Subscription business has a lot of opportunities for growth yet there are many challenges like subscriber churn. This happens when many people are canceling their subscriptions. If you are running a subscription business then you must have experienced the looming threat of increase churn rate. Often times, businesses cannot grasp as to why their churn rate is increasing. With a direct impact on their monthly recurring revenue, their management scrambles to find reasons for the voluntary churn rate. As compared to involuntary churn, customers deliberately cancelling their subscriptions is more worrisome. But fret not because there are ways you can pinpoint reasons behind customer dissatisfaction and use appropriate tactics to tackle these issues.
First of all, it is important that the churn rate is constantly tracked and monitored in order to counter it. This is possible only when you are using a suitable subscription management software. For those who are not familiar, this system has an intuitive dashboard for businesses to track their key performance metrics under which category churn rate or customer churn is also shown. This metric directly impacts MRR also known as monthly recurring revenue. So understandably, it is important that the increasing churn rate (when experienced) is dealt with readily. Now there are two types of churn rate; voluntary and involuntary. The former takes place when customers choose to end their relationship with a business and request a cancellation or in some cases downgrade their subscription plans via the self-service portal. So how can businesses reduce it? This is exactly what this article is attempting to answer.
Reasons behind the Increased Churn Rate
In order to reduce the churn rate by using a subscription management system you first need to understand possible reasons for customer dissatisfaction. Because churn rate is directly targeting customer loyalty, it should be dealt with as such. Loyalty comes when customers are receiving value through their subscription plans. If they are facing issues with the onboarding process, lack of discounts or they do not use your products often, lack of response through customer service, and in some cases, customers have difficulty with payment options. All of these reasons point to how customers, when not offered value, choose to cancel their subscriptions. That is why companies who are facing increased churn rate need to focus on improving customer’s experience. There are a few ways how subscription management software can help you with that.
Ensure Smooth Onboarding Process
Businesses who are looking for tactics to reduce the churn rate can utilize tools from subscription management. One of the main issues customers have faced is during the onboarding process. What you can do is send an automated welcome email to your customers in order to help them navigate your website and introduce them to your subscription plans. Another way to introduce your product to your customers is by offering a live demo. Giving your customers a walkthrough of your platform and designed products will help them get an idea of what they are signing up for.
Offer Discounts, Auto-Renewals, and Trials
When it comes to discounts or trials, a reason why customers might downgrade from their subscription is a lack of satisfaction. A better way to increase retention is by offering a trial version of your product to help customers familiarize themselves with your product. Moreover, discount is a great way for your business to reward customer for their loyalty. Many businesses offer discounts to their customers on their plans or coupon codes for the paid version so more people choose to upgrade. Moreover, auto-renewals, if marketed with an attractive discount and access to exclusive features, can also benefit both you and your customer. The tools of auto-renewals are the key feature of subscription business because customers do not want to enter their contact information every time they want to renew their subscription.
Now the question arises as to how easy will it be for you to incorporate these tactics? It is easy for those who are using a subscription management system because it takes care of your customer’s invoices and can easily account for discounts or add-ons every time an invoice is to be generated. Each time a customer’s subscriptions are renewed, automated invoices are generated against their subscription and after payment processing with their pre-entered payment information, and their plan is renewed automatically for another term. Moreover, with subscription management software, offering trials means increased opportunities for the upgrade thanks to automated email reminders through webhooks. For every subscription business, there might be different reasons behind the churn rate but one thing is common and that is automation which can only be achieved with subscription management software. For businesses who are looking for such a system, SubscriptionFlow is a viable option so contact us today to utilize all of the above-mentioned tactics and improve your subscription health.