6 Ways to Reduce Churn on Your Subscriptions.

6 Ways to Reduce Churn on Your Subscriptions.

50th episode with Kurt ‘Tech Nasty’ Elster. Reading 6 Ways to Reduce Churn on Your Subscriptions. 5 minutes Next Advertising Trends for 2021.

For most businesses, generating traffic and leads is the number one marketing challenge. The struggle to generate new demand for a business can be tied back to the struggle to keep existing customers engaged. Considering 5% increase in customer retention can increase profits by 25% to 95% – according to research from Bain & Company – reducing churn is worth prioritising. 

Simply put, churn rate is the rate at which your customers cancel their subscription. It’s the percentage of subscribers who stop paying you. 

ReCharge has compiled data from over 4,000 merchants and 12 different verticals, providing data that allows merchants in the physical subscription space to benchmark their business for the first time against real data. Clearly, churn rate is an essential metric to measure, so let’s benchmark it. 

According to ReCharge data, church rates tend to be higher for Box plans – likely due to customers having “eyes bigger than their stomachs”. After trying a subscription based approach, perhaps customers simply change their minds and revert back to their traditional methods of purchasing when required or they like the freedom to alternate products or brands. 

We briefly looked at Average Order Value in this post, however it cannot be looked at in isolation. High AOV paired with high church is bad news for subscription businesses, it’s what we call the “leaky bucket” effect, where the cost to acquire new customers is unsustainable, unmanageable and just plain ridiculous. 

Causes of Churn

  1. Price
  2. Poor Product/Market Fit
  3. User Experience (UX)
  4. Customer Experience


Six Ways to Reduce Churn


1. Engage & Incentivise Your Best Customers

Refocus your attention to the most profitable customers on the brink of churning, rather than on any and every customer at risk of churning. The cost of retaining many customers can be greater than the revenue they bring in – these customers are not worth retention efforts. For this reason, businesses should focus on maximising profits, rather than simply reducing churn. Offering incentives gives customers a reason to stick around, whether it’s a promo, discount, loyalty program or otherwise. By providing membership models and allowing customers to customise their subscriptions through ReCharge, customers are incentivized to stay.


2. Use the Right Message at Cancellation

The moment a customer is cancelling their subscription is the digital touchpoint you, as a subscription business, need to be present. A customised list of cancellation options can provide data on why customers choose to cancel their subscription while simultaneously providing an opportunity for retention. ReCharge pointed out the benefit of using church rate as an opportunity to educate customers. For example, a customer may cancel their subscription simply because they aren’t aware of the option to skip their order. Adding the skip option as a stand-out visual enables customers to skip a single order rather than cancelling their subscription completely.

High churn rates can be counterbalanced by high AOV and high retention rates. When customers find something they like, they stick to it.
ReCharge Membership Models offer an emerging plan type to go along with both Subscribe & Save and Box plans. Boasting high AOV, high LTV and extremely low churn; merchants can use this plan type to grow engaged audiences. Memberships are fully customisable to suit your customers.


3. Be Proactive with Communication

Reach out to your customers before they need you and demonstrate that you’re invested in helping them. Ensure communication is truly relevant and genuinely helpful – whether it’s a friendly nudge, a follow-up email, a feedback survey or other content.


4. Onboard New Customers

Help your customers understand your brand, company, products or services. Set up a customer on-boarding process to guide the customer through features, functionality or processes associated with your brand or product.


5. Seek Feedback

Customer frustration leads to customer churn. It’s simple human psychology, we get frustrated and so we distance ourselves from whatever it is that’s frustrating us. Lack of effective support, product quality, or website functionality can frustrate customers and lead to churn. By consistently seeking customer feedback, you’re able to address customer frustrations and pain points with answers or solutions before they become an issue. A simple survey is a great way to show your customers you value their opinions and that you want to give them the best experience possible.


6. Stay Competitive

The market is constantly evolving. eCommerce is shifting rapidly as it becomes the primary method of business in our digital-driven world. Remaining competitive with your product, service, support and user experience is vital in building a community of loyal customers.

As Shopify Experts, we’ve continued to see the success of merchants adopting membership and subscription models. Need to strategically adopt a subscription or membership model for your business? Chat to one of our eCommerce specialists.