Subscription churn is a concern for all subscription business. A subscription business is good as long as the customers who purchase a subscription, remain happy with the product or service, and stay subscribed.

When customers start losing interest in your business and churning, this leads to a significant loss in revenue and their customer lifetime value also deteriorates. If you’re acquiring customers who leave unsatisfied with your services very quickly, you will not be able to stay in the subscription business for long.

In this case, it’s important to adopt practices that give you a detailed insight into customer churn and help you find solutions to ultimately prevent churn.

Customer churn isn’t always down to holes in your product or service, but this can be a good place to start. By paying attention to why customers are churning, you should be able to identify common issues with your product or service and fix these for future customers.

This article will cover all you need to know about subscription and customer churn and how it can be prevented.

What is customer churn?

Churn is a standard used for checking the percentage of customers that stop utilizing the services of a company. In terms of a subscription business, subscription churn refers to the metric that identifies the customers that stop using the services of that subscription business.

Churn is inversely proportional to customer satisfaction. The higher the level of customer satisfaction, the lower the level of customer churn for a business. Loyal customers tend to stay subscribed to the products and services of a company for a longer time, purely because they are satisfied with them so don’t want to stop using them.

However, customers that are not happy and satisfied or have experienced issues such as low customer engagement might cancel their subscription if the subscription business does nothing to satiate their needs. The final blow can be made by the subscription businesses themselves if they do very little or nothing at all to retain their customers.

How does churn affect a subscription business?

Customer churn forces the customer to leave a company's services and search for another company that can offer better services. Subscription businesses that deal with B2B are highly affected by churn. They therefore need to adopt strategies that prevent churn and ultimately allow them to retain their customers.

This can be done by providing them with the best services and taking all the necessary measures to enhance customer relationships. For this, businesses need to have a customer retention strategy in place and keep their customers happy by delivering the best quality services they promised them.

In the case of subscription businesses, customer churn means the number of cancelled subscriptions during a billing cycle. This evaluates the amount of rising or lowering popularity of a subscription business amongst its users. It can be caused due to multiple factors, which we will cover in more detail in this article.

The first step to reducing customer churn is understanding why customers cancel their subscriptions. Only after assessing the causes, can you provide a solution to your customers. It is essential to minimize customer churn in the subscription business because the revenue of the company will only rise if customers are retained. This will also cause the lifetime value of each customer to rise!

Strategies to Reduce Subscription Churn

Adding a few strategies to your business for customer retention can reduce subscription churn. This will highly benefit your subscription business and help you stay ahead of the game. You can find the essential strategies to reduce customer churn below.

1.Identifying the cause of customer churn

It is essential for the subscription business to understand why a customer cancels their subscription. Some of the most common reasons for this might be that your pricing is higher than that of your competitors, your product or service is missing features, there are loopholes in some of your services or you don’t have the customers preferred payment method.

You need to ensure that your services do not provide a frustrating experience to the customer. You can search for the respective solution based on the reasons you have drawn out for customer churn.

To understand the causes, you can conduct a survey of your customers to reduce the churn rate or take follow-ups from previous customers who have stopped using your services.

You can also ask questions to any customer who decides to end their subscription to your services. Businesses should use tactics such as customer service follow ups, phone calls, social polls, etc to understand the reasons behind customers ending their subscription.

In most cases, the customers are reluctant to highlight the original problem and end up saying something vague as an excuse for quitting. Therefore, it is the duty of the business to understand what lies in the hearts of the customers. Based on this data, you can make better decisions to keep the customers satisfied and prevent them from ending their subscription.

2.Facilitating better customer service

When you customers are in need of assistance, or are frustrated with an aspect of your product or service, they’ll contact your company’s customer support to find a solution. If you’re unable to provide satisfactory support and timely answers to your customers, this can cause upset and can lead to them cancelling their subscription.

It’s therefore vital for your company to enhance both the quality and speed of its customer service, in order to reduce churn.

Efficient customer service plays a significant role in maintaining customer loyalty and potentially reducing customer churn. The way customer support converses with customers has a substantial impact on them. Most people build an impression of the company in their mind solely based on the way the customer support talks to them.

You can use chat boards, phone and email and also human resources to provide a better customer support experience to your customers. You can also set up a helpdesk on your site and a forum with frequently asked questions to support the customers. This will lead to the customers being more knowledgeable about your services and the features they might not know before.

A good customer support experience can also play a significant role in making customers feel valued and can lead to them wanting to stay connected with your products and services for longer. More than half of your customers are deeply affected by the experience they had with your customer service.

To enhance this experience, you can conduct customer support solutions that are a mix of offline and online solutions. You can also offer personalized messages and emails to your customers to make them feel valued.

3.Provide your customers with incentives and discounts

Every customer likes to go for a business or service that offers the most incentives and discounts. You can increase the lifetime value of a customer by offering them discounts, surprise gifts and upgrades on a regular basis. Discounting shouldn’t always be about getting new customers; it should also be offered to existing customers to thank them for using your product or service. Discounts and incentives make customers feel valued and this can help you retain them.

A good discount or incentive might stop a customer from leaving your subscription business even if they are unhappy with something and thus reduce customer churn. To do this, you can create a loyalty program and constantly reward your customers for using your services.

You can incentivize your customers in multiple ways, including surprise upgrades and most of the customers. The goal here is to offer the best services in the market by staying ahead of your competitors. For this, you need to conduct research from time to time about your competitors and the offers and discounts they are providing.

When your customers receive a reward from your subscription business, they are more likely to make another purchase. If you don’t already have a rewards system in place, you can make use of external software that can provide you with a loyalty program without the extensive development work.

You can also collaborate with multiple other platforms or social media services to incentivize your customers in unique and unforgettable ways, such as by offering them discounts or coupons from another shopping website that is not your competitor, etc.

4.Educating your customer

High volumes of features can overwhelm customers are first. In many cases, this can also lead to them struggling to know how to use all of the features you offer to their best ability and in turn can lead to them churning. It’s therefore crucial for any subscription business to educate the customers so that they can make the best use of the features offered by their business.

For this, you can organize onboarding meetings and offer educational materials in the form of guides, blogs, video tutorials, newsletters, etc., to your customers. When the customer has an adequate knowledge of your products, only then will they understand their value. This, as a result, reduces the customer churn rate.

5.Enhancing proactive outreach

It is essential to enhance customer communication to ensure that customer subscription churn is reduced. The customers who pay for your services wish to get proactive communication from your side in return. Whenever a customer purchases any services or products from you, you can welcome them on board by showing them the features of the products and how they can use them.

Proper onboarding is essential to ensure that your relationship with your customer does not start on the wrong foot. This is also a way of telling the customers that you are right there to help them whenever they need it.

A good onboarding process reduces voluntary customer churn and improves the levels of customer attention. No matter how much money or effort you have spent in acquiring a customer, unless you work for their proper onboarding, it is not guaranteed that they will stay with your services.

Onboarding can be done with the help of email messages, demo calls and proactive customer service. Apart from that, you can regularly check in on your customers through weekly routine calls and customer surveys.

Final thoughts

Preventing your customers from churning is essential for maintaining your subscription business. Merely establishing a business and acquiring customers is not sufficient, you also need to take care of them throughout their journey with you.

If you adopt the five strategies outlined above, you should find you become more successful in retaining your customers. However, it is also important to remember that customer churn is not always your fault and cannot always be prevented. Nevertheless, it’s still important to work on any areas that are open for improvement to make sure these aren’t causing customers to churn.

At Billsby, we can help you adopt the strategies mentioned in this article with little or no effort on your end. So, why not sign up today!