Subscription-based companies rely on their clients to keep the enterprise afloat. Yet, it's common for consumers to get tired of the products and services being offered over a period of time. As a result, customers may decide to reduce or even cancel their subscription. It's crucial for businesses to develop strategies to keep their churn rate to a minimum. SFG has five ways these organizations can minimize the amount of client turnover they experience:
1. Maintain frequent communication
The success of a subscription company is due to the relationships the organization has with its consumers. Customers often feel, however, that they're only considered important when the business is trying to sell a new product or service or the client has a problem that requires attention. It's crucial for subscription-based enterprises to engage with their audience on a frequent basis and beyond just sales attempts, according to Kissmetrics.
Spam mail – in the form of email newsletters, text messages or promotional social media posts – are not recommended, as too much correspondence could lead consumers to think businesses are annoying. Instead, communication should be more intermittent and provide a good split of both informational news as well as sales-based outreach. Other ways to interact with clients in an effective manner are to request feedback on the products and services they receive, release satisfaction surveys and make sure consumers always have a way to get in touch with customer support.
2. Reward customer loyalty
When clients are happy with the products and level of service they receive, subscription companies will likely see lower turnover rates. Although this is a strong indicator of consumer satisfaction, these businesses have to do more than set and keep a promise. In addition to just following through on a subscription agreement, organizations have to nurture client loyalty.
Company leaders can add a personal touch to a consumer's box or write an individualized email to show customers how much their support means to the prosperity of the business, according to Client Heartbeat. Gaining people's trust will encourage them to share their experience with their friends and family and provide organizations with an earned margin of error. Customers are more likely to forgive an enterprise's mistake if they trust the company as a whole.
"Subscription flexibility can improve customer churn rates."
3. Enable subscription changes
Customers are often ambitious when they first sign up for a service like subscriptions. Many may request delivery on a fairly frequent basis. Over time, however, consumers may realize they can't afford their current settings or they don't need the products or services as often as they once thought.
At this point, clients' first step is usually to try reducing their subscription as a means of cutting costs. If consumers can't complete this action, they may decide to cancel the entire expense. To minimize churn rate, organizations should make it simple for their clients to change their options, according to ReCharge. Scalable preferences enable customers to upgrade or downgrade their subscription as they deem necessary. Customer service plays a large part in this ability. If consumers experience any issues when altering their options, organizations should make sure client care options are available. A pop-up live chat or phone number located at the bottom of the screen will make the situation as easy as possible for people and reduce the number of cancellations that occur due to sheer frustration.
4. Ask for an explanation
It's nearly impossible for organizations to achieve a 0 percent churn rate. Customers are going to cancel, it's just the name of the game. Whether it's boredom with the products and services being offered or the inability to spend an amount of money on a frequent basis, each consumer will have his or her own reason for stopping their subscription. Although it's a challenging experience, client cancellations are events businesses can learn from. If and when consumers decide to reduce or stop their subscription, companies should request a simple explanation.
Whether it's a quick survey to discover a consumer's reasons for leaving or placing a phone call for more information, the data business leaders gather from this question can be extremely helpful. The information can assist subscription-based organizations to better understand their audience's wants and needs, analyze the value of the products and services offered and develop more cost and payment options. Cancellations are a learning opportunity, but they don't have to come as a surprise.
"Some customers are more profitable for subscription companies."
5. Understand which clients are most important
It's common for subscription businesses to attempt to retain at-risk consumers with incentives and promotions, but this isn't always the best strategy. Instead, these organizations have to take into account the true value of their clientele.
Every customer is not created equal. Some people are more profitable for subscription-based companies than others, and it's important for leaders to recognize that, Sunil Gupta, a professor of business administration at Harvard Business School, told Forbes. Organizations have to figure the churn probability of clients, how much they've spent in the past, the chance they will respond to the retention offer and the cost of the promotion itself. This strategy will help reduce consumer turnover, as it helps companies better target the clients who will yield stronger results for the company.
Improving their customer turnover rates should be a priority for subscription-based companies. By taking these steps, these organizations can accomplish that goal.