If you’re in the subscription space, you need to be comfortable experimenting with different strategies, analyzing the results, and optimizing for the best outcomes.
Building a strong cancellation flow for your business is no different. Ideally, you want to choose an automated solution, launch it quickly, use it to validate your assumptions about why you’re losing customers, and act decisively based on what the data tells you.
We recommend this approach because a high churn rate (or low retention rate – depending on how you look at it) can quickly escalate for subscription-based companies. And when you consider that it costs 7x more to acquire new customers than keep the ones you already have, it’s easy to see why.
But don’t let that stat discourage you. Because while unchecked churn can create expensive problems (especially for early-stage subscription companies), increasing customer retention by just 5% can increase your profits anywhere from 25-95%.
How to build a strong cancellation flow for subscription businesses
If you’re a subscription-based company that’s ready to dig in and discover why you’re losing customers, here are five tips from ProsperStack:
Tip #1: Make churn management and customer retention an integral part of your business strategy
Losing customers is like having a leaky revenue bucket. You certainly can’t ignore it, and you definitely need a strategy to fix it. We’ve found that the companies that embed customer retention into their business strategy (instead of treating it as an aside) have the best outcomes. To be profitable, you need to know your churn and retention numbers and improve them. Period.
Tip #2: Launch a minimum viable solution to test and validate its effectiveness quickly
We’ve watched subscription-based companies agonize over finding the perfect solution or chasing certain features. Do we want you to choose our solution? Of course.
ProsperStack is proud to be filled with a team of highly-qualified experts that know how to build the perfect solution to subscriber churn. With that in our back pocket, we know that customer cancellation flows don’t have to be complicated. You can start this work without a lengthy planning process, a significant investment, or hours of development time. In fact, you can have the ProsperStack automated customer cancellation flow live in just a few hours.
Tip #3: Ask customers two simple questions if they choose to cancel their subscription
An exit survey sits at the heart of the strongest customer cancellation flows. While you can build complex “if this, then that” flows, we recommend sticking with two simple questions:
What is your primary reason for leaving?
How can we improve?
The answers to either of these questions can be instrumental in understanding why your customers cancel. But when you combine the two questions, you get the perfect blend of quantitative and qualitative data. Even better, on the ProsperStack platform, you can view all your data in one place. With that in hand, you can rapidly correlate reasons for leaving to lost monthly recurring revenue.
Tip #4: Create targeted retention offers based on customers’ responses
The next stage in your cancellation flow is to offer customers an incentive to stay based on how they answered your exit survey questions. For example:
Discounted price – if the customer says your product is too expensive, offer them a retention discount for three to six months
Plan change – you can also direct customers to a higher or lower-priced plan level based on their response
Subscription pause – another option is to pause their account temporarily
Plan transition – or you can offer a free plan so you can keep the customer relationship alive and make future upselling easier
Better yet, give your customers the option to choose between a few different offers and let them decide what works best for them.
Tip #5: Experiment, analyze, and optimize
Once you have a foundation, your next goal should be data-driven iteration. Customize your customer cancellation flow freely based on what you learn or what’s working well for you. Here are some of the ways you can easily experiment within PropserStack:
Put different offers head-to-head with A/B testing to see what performs best
Integrate with your CRM to create targeted offers, conditional cancellation steps, and segmented reporting
Customize flows for different people with different needs using your existing customer data platforms
Again, even small gains can have a considerable impact. Focus first on gathering enough data to test your assumptions, gain clarity and fix your biggest challenges.
Control your churn & keep your revenue with ProsperStack
Don’t wait to address your customer cancellation flow. Go after your churn aggressively – right now – so you can keep more of your revenue and remain profitable.
If you’re looking for a partner, ProsperStack is a seamless, user-friendly, and low-code solution that your development team can earnestly implement within days versus months. Our customers are reducing their churn by up to 30% by integrating our platform into their existing tech stack.
Learn more about how ProsperStack works.