Churn management

Common Mistakes That Impact Client Retention

April 20, 2023

Membership cancellation is an inevitable reality for subscription companies. When it happens, it's tempting to turn your attention to acquiring more new customers. But focusing only on replacing lost customers isn't a sustainable long-term strategy – it's bad economics. Especially when you consider it costs 7X more to acquire new customers than to keep ones you already have.

While it sounds counter-intuitive, one of the most effective customer retention strategies you can implement is to improve your membership cancellation process. A thoughtfully designed and persuasive cancellation process improves the customer experience and increases your odds for short- and long-term success.

In this post, we explore five common mistakes we see subscription companies make when dealing with cancellations and provide tips on avoiding them.

Mistake #1: Making subscription cancellation difficult

When your subscription cancellation process is complex or hard to find, you risk harming your reputation or setting the stage for a negative review. Instead, focus on making your cancellation process easy.

When a customer's last interaction with you is seamless, it leaves them with a favorable impression of your brand and increases the likelihood they'll share positive feedback or refer others. Here are some easy-to-implement tips:

  • Make sure your cancel button is easy to locate

  • Keep your entire cancellation flow to just a few clicks

  • Share what happens once customers click cancel (e.g., what info they lose access to and what happens next in terms of final charges or data download deadlines)

Mistake #2: Not asking for or listening to customer feedback

Another mistake we see subscription companies make is not asking for customer feedback at the point of cancellation – or not listening to the feedback you receive. This is a missed opportunity to identify and fix issues directly correlated to your monthly recurring revenue. We recommend an exit survey that asks just two questions:  

  • What is your primary reason for leaving (multiple choice)

  • How can we improve (open-ended)

Now it's time to act on what you learn. Share the feedback with your customer success team to help them understand where customers need more support. Your marketing team can use exit survey results to create targeted campaigns or tailor your message. And your product team can create a roadmap based on what customers want – and what missing features cause them to leave.

Mistake #3: Trying to upsell during membership cancellation

As founders of the only platform that automates and enhances subscriber retention, this mistake feels personal to us. When a customer clicks your cancel button, read the room. Now is not the time to upsell (unless your goal is to come across as pushy or out of touch). A better option is to give customers a persuasive and compelling reason to stay. For example, you can:

  • Extend their trial period for a defined timeframe

  • Provide a temporary discount such as 50% off for three months

  • Pause their subscription rather than cancel  

  • Change their plan to a lower pricing tier or freemium option

This approach works exceptionally well when you pair what you learned in your exit survey with the offer you make. For example, offer a discount when your price is the primary reason for leaving. When product value is the reason, a trial extension works best (along with some customer success follow-up, of course).

Mistake #4: Treating all customers the same 

When it comes to cancellations, not all customers are the same. That means you don’t want to make the mistake of giving everyone the same retention offers. A better strategy is to segment your customers and tailor your cancellation flow for people with different needs.

For example, you can divide customers into groups based on payment criteria like MRR, billing interval, subscription duration, or plan. You can also incorporate custom data from your application or service or take advantage of ProsperStack’s integrations and use data from your CRM or CDP. 

These segmentation strategies have two primary benefits. First, highly targeted offers increase your likelihood of success because they make more sense to the customer. And you can analyze your results to see how your offers and deflections impact each segment. We love a good data-driven decision, don’t you?

Mistake #5: Ignoring canceled members

Your relationship with members doesn't have to end when they cancel. There are natural opportunities to re-engage customers through winback campaigns – targeted email messages focused on reactivating past customers.

When done well, winback campaigns are an effective and low-cost way of reducing churn and increasing revenue. For example, say a customer cancels due to product features. You can create a winback campaign to coincide with major product updates or feature improvements. Your exit survey data makes it easy to identify customers who left for specific reasons and target customers based on your retention goals.

Common Membership Cancellation Mistakes You Shouldn't Make - Free Guide

Save customers, grow revenue

It's never easy when members want to cancel, regardless of the reason. But you can turn your membership cancellation flow into a retention machine by avoiding these common mistakes and providing a more positive cancellation experience.

ProsperStack customers reduce their churn by up to 30% by integrating our automated customer retention platform into their existing tech stack. We're a seamless, user-friendly, and low-code solution to build your dreams' cancellation flow without heavy lifting from your dev resources.

Whether your customers want to cancel or decide to stay, make it the best experience with ProsperStack: subscriber retention done right.

Learn more about how ProsperStack works or get a demo.

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