Addressing Subscriber Churn With Strategies Aimed at Reducing and Preventing Churn

What is Customer Churn and What Are Its Potential Causes?

Customer or subscriber churn or customer attrition represents the number of users who stop using your product or service. This rate is often measured within a specific period. For instance, if you have 1000 subscribers at the beginning of the month but by the end, the number comes down to 900, the churn rate is 10%. 

I have seen teams of around 5-10 people in big companies dedicated to reducing churn. Even with everything companies do, some amount of churn is inevitable, but that does not make this problem unsolvable. 

Churn exists for various reasons;

• Shift in customer’s needs and requirements.
• Competitors bring out better products.

So, one of the mistakes companies with a high churn rate make is alienating churn from other departments. Your business profitability depends on your efficiency in retaining customers. This data is old, but I always like to share it with everyone; a mere 5% increase in customer retention can increase profits by 25% to 95%. 

That is amazing, right?

Here are a few reasons I think that causes churn.

1. High Price: Initially, customers subscribe to a service in excitement, even at a higher price. But to pay that amount every month like clockwork may get overwhelming, which causes them to unsubscribe. 

2. Customer or User Experience: Performance lags, glitches, bugs, etc., raise concerns with customers, leading them to stop using the service. This translates to losing interest in other aspects of your brand, which hits hard on customer experience. 

3. Poor Onboarding Experience: A poor customer onboarding experience causes around 23% of customer churn. When subscribers struggle to engage with the product and customer service team this is at the stage when they have become your customers. Frustrations, hiccups, and poor experiences at this stage can inspire customers to leave. 

You will be as surprised to know this as I was. Companies lose around $1.6 trillion every year due to customer churn. Hence reducing churn is one of the revenue drivers among others. 

Seeing this, it’s natural to focus on reducing churn. But first, I want to share something on diagnosing and identifying churn. 

How to Diagnose or Identify Churn?

As I have mentioned before, customer churn exists in every industry but at variable rates. This is because the sales process, marketing strategies, customer preferences, etc., vary according to the industry. So, to identify churn, I always use two methods;

• Knowing the early signs of churn
• The 4W framework of churn analysis

The four early signs of churn are akin to the symptoms, which include;

1. Continuous decrease in the amount of time users spend on the product. 
2. Increasing number of times when the user has missed subscription payments. 
3. An increase in the number of subscription plan downgrades. 
4. Changes in account administration, like transferring decision-making to another user. 

The 4W Framework for Churn Analysis

Subscription churn is not a pleasant experience. While everyone talks about the numbers and how churn can affect company performances, we seldom discuss its effect on company morale and confidence. 

Seeing customers abandoning your product to use the competitor’s isn’t easy. So, here are the strategies that I have used and heard about from experts to combat churn. 

How to Combat Churn Effectively?

Reducing customer churn is done in two parts;

• Combating or tackling churn for a better understanding
• Adopting strategies to reduce churn

I’ll discuss both these aspects in more detail in the following sections. Tackling churn is a long-term game. So, it's possible that you won’t see the results in the early stages of the process.  

• Subscription Analytics

Comprehensive subscription analytics reveals the reasons behind abandoning your product or service. Subscription analytics share in-depth insights on customer sentiment and behavior. 

Think of these like X-ray vision into your customer’s actions and preferences. These solutions have churn dashboards to record and visualize user activity and discover usage patterns. 

Through these, you can pinpoint drop off locations in the customer journey and help identify at-risk customers. Proactive analysis gives you the opportunity to address concerns of at-risk customers and prevent them from hitting unsubscribe. 

• Offer Incentives

Strategic incentives are a great way to tackle churn, but implementation is the key. First of all, don’t consider discounts as a way to lure in customers. Discounts are a way to create value and build long-term loyalty for customers.

So, when you give discounts, consider tiered loyalty programs. These programs reward customers for continuous engagement with your brand. In addition to this, you can also offer other perks like priority customer support, exclusive access to new products/services, etc. 

• Pay Attention to Customer’s Complaints

Not all, but some customers complain, which shouldn’t be unheard of. These complaints represent customers' frustrations and, through them, the shortcomings of your product or service. 

Set up a closed feedback loop system. This means as soon as a customer sends in their complaint, take note of the same, dedicate the right person to resolve the issue, and communicate the message to the customer. 

