Subscription churn

If you sell a subscription service, you understand the importance of keeping customers for as long as possible. New customers are great, but long-term customers are the foundation of a healthy business.

The rate customers cancel – the churn rate – is a crucial metric that directly affects profitability. In fact, it doesn’t take much churn to have a big impact on the size of your customer base. A single percent or two can be the difference between just getting by and building wealth.

Subscription churn

Some churn is inevitable. You’ll never get your churn rate down to 0%. Nevertheless, it’s important to aggressively fight churn so your business grows as much as possible. In this article, we’d like to cover the top ways you can fight churn.

Reach out to churned customers and ask these questions to learn why they churned and how you can prevent it in the future.
It’s important to aggressively fight churn so your business grows as much as possible. Click To Tweet

1. Determine Where the Churn Occurs

Naturally, your first step to preventing churn is to determine why it happens. In many cases, the bulk of churn has a single, fixable cause. You could pour over your analytics, watch user sessions, and run A/B tests all day, but the best way to identify churn is by talking to your customers.

Take a simple, low-tech approach: Call a customer who recently canceled their service and ask why. Make it clear right away that you aren’t trying to pressure them into restarting. Demonstrate that you genuinely care about the problem and just want feedback so you can fix it.

Make a small list of objections from ex-customers then methodically address each, no matter how minor you think they are. Each fix could represent a customer who sticks around.

2. Get Your Onboarding Right

40-60% of people who sign up for a service use it once and never again. Why? Because they either a) weren’t able to use the product, or b) couldn’t see the product’s value. You can help customers hit both of these goals with a smooth and efficient onboard sequence.

Your onboarding sequence should walk the user straight to the thing they find most valuable – their reason for using your service. It should help them realize some benefit as quickly as possible so they think, “I’m glad I bought this.”

For example, take the case of Bingo Card Creator, a tool for school teachers to create classroom learning aids. To create a bingo card, users have to progress through a short series of steps. However, a percentage of users would abandon the process at each step. This means they would never create their bingo card (the product’s value).

The team hypothesized that some found the process too complicated (even though it was actually quite simple). To make things even easier, the team added a visual progress indicator so users can see where they are in the process and how much is left. After these changes, the number of users who completed the process increased from 82% to 90%.

Subscription churn

3. Identify At-Risk Customers

Most customers exhibit certain signs before churning. If you figure out the signs, you can keep your eyes out for customers who are about to churn. Then you can intervene to stop it. This tactic is so powerful that it’s one of the most popular churn-prevention tactics.

For instance, SaaS companies typically recognize inactivity as a sign of churn. If a user doesn’t log in for, say, two weeks, they are considered at-risk. At-risk customers might receive re-engagement emails or a call from a salesperson.

An online course might flag customers as at-risk when they stop completing assessments or fail to watch videos. A simple email that prompts them to visit the next video could be enough to keep them engaged with the product.

4. Educate with Documentation

Do your customers know how to use your product or service? If they have questions, is there somewhere they can go to find answers without contacting you? If you have a repository of information, does it cover everything?

If you can answer “no” to any of those questions, your customers might churn due to lack of information. It’s important to provide a bank of quality educational support materials. This might include documentation, webinars, tutorials, product demonstrations, how-to articles, templates, or whatever else it takes to turn your customers into experts.

5. Develop Your Product’s Value

If customers are going to pay over time for access to a product or service, they want to see it grow with them. They want new features, slimmer workflows, and better solutions to their problems. They want you to boost your strengths and compensate for your weaknesses.

How do you develop your value? It depends on the nature of your product. If you offer one-on-one consulting, consider developing some downloadable worksheets or templates to help your customers take action with your advice. If you sell an online course, you could add videos or quizzes or make the product more robust. If you run an ecommerce site, add a new site feature, like customizations, wish lists, or personalization.

6. Track Your Competition

If your competitors start offering a better service, or a comparable service at a better price, your customers will leave. So it’s important to keep an eye on your main competitors at all times so you know how you compare. Have they deployed new features? Do they have a better price model? Do they engage and educate their customers more?

This isn’t to say you should copy whatever your competitors do, of course. You don’t have to mirror their product roadmap or marketing strategy. Just make sure your value is at least equal to theirs.

7. Implement a Check-In Process

Most businesses only speak with their customers when there’s a problem. But just because a customer hasn’t complained doesn’t mean there isn’t an issue. For every customer complaint, there are 26 unhappy customers who remain silent. Eventually, unhappy customers reach a point where there’s nothing you can do to make them happy again.

You can identify and fix issues early by implementing a check-in process with your customers. Call or email them from time-to-time to ask how they like your product or service. Encourage them to be honest with their feedback and make it clear they should reach out to you whenever they have a question or problem.

8. Offer Long-Term Contracts

An easy way to prevent churn is to extend your customers’ commitments by offering longer contracts. For instance, instead of month-to-month contracts, see if they’re willing to commit to six months or a year. This has a few benefits:

  • You have more time to show the customer that your product/service has value.
  • The customer will devote themselves to your product/service because they have already made a significant investment.
  • You’ll gain more revenue from the same customer, which makes it less painful if they decide to churn anyway.

In most cases, customers are only willing to commit to longer terms if you offer them something in exchange, such as a small discount. But this is a small price to pay for guaranteed revenue.

9. Keep Payment Methods Up-to-Date

Your customers may churn inadvertently if their payment method is no longer valid. This happens if their debit or credit card expires, or if they simply don’t have enough money in that account. You can keep their subscription active by sending them a simple email reminder before you charge their payment method, giving them the option to update their information if necessary.

If you use WP Simple Pay (a Plus or higher license), this is already available to you!

To set this up, first head to Stripe’s “Subscription and emails” settings and configure the page like this:

Subscription churn

This will send an email to subscribers three days before their subscription renews. The content of the email will look like this:

This is a friendly reminder that your {account_name} subscription will automatically renew on {renewal_date}

Your payment method on file will be charged at that time. If your billing information has changed, you can update your payment details below:

{update_url}

When the subscriber clicks the {update_url} URL, they will be directed to their original payment confirmation page with a form to update their payment method. Entering a new card number here will ensure all upcoming invoices charge the new card.

For additional details and updates to the subscription reminder features, please see our documentation.

Free Download: Subscription Customer Exit Survey Questions to Help You Fight Churn

Tackle Churn Early

While you’ll never prevent all churn, you should never consider it “the cost of business.” Each churned customer makes your customer acquisition activities more expensive and diminishes your long-term growth. The sooner you take it seriously, the sooner you’ll enjoy stable customers and healthy income. Keep an eye out for the warning signs and implement the techniques we listed above.