Subscription Metrics

How to reduce your subscription business customer churn rate

March 8, 2022
7 Mins

The first step in reducing subscription churn is to recognize the signs of churn in your subscriber base. When a customer is about to stop subscribing, remind them of the options that let them downgrade or pause their subscription. In addition, provide "best in class" customer support and offer customers the option to pause or downgrade their subscription. Another way to nudge subscribers to renew is to remind them of the tools that allow them to contact you with questions or concerns.

Voluntary and involuntary churn

Subscription churn is an ongoing process in which customers either cancel or fail to renew due to a few types of churn reasons. Some customer churn is voluntary, while others isn't.

Involuntary churn

Involuntary churn is customer churn that wasn't intended by the customer. This is commonly known as delinquency churn, which occurs when a payment fails because of an expired / inactive credit card on file. Or if the credit card on file doesn't have enough available credit. To combat this we highly recommend services like churnbuster.io, which send automated collection emails to delinquent clients.

Voluntary churn

Voluntary churn happens when a subscriber no longer wants or needs your service. It is common for a customer to discontinue their subscription for any number of reasons, including insufficient funds or a changed lifestyle. However, you can take action steps to minimize churn and improve retention.

Monitor customer log-in activity. Consumers who churn often exhibit unusual behavior. Login activity has decreased. You can identify at-risk customers by monitoring login activity. Login activity varies from product to product, but the lower usage of plans is an indication that they are in danger of churn. Once you have identified potential at-risk customers, you can target them with a targeted strategy.

Communicate regularly with your customers. Try to communicate with costumers by phone or email. This is the best way to determine the reasons for churn. You'll get more information and insight from customer feedback when you talk to them over the phone. If they don't want to talk, a survey is a great alternative. Be sure to ask the right questions, and follow up with follow-up emails to ensure that your customer is satisfied.

Improve retention and engagement

To reduce churn, focus on onboarding. Customers need to feel welcome and appreciated right from the very start, and a positive first impression is crucial to preventing churn. Additionally, discount offers can boost your profits. Offer a discount to loyal customers just as their subscriptions are about to end. If you have a loyal following, you can offer them a discount, which will help them keep coming back to your service.

Providing "best in class" customer service

Remember that existing customers deserve better treatment than potential customers. By offering better customer service, you'll create a loyal customer base, and reduce churn. In fact, it's crucial to ask your existing customers why they stopped using your product, and work to resolve their issues. Those reasons will likely be the same for most churned customers. If you want to see your churn rate decrease, you need to put some effort into your customer service team.

There's always a risk of churn in subscription businesses, and not all of it is due to a product or service. Sometimes the timing is off, or a magic feature is buried in the menu. But most customers won't abandon you at the first sign of friction. If you want to reduce churn, you need to give "best in class" customer service.

Reduce voluntary churn in your subscription business with downgrades or an option to pause subscriptions

While some subscribers may have a very good reason for downgrading, some just aren't ready to pay for a premium service. By offering the option to pause or downgrade, you'll retain customers even if the reduced service doesn't improve your revenue. It's not surprising that many publishers have responded to this need by enabling self-service subscription management.

Giving customers the option to pause or downgrade their subscriptions can help you recover revenue and reduce the risk of customers cancelling. It can also help you learn more about why customers are choosing to pause their subscriptions so you can make adjustments in post-pause. Offering a downgrade or pause option to customers helps them to avoid churn and improve customer satisfaction.

To help your customers downgrade or pause their subscriptions, you should offer them a way to cancel the service without losing any data. For example, if a customer is logging in with an account that uses a lot of data, giving them a downgrade or pause option might be useful. And don't forget to make this option available on the offboarding conversation with your customers.

Provide an option for customers to downgrade or pause their subscriptions if they change their mind about staying. While users may be inclined to cancel their subscriptions if they see that they don't have to pay for them, they may still decide to stay with the company. Providing them with options for downgrading and pause their subscriptions can help them stay with your service if they find something better.

Lastly, by removing barriers to cancellation, you can ensure customer retention and revenue. By offering the option for customers to pause or downgrade their subscriptions, you can help your customers achieve their goals and improve customer satisfaction. And if they decide to cancel a subscription later, they can choose another one. You should not forget about your customers, no matter what their reasons are.

Wrap Up

Churn happens for a variety of reasons. Voluntary churn occurs when customers voluntarily cancel an active subscription. The reasons are varied, ranging from incorrect expectations, poor quality, lack of connection, or life changes. The fact remains that many startups don't realize that their customers are cancelling their subscriptions - sometimes without even realizing it!

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