Use these complaints as a springboard for further learning and analyze common issues to proactively address them. 

Learning from our mistakes and having an in-depth understanding of resolving customers' issues, we have built and implemented a closed feedback loop system as one of our primary product offerings. Check it out here.

• Have a Subscription Billing Management System

A clunky and cumbersome billing management system can only add to your existing subscription churn woes. An inefficient system means customers overcharging for one subscription while missing the records of other payments. 

When your billing management system is inefficient, a lot more can happen. However, with a proper system, you will have updated records of payments, upgrades, and downgrades, in addition to a transparent payment history. 

A seamless payment system will help provide a seamless subscription experience, keeping your customers happy. 

• Bloat your Competitive Advantages

Adding more features to your product isn’t an achievement. Anyone can keep on adding new features, but your focus should be on what sets you apart from the competition. 

Going beyond the features, articulate over how your product will make your customer’s life easier. For any customers, it’s not just about the application, but what value they receive from the service. 

Clearly communicate the values you provide, ensuring that they understand the “WHY” behind using your product or service. 

• Delegate your Best Team to Handle Cancellations

Subscription cancellations are a big challenge for any organization, and it’s only natural to delegate this work to the A-Team. Regardless of the company's size and scale, don’t leave churn to automated messaging. 

The A-Team’s mission must be to;

• Identify the reason behind churn, as it can help improve the product. 
• Win back the customers with incentives and rewards or suggest another subscription plan. 
• Guide the product development team with the nuances of customer experiences to create a better experience. 

With the right approach, it’s possible to turn churned subscribers into loyal customers. 

• Identify the Reason for the Churn

I cannot stress enough that you need to know the reason for churn. Your answer to reducing subscription churn lies in understanding the reasons behind customers abandoning your product. 

To uncover the root causes of churn;

• Use exit surveys
• Winback call scripts
• Customer support teams

The motive is to get honest feedback from customers to know what you could have done better for improving the product. 

Most of the steps I mentioned above can be implemented after the customer leaves or is in the process of leaving. Hence, you will have limited time to take the required action. However, using these strategies, you will be able to gain a deeper understanding of your customers and identify churn triggers. 

How to Reduce Subscription Churn?

The following steps are preventative measures you can take to reduce subscription churn and improve customer success rates. 

“What’s the point of attracting new customers when your existing ones are leaving.”

In the subscription model of monetizing your product, potential revenue is spread out over time. This is opposed to the model where businesses pay upfront returns for their investments. Hence, when customers bail out early on, they bring down profitability. 

Here are the ways I recommend you follow to reduce subscription churn;

• Implement Better Customer Engagement

Reducing churn means retaining customers, for which you need to improve engagement. I was surprised to know that a 15% improvement in user retention in the first week will have a cascading effect, doubling the retention rate by the 10th week. 

Effective customer engagement helps nurture relationships with customers and get feedback. So, I would recommend moving beyond emails and automated replies. 

Go for webinars, live sessions, and peer-to-peer learning, and implement gamification strategies to reward your customers for consistent product usage. Work with the goal of facilitating active participation in your ecosystem, ensuring they feel valued. 

• Educating Customers, The Right Way

One of the lessons I learned was having limited features and with that, provide usage training to customers. Exceptional customer training empowers them to use your product to its full potential. 

Build training materials in the form of;

• Bite-sized videos
• Interactive product tours
• Tiered knowledge base

All these must cater to beginner, intermediate, and advanced-level users. You can also segment the training material according to the subscription plans. Effective training reduces customer friction while fostering a sense of accomplishment. 

• Focus on your Best Customers

Identify your high value customers, who actually deserve special treatment. These are the power users of your product and can help create a loyalty loop, leading to an even deeper connection with the product. 

At Qwary, I interact with such customers and offer personalized support and assistance. For these power users, create a loyalty loop fostering an even deeper connection. 

This implies giving beta access to new features, personalized priority consultation with experts, and priority customer support. The motive is to show your customers that they are valued, which incentivizes continued engagement and discourages churn. 

• Proactive Communication

Proactive communication is about reaching out to customers before they reach out to you with their issues and concerns. To effectuate this, send personalized messages based on the customer’s behavior. 

