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January 6, 2021 | Authored by: Steve Booth

Retention tips for every CMO: Proven ways to fight subscription churn

You’ve probably heard (repeatedly) that retention is the new growth. It is. Growing your customer base without a high retention rate is hard. High churn means that for every three steps you take forward with acquisition you take one back due to churn. A monthly retention rate of 93% instead of 88% leads to a 42% subscriber increase over two years. Keeping subscribers and their revenue longer is the most cost-effective way to accelerate growth.

Unpacking the causes of churn

To stop churn, you need to understand it. Consider involuntary churn. Involuntary churn is the easiest type of churn to understand—and one of the most complex to address. When people churn involuntarily, it’s usually because of billing issues. They want to stay, but the payment method they provided failed. Transaction failures are often temporary. Account updaters address some failures. Basic retries (such as retrying a transaction four days later) take care of others. But involuntary churn still adds up to about 30% of all churn.

There are many more reasons for active churn—otherwise known as cancellations. The big picture whys behind cancellations fall into four major categories:

  • Low engagement: Subscribers who seldom (or never) use your service have one foot out the door. They will cancel eventually.
  • Value: Everyone wants a good deal. Subscribers who perceive your service as a bad value will look elsewhere—even if they use your service. Value concerns can leave a service on the losing side of subscription fatigue, which is when people feel they have too many subscriptions. Fatigued subscribers will start looking for something to cancel.
  • User experience: Bad user experiences can take many forms. For instance, you can confuse subscribers with cumbersome and glitchy user journeys. And you can annoy people with privacy or parental controls that are hard to find or use. Or you can frustrate people with “personalization” attempts that make changes to content, settings, or navigation feel arbitrary.
  • Temporary factors: Sometimes people need to stop using or spending on a service temporality. That may be due to a job loss, financial setback, health concern, or travel plans. These subscribers may cancel and plan to return in the future.

Take action to stop churn

Many companies have treated most churn as inevitable. That’s led to retention strategies that scratch the surface—and catch only a few customers who are about to churn. Look at the above list. Nothing is inevitable. You can address many of the issues that lead to churn.

Take involuntary churn as an example. Some subscription services use account updaters and basic retry logic to address failed transactions.  That’s a smart start, but those techniques only resolve about 50% of failed transactions. A 50% or so success rate shouldn’t be a cause for celebration. What about the other 50% of subscribers who never even intended to churn? They are gone. But applying advanced retention recovery algorithms like those used by Vindicia can heal 30% more failed transactions. A more advanced approach to involuntary churn translates into as much as a 5% revenue increase almost overnight. Try the Vindicia ROI Calculator to see how much revenue you could recover.

What about low engagement, which is the top active churn driver? You probably run email and SMS campaigns intended to boost engagement. That’s not enough. Vindicia partner Redfast lets you monitor usage and guide subscribers with one-click actions that increase engagement in real time. You target subscribers at risk of churning with personalized suggestions and promotions. The right suggestion reaches the right subscriber at the right time. It’s an approach that can reduce cancellations by as much as 25%. Plus, you can refine your upsell strategies more effectively with the same techniques, increasing monthly to annual upgrades by 30% or more.

At Vindicia, we’ve made retention-boosting features part of our platform from the beginning. Helping clients keep subscribers longer is part of our DNA. That’s given us an edge with many top brands that make retention a priority too. Working with Vindicia lets you apply a complete approach to retention fast and effectively. We make it simple to adopt a set of proven practices that reduce both active cancellations and involuntary churn.

See if you’ve got retention covered

You can adopt practices that keep more customers. The transaction and engagement examples above are just two proven tactics. A complete retention strategy should cover all the drivers listed above—and many drivers will require multiple tactics. We’ve compiled a list of 15 top addressable churn factors. And we’ve outlined effective retention boosters for each one. You may already be following some recommended boosters. But are you and your team really are giving retention your all? Get the CMO’s Subscription Churn Checklist now—and see how many of the 15 churn factors you’re overcoming with proven retention boosters.

About Author

Steve Booth

Steve Booth, Vice President, Eastern Region, is a seasoned sales executive with over 30 years of enterprise solution sales and sales management experience. Steve has been in the billing industry for over 15 years and is responsible for Vindicia’s U.S. Eastern Region. Prior to joining Vindicia, he served as vice president of sales at Proclivity Systems. Before that, he was vice president of sales and business development at Aria Systems. Steve has also held senior sales management positions at QlikTech, Responsys, Oracle, ADP, and Portal Software. He holds a BS in marketing and finance from LaSalle University.