What a spike in your cancellation curve is trying to tell you.

Most cancellation curves follow a predictable shape: a small bump in early months, then a slow, steady climb. That’s the norm.

But if you’re seeing a sudden spike in Month 3, something is off—and it’s probably not your product.

For VSC and home warranty marketers, a sharp increase in cancellations at a specific month is often a sign of external interference—and one culprit shows up again and again: lead reselling.

First, what does a normal cancellation curve look like?

In a healthy contract portfolio, the cancellation curve climbs gradually. A few contracts cancel right away—maybe due to buyer’s remorse or funding issues. After that, cancellations tend to taper off or rise slowly as customers drop off over time.

A spike—especially a steep, narrow one isolated to a single month—is not normal churn. It’s behavioral. Which means it’s probably driven by something outside your sales or customer success process.

Month 3 spikes often mean you’re being undercut

Here’s what we’ve seen behind Month 3 cancellation spikes:

1. Your lead provider is reselling the same lead to another marketer
2. That second marketer hits the same customer with a slightly better offer
3. The customer switches—often within the first 60–90 days of the original contract
4. You eat the cancellation and lose the sale

And guess what? You paid full price for that lead. And your marketing dollars? Gone.

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How to spot the pattern

If you’re using the Experience Curve, filter your cancellations by:

• Lead source: Are all the Month 3 cancels coming from one vendor?
• Campaign vintage: Did this pattern show up only in recent cohorts?
• State or region: Is the overlap happening in a specific geography?

You’ll start to see clusters. And those clusters often point to aggressive reselling practices or loose exclusivity agreements that aren’t protecting your investment.

What to do next

Once you’ve identified the spike and tied it to a lead source or tactic:

• Flag the vendor—and renegotiate or replace them
• Consider a holdout test: Stop buying from that vendor for 30 days and compare cancel curves
• Monitor your curves monthly—not just your topline cancel rate

Remember: cancellation curves don’t just show what’s happening—they show when and why it’s happening.

Bottom line:

If your Month 3 cancel rate is spiking, that’s not customer behavior—it’s competitive pressure. And without visibility, you’ll never know you’re being undercut.

That’s why we built the Experience Curve: so VSC and home warranty marketers can finally see what’s breaking—and where to fix it.

📉 [Experience Curve by Dark Sky Data →]