Fighting churn: How to never lose a subscriber
Recurly customers have a 98% subscriber retention rate and a churn rate as low as 1%, so Recurly’s Chief Marketing Officer, Theresa, McEndree, hosted a webinar on “How to never lose a subscriber.” Keep reading for some best practices on how to move nimbly with insights and intelligence, scale efficiently, and cater to today’s consumers.
Subscriber expectations change at the speed of light. Coupled with today’s macroeconomic trends forcing a shift in spending habits, how do you respond to an ever-changing market? Even though 95% of consumers feel the weight of inflation, they still feel more loyal to (51%) and spend more money (42%) with brands and businesses they subscribe to. Subscriptions present a huge market opportunity for businesses, growing eight times faster than a non-subscription company.
While the future is bright for subscriptions, the realities of the economic climate still ring true–31% of U.S. consumers plan to cancel at least one subscription this year. While the top reasons for voluntary churn include price increases, a product or service becoming no longer of use, and finding a better competitor offering, below are proven ways to mitigate an increasing churn rate.
1. Iterate. Experiment. Adapt. 76% of consumers demand personalization–such as add-ons or the option to choose an ad-supported or premium subscription–and the ability to personalize subscription plans in just a few clicks. To create the best options for your subscriber base, intelligently test and optimize. For example, test cohorts that come in from different marketing channels to assess their reactions to personalization opportunities. To achieve this, partner with an integrated, flexible subscription solution to pivot quickly with trends and lower your operational costs in the long run.
An example of plan personalization from FabFitFun.
2. Deliver options across the subscriber lifecycle. Variety is the spice of the subscriber lifecycle. Trial lengths, flexible payment methods, billing frequency–subscribers crave options. Let them tell you where, how, and when they are willing to pay for exclusivity and content and when they’re willing to make sacrifices for lower costs. Remember: the more options that satisfy the needs of your subscribers, the less likely they are to churn.
An example of multiple ways to engage from TIME.
1. Unlock subscriber insights to grow. How are you currently using data to drive subscriber retention and grow your relative average revenue per user (ARPU) and lifetime value (LTV)? Retention opportunities start at signup and last through the entire relationship, giving you innumerable chances to capture the right data to engage with subscribers in a meaningful, targeted way. Analyze different customer segments to discover your ideal subscriber, including their reasons for voluntary and involuntary churn, then decide how you want to manage each in a way that maximizes subscriber retention and LTV individually.
2. Don’t fail your subscribers–minimize involuntary churn interruptions. 13% of recurring transactions are at risk of failure, and there are more than 2,000 reasons a payment can fail–the only way to combat involuntary churn is to apply preventative measures. Choose a billing partner that is adept at understanding these struggles, and create a full payments strategy with dynamic, automated retry logic and intelligent dunning campaigns to stay on top of these potential risks. Incorporate this strategy into a positive, well-communicated experience that reinforces your brand.
Read more: How Output reduced failed payments by 45%
1. Be ready to scale without limits. Does your subscription management solution offer the opportunity and ability to scale with high velocity, high volume transactions? Does it allow you to apply industry best practices and benchmarks? Is it ready for global expansion–recognizing local requirements for currencies, payment gateways, tax, and language? With an experienced partner, you can anticipate challenges and ensure your tech stack has the necessary security and compliance backbone to grow.
2. Build community and loyalty. One of the biggest changes from the direct-to-consumer (DTC) consumer shift is the desire to feel more connected to a brand through community and social propositions. Create a sense of community by offering omnichannel experiences and rewarding loyal and engaged subscribers. In fact, brands with an emotional connection have consumers with a 306% higher lifetime value.
An example of the Twitch community.
3. Offer alternatives to cancel. Creating a positive experience even during cancelations is key to managing your churn rate. Offer options in lieu of a hard cancellation–a multi-step process with ideally three to five steps where you suggest an alternative then end with the option to pause. This is a great opportunity for feedback and insights for win-back campaigns, which could mean offering an enticing annual subscription rate to replace a high monthly cost, for example. 65% of consumers prefer a positive customer experience over advertising, so create an experience they want and watch your subscriber retention rates soar.
The average churn rate for subscription businesses across all industries is 5.6%, but with these churn management best practices, you can lower it measurably. To grow faster, ensure the flexibility to test and iterate so you can continually evolve, enable personalization, and go global with ease. To grow smarter, find an expert partner with the right tech stack and 360* subscriber insights to support your subscriber relationships, revenue, and growth. To grow stronger, build an exciting community and a consumer experience that caters to exactly what your subscribers want.