Regardless of which facet of eCommerce marketing you dabble in, every strategist knows that the be-all and end-all of your efforts lies in your retention rates. So, in regards to subscription services— a format with retention rates baked right into the business model— isn’t maintaining a high retention rate actually pretty easy? Wrong! Well, half-wrong!
While it’s true that subscription services and customer retention go hand in hand, it would be a mistake to assume that this makes boosting retention rates any easier. What it does do though, is shine an even brighter spotlight on the importance of retention rates. When it comes to the importance of customer retention, there are three key stats you should know:
- Acquiring a new customer can cost up to 5x more than it costs your company to retain a customer you already have.
- Increasing your retention rate by as little as 5% has the power to increase your overall profits as much as 25-95%.
- The success rate of reselling to existing customers is 60-70%, compared to 5-20% for selling to new customers.
So, what does this all mean for subscription services? Remember what I said earlier about subscription models having retention baked right in? Not only does this mean that when your retention rates suffer, so does your overall subscription service.
Subscription marketing is all about the retention, not getting new customers. And let me just warn you from the start, it can be brutal out here for subscription service retention. 72% of subscription customers don’t make repeat purchases within 6 months of signing up and more than a third of subscription service customers cancel within three months.
If these numbers scare you, don’t toss your subscription marketing strategy out the window just yet. The good news is, there are many actionable things that can be done to boost retention rates and in-turn boost the success of your subscription service. First, let’s focus on the second scariest C word for subscription strategists after cancellation. Then I’ll run you through the 11 ways you can prevent customers from cancelling their subscription.
How can I reduce my subscription customer churn?
Oof, churn. The Achilles’ heel of subscription services. The public enemy #1, the arch nemesis, the foe, adversary and primary antagonist of all those subscription service strategists out there. Too much? Alright, let me start over.
Churn— the rate at which customers cease doing business with your brand— is one of the primary metrics that you’ll track to assess the success of your subscription service. In a more specific sense as it applies to subscriptions, your churn rate is the percentage of customers who have unsubscribed from your service during any given period. For example, you would calculate the churn rate of a month by simply taking the percentage of customers who have unsubscribed that month and divide it by the total remaining subscribers you have. The higher your churn rate means the more work you have to do in order to bring your retention rate back up to the level it belongs.
To reduce churn, consider making changes like these to your subscription service:
- Optimize the customer experience to make it as user-friendly and enjoyable as possible.
- Incorporate surveys at different points throughout the customer journey to learn precisely when, why, and where customers are having challenges.
- Use what you learn from customer surveys and feedback to improve everything from your products themselves to your communication practices and delivery service.
- Regularly analyze customer data to find areas for improvement.
- Implement a messaging strategy that targets customers when they are the most likely to unsubscribe.
- Identify the days and reasons why you lose customers in order to gain a better understanding for the root of your churn rate.
11 Ways to Prevent Customers from Cancelling their Subscription
When you look at it from the customer’s perspective, all you need to do to prevent churn and keep subscribers happy is to optimize the customer experience. Of course, as strategists we know that this is always easier said than done. However, there are many things that you can do to keep your subscribers subscribed and your retention rates retained. Here are our top 11 ways to prevent customers from cancelling their subscription with your brand.
1. Provide instructions + resources
One of the primary reasons that customers unsubscribe from subscription services is that they feel that the service is no longer worth the price they are paying. The best way to combat this feeling of post-purchase dissonance (or I guess, if we’re being technical this would be post-subscription dissonance) is to be completely transparent from the get-go with your customers as to the purpose behind your subscription service. When you provide instructions, guidebooks, and other resources with your packages you are inviting subscribers to engage even further with your brand, leading to a longer lasting customer relationship.
Imperfect Foods (a favorite subscription with a great mission— reducing, reusing, + recycling, another great way to maintain subscription customers) provides recipes, recycling tips, and ways to use and store their food items. When customers aren’t equipped to receive products monthly, things can more easily go to waste, causing them to unsubscribe. But when you make it super easy for subscribers to succeed, they stick around.
2. Send reminders
While surprises have their place in marketing and even in subscription services (who doesn’t love when a subscription offers a “free surprise gift!” every once in a while?) it’s also important to provide your customers with the information they need, as soon as they need it. One way to increase your open rates is to send SMS messages as a companion to remind subscribers to open their emails. These reminders are known to increase open rates by 20-30%. Even without including SMS into your reminder strategy, it’s still important that you regularly send reminders via email to alert subscribers of when it’s time to take action concerning their subscription and with shipping reminders.
This email I received from subscription razor brand Billie is a great example of a concise, clear, and effective way to remind me to begin expecting my next package to arrive. It gets right to the point, while also including some helpful updates like that they have shifted to new eco-friendly packaging (Awesome!) and that their shipping company is experiencing delays (Not awesome! But, it is great to be told this info so I can better set my expectations.). Even though this example doesn’t use tracking numbers, we recommend using order tracking pages and order update notifications to keep customers in the loop.
SMS messaging is quickly becoming one of the most popular and customer-friendly communication best practices for eCommerce organizations. For a deeper dive into SMS best practices, here’s 9 Great Ways eCommerce Brands Can Use SMS.
