a slight increase in share of passive churn in total churn in May 2023. The trend continues. We hypothesised that this can be also driving our total churn
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🖇️
Goal
Outline the root causes and solutions/recommendations for the passive churn increase hypothesised by the team.
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In a nutshell
Key findings
- The Client’s paying provider base grew ~18% YoY in 2023, driven mainly by stronger retention of existing providers (recurring paying base +20% YoY).
- Overall churn rate is not increasing materially, but within churned providers the passive share has risen from ~59% to ~69% since early 2023.
- This shift toward passive churn is mainly driven by Payment Source 1 (PS1) providers, where passive churn rate from overall providers grew from ~1.4% to ~2.4%.
- Key recommendations
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Analysis & Findings
Problem definition & context
In 2023, The Client’s paying provider base grew by ~18% Year-over-Year (YoY) - (Dec 2022 → Dec 2023)
- Most of this growth came from recurring (retained) paying providers, which grew ~20% YoY, demonstrating strong retention of the existing paying base.
- Total churned providers (volume) increased by ~11% YoY, but overall churn share decreased by ~10% YoY, suggesting that growth outpaced churn in relative terms.
- Newly acquired paying providers (
new_paids) were stronger in 2022 than in 2023, with a ~10% YoY decrease in 2023 indicating that acquisition was slowing.
Churn composition over time
The hypothesis provided is that passive churn had a visible increase in May 2023 onwards:
- Passive churn as a share of total churn went from a steady average 59% in early 2023 to 66% in May 2023, then continued to grow steadily until reaching a 69% by late 2023.
| Metric |
Early 2023 (Jan-Mar) |
May 2023 |
Late 2023 (Oct-Dec) |
Change (Early → Late) |
| Passive Churn Share (% total churn) |
59% (steady) |
66% |
69% |
+10pp |
| Passive Churn Rate (% paying providers) |
~5.2% |
6.1% |
6.8% |
+1.6pp |
| Active Churn Rate (% paying providers) |
~4.1% |
3.1% |
3.0% |
-1.1pp |
- Active churn improved as a percentage of paying providers (-1.1pp), while passive churn increased.
- As a result, the mix of churn shifted: passive churn now represents a larger share of total churn.
- This shift could demonstrate a bigger opportunity to prevent churn that could be more easily addressed as it might be affected by:
- Payment failures
- Payment communication/recovery flows
Root Cause Analysis