16 Strategies to reduce subscriber churn
In the subscription business, winning a customer is only the beginning.
If you're ready to take serious steps to reduce customer churn rates, there's a lot of good news. It takes some work, but it pays off. Noticeably in your monthly recurring revenue and customer feedback surveys.
1. Analyze why churn is happening
If you're leaving this up to an exit survey, you're missing out. Get your support teams to call up your former customers and investigate. Their job is simple: Dig until they understand what turned this once-current customer into a churn rate statistic.
When you rely on customer satisfaction surveys, you miss out on quite a few reasons for customer churn, including some that point to whether this churn is voluntary or involuntary churn. If unhappy customers misunderstood some step in the onboarding process, you might not pick up that nuance from a survey. That said, customer engagement surveys do have a place in improving your retention rates.
2. Engage with your customers and get valuable feedback
If you want to know something, sometimes the best thing to do is just ask. At every opportunity, you should invite and welcome customer feedback, both from your most loyal customers and from those who have decided to churn. While you might be the expert at marketing and selling your product, your customers may have a completely different perspective.
Conduct regular surveys of your subscriber base to get an understanding of how people are using your product, the features they'd like to see, and the challenges they're experiencing. This kind of engagement can help mitigate voluntary churn before it happens.
You should also ask canceled subscribers for feedback immediately after they cancel. This will give you their reasons for cancellation in concrete terms, helping you potentially overcome the objection and reduce future churn in other customers.
For instance, if you survey your churned customers and two out of three say that the price was too high, it's probably the right moment to take a look at your pricing structure. In this type of survey, you should make it as simple as possible to respond. Checkboxes instead of required comment fields.
3. Train your customers on your products
Offer free webinars. Post video tutorials. Host live product demos. Your subscription business runs on providing content or a service, so make sure one of your offerings is about what you provide.
In a SaaS business, this comes with the territory since you're creating a new product under your customers' feet. Teaching your current subscribers how to realize the full potential of your products and services goes a long way toward keeping those customers. Sharing tips and tricks while listening to your customer feedback can create a virtuous cycle; the better you train your current customers, the smarter your onboarding for new customers can get.
4. Identify those about-to-churn customers
An ounce of prevention is worth a pound of cure. And preventing customers from churning is one sure way to avoid paying customer acquisition costs all over again.
If you have a good sense of your customer lifecycle and key conversion points, you'll be able to identify the actions and behaviors that occur before a cancellation. This might include reduced usage, decreased login frequency, or an increase in support tickets. If you're aware of these signals, you can implement tactics to mitigate the risk of churn.
Finding customers at risk of churning is all about customer relationships 101: Talk to the quiet ones.
Go look for those customers who have had the least interactions with your company. For example, if a customer hasn't logged in for a few weeks after regular usage, you can shoot them a quick “we miss you” or a “what's new in our product” email. If they're repeatedly reaching out for support, you can proactively have a customer success agent get in touch to schedule a conversation. Do they have an open service request? Have they been unresponsive to other customer satisfaction surveys? Have they simply gone passive?
Make this effort mirror your efforts to understand why customers did cancel. You're looking for trends and themes when studying this population of your customers. Taking the time to identify these behaviors and react appropriately can dramatically reduce churn before it happens.
5. Define your churn goals and identify your most valuable customers
Define your acceptable churn rates and which customers you're committed to keeping. Set thresholds for a monthly acceptable churn rate, maximum churn tolerance, and any churn thresholds that would signal new action for your marketing teams.
Then, identify those valuable customers already showing loyalty with their wallets. Make sure your customer success teams know who they are. Develop some customer segmentation data and a customer profile for this audience. Make sure your teams have a firm grasp of what makes a most valuable client. And do better than simply identifying the big spenders. After all, the wrong client may pay plenty of dollars before they demoralize your departments.
Once you know which customer types are most profitable, who's most ready to cancel, and who's most likely to accept offers, your teams will be well-positioned to manage churn rates.
6. Offer incentives
Think about the last time you stayed in a hotel. You paid for your night in the room with the expectation of a bed to sleep in and a clean bathroom. You arrive at check-in and receive a warm chocolate chip cookie with your room key, get to your room and find mints on your pillow. After a good night's sleep (with a complimentary sleep mask) you enjoy a free continental breakfast. All of these little add-ons make you feel welcome and appreciated. Next time you take a trip you're likely to book with the same hotel-the same concept applies to your subscription business.
Value-added services such as member-only content, premium support access, and additional features make your product more attractive to paying customers. While you might only see a marginal increase in your operating costs with these offerings, you'll see an exponential increase in brand loyalty and reduced churn.
7. Be proactive about communicating with customers
Dunning is the process of communicating with customers (usually by email) to try to collect payments due. In the subscription business model, dunning is specific to reducing churn because of failed payments. Most involuntary churn in subscription businesses happens because of an expired payment card. Because you know when your customers' cards expire, you can easily send them reminders to update their card information.
We recommend sending multiple emails during the dunning process as this gives customers multiple reminders to update their payment information. We do not recommend dunning cycles longer than 28 days for monthly plans. A dunning period longer than 28 days can cause invoices to get into a “loop” state where a new invoice is issued even though the prior invoice was not collected.
This is by far the simplest way to reduce involuntary churn understand that your customers are busy, and give them a reminder to update their card information. Be sure to make it as convenient as possible to do so by offering a direct link to log in and update payment information.
