Subscription services are increasing in popularity. Recent studies show that subscription spending for the average consumer is up 15% from 2018, for a total of $273 each month.
Although people often underestimate how much they actually spend on their subscriptions, the reality is, savviness among consumers is growing and people are more vigilant than ever to make sure they get value out of the money they spend. All we need to do is to look at the growing number of companies designed to help consumers track, manage, and cancel their subscriptions to understand where the industry is heading.
That’s why it’s as important as ever for subscription businesses to do everything possible to prevent customer loss.
Luckily, there are tools available that can be easily integrated into your existing billing platform that allow you to create sophisticated, streamlined cancellation flow experiences designed to entice customers at point-of-cancellation to stay. If done correctly, this can reduce your churn by as much as 30%.
How do you make sure you’re doing it correctly? We find that focusing on these three points will help your churn management program prevent customer loss and drive revenue.
Find a churn management tools with easy setup.
Get personal through audience segmentation
Use data to make decisions with advanced A/B testing
There are many considerations when evaluating new churn management tools, but none are as important as making sure it doesn’t require cumbersome development time to integrate into your systems.
Your dev team is busy making your product best-in-class, and there is no reason to distract them to implement a new churn management tool. Especially when there are tools like ProsperStack that can be easily set up with just a few lines of code. And it’s not just the initial implementation to consider. Ensuring that changes to the tool can be made without requiring cumbersome dev time will ensure your program is nimble enough to keep up with your growing business.
Additionally, a basic cancellation flow is relatively turnkey and should come pre-loaded within your tool. As you’re getting your cancellation flow started, it should be as simple as:
Keeping the list of questions you ask customers short,
Including a field for open-ended answers,
And being as aggressive as possible with your retention offers.
You want to see immediate ROI, so don’t overcomplicate the initial program set up and build on it from there with more advanced audience segmentation and A/B testing.
Once your cancellation flow tool is implemented and your churn management program is up and running, you can turn your attention to audience segmentation.
To start, you should segment by the following (if applicable to your business, of course):
Billing cycle – i.e. monthly vs. annual
Free trial vs. paying subscriber
Length of time they’ve been a customer
Your churn management tools should have the ability to use these segments to automatically route a customer to a completely customized cancellation flow. Asking them tailored questions to get additional details, as well as offering up the incentive that is most likely to retain their business.
Where segmentation starts to get fun is when you stack segments on top of each other to get a deeper understanding of each customer.
Maybe you know once you get a customer past the 60-day mark, they are more likely to become a long-term subscriber. Creating a segment for all subscribers who are under that 60-day mark allows you to build aggressive offers to get them past the hump.
Also, understanding the lifecycle of a customer is helpful. For example, have they previously accepted an extended discount offer? That might mean that they are an incredibly price-conscious consumer and if you offer to move them to a lower billing plan, they would be more enticed to commit longer-term.
Using industry best practices to get your program kicked-off quickly is great for seeing immediate ROI, but eventually, you’ll want to create customer retention strategies tailored to your business. A/B testing is a data-driven way to learn what incentive works best for each customer segment.
Your churn management tools should have the ability to easily create sophisticated A/B tests directly within the tool itself. Using a control and up to two variants, you’ll be able to pit strategies against each other and monitor results in real-time. More advanced tools will even statistically model anticipated results and give you probabilities of what strategy is going to come out on top for each test you're running. This ability to project the winner will get you to results faster, helping you realize more revenue more quickly.
As you develop your tests, keep in mind:
Sometimes it’s the offer itself – testing different promotions targeted at the same segment will help you determine what that group values most. For example, if your product has any seasonality does the offer to pause a subscription during the slow season garner more acceptance than an added discount?
Sometimes it’s all in the wording – Another type of A/B test to run is playing around with the wording. Let’s say you’ve determined a discount is an ideal promotion for a certain segment. Can you increase acceptance even more by positioning this discount as an “exclusive offer”? We’ve seen companies get creative and have success by offering a “Secret Plan” that isn’t available to the masses.
While customer loss will always be part of your subscription business, building a sophisticated churn management program will ensure you are doing everything possible to keep your customers subscribing long-term. By finding a drop-in cancellation flow tool, you can see immediate churn reduction results.
ProsperStack is the drop-in cancellation flow that prevents churn automatically. Use targeted offers to save customers, and capture feedback to make informed product, pricing and remarketing decisions. Schedule your demo today.