MRR, churn rate, and LTV: the metrics that matter
Monthly Recurring Revenue (MRR) is the normalised monthly value of all active subscriptions. Churn rate is the percentage of subscribers who cancel or lapse in a given month. LTV (Lifetime Value) is the average revenue generated per subscriber before they cancel. These three numbers tell you whether your subscription programme is growing, stable, or quietly declining — and none of them is visible in Shopify's native analytics.
- MRR = sum of (active subscribers × their monthly plan value)
- Monthly churn rate = cancelled subscribers ÷ subscribers at start of month
- LTV = average order value × average number of orders before churn
- Net MRR growth = new MRR + expansion MRR − churn MRR
Dunning: automatic recovery of failed subscription payments
Failed payments are the largest single source of involuntary churn in subscription businesses. Cards expire, billing addresses change, and fraud blocks trigger without warning. A dunning system automatically retries failed charges on a configurable schedule (commonly day 1, day 3, day 7, day 14) and sends cardholder update emails between retries. Stores with good dunning typically recover 30–50% of initially failed payments that would otherwise have cancelled.
Churn prediction and proactive retention
Not all churn starts with a cancel click. Behavioural signals — subscribers who skip multiple orders in a row, who haven't opened a renewal email in 60 days, whose average order value is declining — predict cancellation before it happens. Subscription apps that surface these at-risk subscribers let merchants intervene with targeted offers (a discount, a product swap, a personal email) before the subscriber decides to leave.
- Multi-skip behaviour predicts cancellation 2–4 weeks ahead
- Email non-engagement signals passive churn risk
- Win-back offers sent to at-risk segments can save 15–25% of predicted churners
Bulk operations and merchant controls
At scale, merchants need tools to operate subscriptions in bulk: pausing all subscriptions for a product going out of stock, moving billing dates for a fulfilment schedule change, swapping a discontinued product variant across hundreds of active contracts. These operations are impossible through Shopify's native admin and require a subscription app with a proper operator dashboard.
Notification management and customer communication
Subscribers expect to be told what is happening with their orders. Upcoming order notifications (typically sent 3–7 days before the billing date) reduce chargebacks, give customers a chance to skip or modify, and keep the merchant relationship warm. Failed payment notifications, shipping confirmations, and renewal receipts are equally expected. A subscription management platform should handle all of these with configurable templates and reliable delivery.
- Upcoming order emails sent 3–7 days before billing reduce chargebacks
- Failed payment emails with a direct card-update link maximise recovery
- Renewal receipts and shipping notifications maintain subscriber trust