Do you remember receiving in-app notifications like “We are missing you” or “You haven’t logged into your account for 2 months”? Such messages imply that companies are tracking user behavior and sending personalized messages to reignite their interest and engagement. Using behavioral patterns, identify and anticipate potential roadblocks to communicate with customers before their experience turns into frustration. 

Proactively communicating with your customers also helps you stay ahead of the curve. It demonstrates your concern for the customers, building trust and loyalty. 

• Create a Roadmap for the New Customers

It’s super important to have a smooth customer onboarding process. A customer-centric process sets the stage for long-term engagement and success. 

A clear onboarding process will ensure your customers don’t feel lost. This means you must create a personalized onboarding process combined with drip emails guiding the users through every step. 

What we did at Qwary was use the onboarding process to upsell our services. By sharing our features along with their capabilities and limits, we subtly urged the potential customers to buy plans that give them more user control and freedom to A/B test our services. 

• Provide Valuable Content, Consistently

High-value content is the secret strategy that business owners seldom use to reduce churn. Speaking from experience, it’s an amazing strategy to reduce subscription churn and sustain effective customer retention.

Email marketing is the most effective way to sustain customer engagement, so I would recommend adding this as the primary method of sharing valuable content. 

In addition to this, create blog posts, expert tips, tricks, and strategies, along with exclusive webinars on different industry trends and topics. Prefer curating expert featured content from industry thought leaders and curating content collections. 

Good content will help build your valuable content and position yourself as a trusted authority. 

1. Use NPS Surveys to Identify At-risk Customers

Net Promoter Score (NPS) is your early warning system, an unsung hero required to identify at-risk customers. Regularly send NPS surveys to gauge customer sentiment and check their scores. 

Around 35% of B2B organizations use this method to reduce churn and address customer complaints. 

Usually, customers with low NPS scores are potential churners, and you should never ignore them. Reach out to them proactively and understand their concerns through dedicated communication channels. 

Address their concerns directly. Qwary gives you a flawless system to conduct NPS surveys, use in-built analytics, address their concerns, and turn them into loyal customers. 

2. Overcome Feature Blindness

Another thing I read about and then implemented was tackling feature blindness. It’s a phenomenon where users become familiar with a couple of features and ignore other areas or functionalities. 

This limits their usage of the product or service. Ideally, you want your customers to build their habits around the product, but it won’t be easy, as breaking customers' habits isn’t simple.

To overcome this, what we did was leverage hotspots to point out features in the right context to combat feature blindness. 

To Sum it Up

There are many points of friction that can motivate the customer to churn, whether it's ineffective communication, your inability to address customer concerns, or failure to implement retention strategies. 

Think about this! You might lose your customers even before they discover the true value of your product. Ideally, you will want to ignite the Aha! response from your customers as your product solves their problems. 

Working with Qwary, you can achieve all your customer retention goals as we empower you to address their concerns and help implement methods to reduce subscription churn. After all, retention is cheaper than acquiring new customers. 

To know more, book a demo and understand what our product has to offer. 

FAQs

1. What qualifies as a healthy churn rate?

A good churn rate ranges between 5% to 7%. While this range is ideal for SaaS companies, the rate might be different for other industries. However, a churn rate of 15% and higher isn’t an ideal condition to be in for any organization. 

2. What’s the difference between retention rate and churn rate?

The retention rate represents the number of customers who continue to use your product over time. Churn rate, on the other hand, measures the percentage of users who stop using your product or service. Companies must aim to increase the retention rate and reduce the churn rate. 

3. What strategies does Netflix deploy to reduce churn?

Netflix implements retention strategies with top priority to reduce churn. In addition to this, they send personalized recommendations, create original content, and provide impressive customer service, which helps retain subscribers. 

4. What are the best tools to use to reduce subscription churn?

Qwary is one of the best tools you must use to reduce subscription churn. Plus, you can use several other products according to the requirements. Choose tools that will help you track subscriptions and address the root cause of subscriber churn. 

5. What is the KPI used to measure churn rate?

The key performance indicator for measuring churn is Customer Churn Rate (CRR). To calculate CRR, divide the number of lost subscribers at the end of the period by the total number of customers at the beginning of the same period and multiply it by hundred.