5 Tips for reducing The Churn of Subscriptions
One of the most appealing aspects about a subscription program is the steady income that it can generate. But the biggest problem part is that a large percentage of this "reliable" earnings is very uncertain. We're talking about the concept of churn.
The decision to cancel a subscription is at any time voluntary (e.g. subscribers decide to end their subscription) as well as involuntary (e.g. that the subscriber failed to update their credit card info). Either way, you're out of monthly income you were planning/wishing/hoping to get.
If you're trying to maintain your monthly income Here are five tips to cut down on churn in e-commerce companies.
1. Incentivize Prepayments
The monthly-to-month model gives your customers the ability to quit at any point, and this could cause unpredictable churn for the company. Offer subscribers a discount by letting them prepay their subscription in advance, either quarterly or annually and then you'll have more money that you can count on earlier. Do you have a product that is difficult to reduce? Try other alternatives like offering a complimentary month or special features for members who prepay.
It's easier to forecast your regular earnings from prepaid subscriptions than the unpredictable earnings that come from the monthly subscriptions you have. You might consider putting a portion of the profits from prepaid subscriptions to the acquisition of new customers to help buffer your monthly customers who are churning.
2. Automate Dunning
Automate management of dunning in order to minimize the chance of passive churn. Dunning refers to the means to contact customers with late accounts. The subscriber may have failed to make the required payment prior before the expiration date of their credit card and it was either lost or cancelled regardless of the reason. They failed to update their account information, resulting in an uninvoluntary denning.
Some of them may be tempted to use your product but they're not aware the payment process isn't working. Do you have the capacity to contact or email each unsuccessful payment? Most likely, there isn't. According to B2B businesses, 9 percent of each month's recurring credit card transactions do not succeed on the average. But, for B2C businesses, the percentage is much higher, at 14 percent.
This is where the automated dunning service can help. There are many dunning solutions that will automate emails for the purpose of regaining lost payments as well as subscribers that are lost. Dunning services can start by sending customers with unsuccessful payments an email such as "It's we, not us" in which they are reminded to switch their payment method and direct them to a secured website prior to moving on to more serious messages.
If you've created an advertising campaign which is in line with your company's image, it will be running behind the scenes to help to reduce the amount of turnover you encounter while you concentrate on your other initiatives.
3. Survey Churners
Are you wondering why some people have decided to cancel their subscriptions? You can ask them. Reach out to customers who quit churning and find out why they stopped taking advantage of your product. The information could be posted on your cancellation page or provide the link to your survey via an email.
What's the worst that can occur? This is over at most. The best scenario is that you find out what caused the cancellation and solve the issue and stop future cancellations.
4. Let Subscribers Skip & Pause
There are times when people need to have a bit of flexibility. If your requirements for subscriptions are very strict and you're not surprised if subscribers abandon the plan when they encounter surprising events in their path... as well when a competitor arrives with a comparable plan that's more accommodating.
Allowing customers to skip a month or put their accounts temporarily in suspension for 3 months could ensure that you retain customers who like working with you, however need to rest because of whatever reason. You can also advertise to give potential customers the confidence. They may never need to stop or skip a step but they'll feel more secure of committing to you with this option.
5. Honor Loyalty
The loyalty programs can reduce the chance of losing customers by giving customers the feeling of being part of something exclusive. Develop a loyalty program that will give your most faithful, trustworthy members an identity that's entertaining. You can reward them by offering incentives including sneak peaks at brand new products and features, as well as in-person meetings and even discounts at your partners' business.
The research has proven that the participants of customer loyalty programs generate around 12-18 percent greater revenues. This means that they have longer subscription times and less turnover. Discover what it will cost you to acquire a new customer, and then design an incentive program to encourage loyalty. It's less expensive per customer, yet keeps your customers satisfied for a longer period. This also creates a more reliable earnings and boosts word of mouth marketing.
Conclusion
Each business has to deal with turnover. You can't stop it, but these methods can help to reduce it and make it easier to reduce your rate of turnover to below the industry average.
Geneva Ives Geneva Ives is an expert in marketing journalism for the top technology and travel firms. She's focused on improving user experience in the hopes to make the web better for all users, consumers as well as brands as well as search engines! If Geneva isn't babbling on about search engine optimization, CTAs, and UX, you'll find her enjoying a meal in Santa Barbara.
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