3. Make it easy to skip
Customizing the subscription process comes in many forms. One of the most popular ways to include a customizable element to your service is to allow subscribers to easily skip a shipment. Regardless of the reasoning for their skip— maybe they’re going on a long vacation, maybe they are fully stocked on your products at the moment, maybe they are just looking for a little moment of control in this crazy world— putting this decision in the hands of your customers is a great way to convey to them that you are dedicated to their happiness.
Popular beauty and makeup subscription bag service Ipsy offers their subscribers to skip a month at the press of a single button. This increased flexibility is a great way to lower churn, because it provides users with a simple alternative to unsubscribing entirely.
4. Provide value
One of the most appealing factors of subscription services is that they provide users with a cost-effective alternative to the typical mode of purchasing things on a needs-based schedule. Everyone loves a deal and the more transparent you are about how much money your subscription service will save your customers, the more likely you are to attract a larger audience.
Take luxury makeup brand Allure’s subscription box for example. Right out of the gate they are incredibly transparent about what a great value their service is. I mean, who among us is strong enough to turn down over $300 worth of products for just $23?
5. Design a delightful unboxing experience
Unboxing is not just a YouTube buzzword anymore. Now, the experience of unboxing a subscription package is just as relevant to the overall subscriber experience as the actual contents of the package. In fact, the design of your subscription packaging can directly affect your bottom line— 28% of users say that they expect a personalized experience from subscription services.
Source: Try The World
Global gourmet food and snack subscription box service, Try The World, is known for their exceptional unboxing experiences. Each package is meticulously designed and packaged with the customer's happiness in mind— which is evident from the colorful packaging, resource cards, and enticing bonus goodies included in each package.
6. Incorporate social media campaigns
If you find that your retention rate is not where you’d like it to be, the problem may be that your customers don’t feel connected to your brand. One way to make them feel reconnected with your organization is to connect with your subscribers on social media, to create a more personal relationship. The more that your subscribers see of your brand, the more comfortable they will become with being a member of your brand community. Taking your relationship out of the box and onto a social media platform will show your subscribers that you are worth more than a monthly subscription price.
7. Offer stellar customer support
When running a subscription service one of the most important team members on your squad is your customer support team. Especially for brands at the beginning of their subscription launch, you’ll need a knowledgeable and accessible customer support team to assist subscribers with any questions, concerns, or comments they may have regarding your products or subscription service.
It’s also a great idea to offer variety in your customer support. Remember what I said earlier about adding customizable moments whenever possible? This is what I was referring to! Instead of simply conducting all customer support over email or the phone, when you offer a variety of helpful options your subscribers and potential subscribers will feel that much more supported in their relationship with your brand.
The support options you offer can include:
- Scheduled or spontaneous phone calls
- Live chat
- Or even community message boards for peer-support
8. Send free gifts
This one feels pretty self explanatory. Everyone loves free gifts! It’s only human natural!
By offering sporadic or even regularly included free gifts into your subscription service you are fostering a trust-based relationship with your customers. They can be a value add for larger cart sizes or be bonuses for subscribers who have been with you for a given amount of time.
Additionally, free gifts can be used strategically as part of a larger, more comprehensive product rollout. For example, if you are officially launching a new product in six months you can start building anticipation for it by sending free samples of it out to your customers who have exhibited a pattern of behavior that implies they would be interested in this particular product. Then, once it’s time for the official new product launch you’ve already got a network of existing customers that can vouch for how great the product is.
9. Allow customers to preview their order and make last-minute changes
Another option for customization is to allow your customers to preview their orders before they receive them, like this example from Stitch Fix. Sure, some subscription boxes are designed to incorporate a degree of surprise by sending curated boxes chosen by the brand, for the customer (and Stitch Fix even gives the subscriber the option to still get a surprise— best of both worlds.). But there are many others that are designed to allow their users to choose exactly what they will receive every month. For these services, it’s a good idea to allow customers to preview their orders before they’re shipped to ensure the customer is happy with their package.
10. Use personalized email/SMS messaging campaigns targeted at different post-purchase points
The post-purchase customer experience isn’t just for a typical purchasing model, but it should be maintained for subscription services as well. One great way to turn your post-purchase experience into an enticing, tailored experience for your subscribers is to incorporate personalized emails and SMS messages.
Here, Grove uses the strategy of “making it really easy for your customers to succeed” by reminding the user of their upcoming order. It’s targeted, personalized, and helps to increase retention rates.
11. Offer detailed order tracking and send update notifications
The importance of supplying your customers with detailed order tracking updates never goes out of style. For subscription services, which are built around a structured shipping schedule, providing your customers with all of the information they could need about when to expect their package is even more essential than usual.
A comprehensive way to approach order tracking is to notify customers when:
- Their order is being prepared so they can review it if they’d like to.
- The order is shipped.
- They can expect the order to arrive.
- Any delays or expected delays happen, to ensure they have updated expectations about the arrival of their package.
- Their order has arrived.
When it comes to subscription services, optimizing the customer experience is all about increasing retention rates and lowering that tricky little churn rate. All it takes to see the retention rates you’re looking for is to incorporate personalization at every turn and to be transparent about the shipping process. To help you incorporate SMS messaging and customizable emails into your order tracking offerings, request a demo and begin using the Wonderment Where’s My Order? app today.