While it may seem like a subscription eCommerce company would not need to worry about customer churn, the truth is 72% of subscription eCommerce customers fail to make a second purchase within 6 months of their initial transaction. This goes to show that even subscription businesses, who may seem to have a baked-in advantage when it comes to customer retention, need to address and prevent customer churn.
Why customers are churning
Customer churn is when a customer stops engaging, purchasing, or unsubscribes from your brand. Customers may churn for a variety of reasons (most don’t churn for no reason at all). This is why it’s so important to look at the factors that may be causing your customers to churn:
Too much focus on acquisition
While acquiring new customers is essential to business growth, too many subscription companies focus primarily on acquisition, thinking that once they have a subscriber, they no longer need to worry about keeping them. Looking at how many subscription customers fail to make a second purchase proves that just because someone subscribes does not mean they can be ignored.
When subscription companies only offer promotions and incentives to new customers, they leave their current customers feeling neglected and resentful, leading to customer churn. For example, Spotify only offers a discounted three month rate to new customers, ignoring current customers who try to take advantage of this deal. Remember that your current subscribers want to feel appreciated for being loyal customers and potential customers will like to see that you’ll treat them well if they become a subscriber.
Not enough value
Customers today have more choices than ever before, which is why it’s so important to prove your value. This is something that is especially important for subscription companies as customers will need to see continued value, both monetary and perceived, in order to first subscribe to your product or service and to continue their subscription. By diversifying offerings and personalizing them to each customer, subscription companies can add value and variety to their products, keeping customers engaged and invested.
How to prevent customer churn
Some of your customers will churn, that’s just a natural part of doing business; however, there are things you can do to prevent some of your customers from churning and turn them back into active subscribers.
A win-back campaign is a series of messages (usually emails) to help bring back customers who have stopped purchasing. There are two main components to a win-back campaign: messaging that addresses why the customer churned and an offer to help bring them back.
When Dollar Shave Club noticed that a significant number of customers were beginning to cancel their subscriptions, they implemented an exit survey to find out why people were cancelling. They then took the survey findings and created a win-back campaign with marketing messages to address these concerns and after a 90-day period, saw a 5x increase in resubscribe rates.
Advocacy and rewards
Advocates are your most valuable customers as they promote your brand for you to their family, friends, and networks. When you have customers who are advocates of your brand, keeping them from churning is crucial.
Offering rewards and special perks for your advocates is a great way to show them you appreciate them and to keep them engaged. Subscription companies can offer points for each item shipped and extra reward points for anniversaries and birthdays. And since advocates like to spread word-of-mouth about your brand, it’s a good idea to give them rewards for reviews of your product / service.
Even though subscription models seem to have retention baked-in, keeping customers engaged and purchasing after they become subscribers is key to making the business thrive. Adding value and rewarding their loyalists customers are how subscription eCommerce brands will succeed in the market.