8. Turn billing obstacles into your allies
Credit card changes, billing info changes, or a simple typo on payment information can cause involuntary churn. However, you don't have to leave these process problems to chance.
Mastercard, Visa, American Express, and Discover cards all offer an automated service that monitors customers' credit cards for changes and makes updates to the records whenever necessary so that recurring transactions can be processed successfully. In this way, a subscription business processing payments can avoid a failed payment before it even occurs.
Recommended reading: Maximizing subscription revenue recovery
9. Deploy a subscription billing and management platform
Along with the dunning process, credit card transactions that fail can automatically be retried using a subscription billing and management platform. The reason for the failure determines the frequency and timing of the retries. For example, if a customer has insufficient funds, this may take longer to rectify than other failure types. This kind of “intelligent” retry logic means that retry attempts are set at a schedule that will most likely lead to success.
The goal is to maximize revenue gained through retry attempts, while also being mindful of the fees related to these transactions to make sure they stay within reason.
Top subscription management platforms, like Recurly, take advantage of billions of data points and machine learning to attempt retries at just the right time, thereby minimizing retry costs for merchants.
Recommended reading: Strategies to minimize churn & maximize revenue
10. Target the right audiences
If they joined for the free lunch, will they pay for a five-course meal? Some customers are worth churning. Your products and services have value, one that grows as you develop your offering. When you have identified those subscribers who keep delving deeper into your products, then you can keep looking for more customers like them. If you're offering cheap, starter specials, you may be attracting the wrong potential customers.
When you find customers who see themselves sticking with your service for the long term, those are customers worth the effort to retain them.
11. Prioritize your onboarding process
In the SaaS space, early subscriber churn is common when customers feel like they're not sure how to navigate a product or use it effectively. If you're seeing a high churn rate after the first few subscription periods, you might need to take a hard look at your onboarding process.
Make sure that you have documentation, email, and tutorial content that helps your customers navigate and set up your product. If you're a higher-priced B2B product, you might consider making a significant investment in a customer success team to personally walk your new customers through the setup and onboarding process. This ensures that all of their questions are answered as clearly and quickly as possible.
Recommended reading: MarketMuse uses smart promotions to fuel subscriber growth
12. Help your customer teams offer killer customer service
When you run a SaaS company, you'll have access to plenty of customer behavior data. So if you want to offer killer customer service, set up a department of people whose sole task is to make sure your customers are getting the most out of your products and services.
Customer support handles emergencies. Customer success is like the dietician and fitness trainer. They're signing up your customers' power users for webinars, treating the VIPs to unique offers, and overall showing the best side of your products and services.
So give that team unprecedented access to the customer behavior data. As analysts, your customer success and customer support teams will be able to read customer data with greater empathy for your customer.
13. Study complaints, review sites, and community forums
Ever wonder what your customer satisfaction surveys aren't telling you? Go to the forums.
The community forums, third-party review sites, and your own customer complaint box are all a treasure trove of valuable feedback. This customer retention rate booster takes thick skin and some de-personalization. Go into it with the air of an anthropologist or as an outside researcher trying to understand your business. Trust yourself that you can identify which complaints are in bad faith and which ones are customers you genuinely lost due to a process you can fix.
Because the good news is, it probably is solvable. Your team will fix what's broken, add what's missing, and tune the slightly misaligned expectations. And if it's nothing you can solve, then add the findings to your research into reasons for customer churn.
14. Send your brightest and best to answer big cancellations
Get the short list of your company's most winsome and charismatic B2B sales reps. Then make them your premium subscriber savers.
If you spot a high-value customer making signals that they're about to cancel their subscription, send in your all-stars. You can never underestimate the value of a good sales rep. It'll take effort to turn around a situation headed south, but that's what defines a high-performing sales rep. It may only take a bit of listening, some well-posed questions, and a short-term incentive. You'll know for sure only once you've sent in the pros.
15. Show off your competitive advantages to your current customers
You created your subscription business to offer something unique or in a unique way that no one else in the market has.
So grab some of your marketing team, have a fun lunch outing, and spend time talking about what makes your business different. Explain it fully, completely, and succinctly. Have them repeat it to you in their own words. Volley the key differentiators back and forth with each other until you and your marketers can say what makes your product and service stand out and what customers lose when they decide to quit. Then use the most memorable phrases in places where your current customers will see them.
Make this an annual exercise. This comes from an old writing exercise: Say it straight and then say it great. And while it may seem like preaching to the choir to tell your current customers why the subscription they're paying for is so valuable, don't take your customers' loyalty for granted.
16. Offer long-term contracts
What might be the most outrageous versions of your products and services that you don't think any customer would ever choose? Longest possible terms? Most wide-ranging value? Take it as a challenge for your products and services team. You might be surprised to find a customer will still subscribe to it.
The right upgrade offer with a long-term contract will win over any customer who's enjoying the benefits of your products and services already. Then effectively, these customers are churn-proofed for a longer period than the rest of your customer base.
Raising your customer retention rates comes down to this...
Reducing customer churn starts with communicating directly and often with your customers. Then studying your customers will help you anticipate their needs and develop imaginative ways to overcome objections. Then your business must participate in your customers' day-to-day lives so you can establish and reaffirm the value you're bringing.
Reducing churn can feel like trying to hit a moving target. To help you suss things out, we've created this compelling guide that helps you cut your involuntary churn rate to 1% and boost subscription revenue by 11% MoM.