Subscription billing may be one of the most successful business models in this day and age, but that doesn’t mean it’s the easiest one to adopt and navigate. However, it’s very much possible to succeed in this business, especially if you know how to properly deal with one of the biggest factors that affect profitability: customer churn.
Customer churn is the rate of customers ending their subscription relative to the time they signed up for your products or services. Having a high customer churn means your subscribers are leaving your business too soon. If neglected or handled the wrong way, high customer churn could mean you’ll end up spending more on acquiring people to subscribe than you’re earning from their subscription. Fortunately, there are many ways to approach customer churn appropriately in order to keep your business from losing revenue.
- Brute Force Doesn’t Work
Tackling customer churn may seem like a simple process. You have subscribers leaving too soon, so you just need to try out things to keep as many of them subscribed as possible, right? As it turns out, this “brute force” approach may all be for naught because disinterested customers will still be likely to unsubscribe. Remember that spending resources on marketing to your existing customer base will cut down on your revenue, so pouring huge amounts of resources on customers that are already likely to leave will just increase your losses.
Instead of focusing on all customers equally, look for subscribers that are more likely to stay subscribed to your services. These high-value customers are already highly engaged with their subscriptions, so it takes less resources to keep them interested in your business.
- Listen to Feedback
Few things can cause customers to bail on their subscriptions faster than poor service. When a customer subscribes, they expect their needs to be met. Remember that a small flaw in your product that they find as a minor issue when they sign up can eventually bother them to a point that they wouldn’t want to keep paying for your subscription.
Instead of guessing what your customers want, it’s much better to solicit feedback from them on a regular basis. A short questionnaire accompanying their most recent bill or an unimposing email can be just what you need to find out what’s keeping them from fully enjoying their customer experience. This also helps you avoid unnecessary changes that may not work for everyone.
- Make Subscriptions Easier to Keep
There are cases when customer churn is not necessarily related to the quality of the products or services you’re offering. Poor billing options or payment transactions that are riddled with friction points can be just as bad as providing a substandard product. The worst thing about this kind of problem is that the customers actually want to keep their subscription, but they can’t because of the regular inconveniences.
The proper way to approach this is to set up convenient solutions for your customers. If your main payment option is not accessible to customers, for example, you should add other options so that they can pay as soon as possible. You may use a smart recurring billing platform that automatically resolves failed payment transactions, thereby encouraging your customers to remain subscribed. Moreover, you can also consider providing leeway for delayed payments so that those who miss their due dates have a chance to settle their balance instead of having to ask for reconnections every time they miss out on a payment.
- Reward Your Customers
Sometimes, dealing with customer churn requires a bit of conditioning. By setting up loyalty rewards for long-time subscribers, your customers will have a good reason not to terminate their subscription. This approach benefits both you and your customers—your subscribers get more value out of their subscription through the rewards while you get more value out of them by staying subscribed to your business for longer.
Just any reward won’t suffice, however, so you have to make sure you’re giving them something relevant to their customer experience. By using subscription management tools to find patterns in their usage and consumption, it’s possible to figure out what aspects of the product or service they favor the most. You can then capitalize on this knowledge to make the most attractive rewards.
Dealing with customer churn requires a deeper understanding of what your customers want. By using the right tools and approaches, you can focus on keeping the customers that matter, make them happy with their subscriptions, and encourage them to stay subscribed for a long time.