Why Customers Leave: Preventing Subscription Cancellations
Subscriptions are a great way to offer customers a simple and hassle-free shopping experience that extends much further than a one-time transaction. This strategy helps attract more customers, retain them for a longer period of time, and ensures they get billed regularly for a more consistent cash flow. In fact, 80% of future revenue is likely to come from 20% of current customers if you run a subscription business (Bain & Co).
Overall, subscriptions are based on customer retention, not conversion. The majority of revenue is made by continuing to sell to the customers who stick with you. But, keeping customers is still a common struggle for many subscription businesses today.
There are various reasons why customers decide to cancel their subscription and it can happen on a whim. Whatever the reason may be, the main issue businesses need to focus on is when customers leave your business; it can crush your revenue.
So, how can a business avoid this and prevent subscription cancellations?
Don’t Focus Too Much on Acquisition & Deliver Value To Subscribers
Acquiring new customers is great for growth, but keeping them is far more important. Research shows that 72% of subscription customers don’t renew within 6 months of their initial transaction. To avoid this, a business should be proactive and remind customers of the value that you offer. This doesn’t necessarily mean adding new features or service; it can be as simple as reminding subscribers of how your product benefits them and why they chose it in the first place.
Communicate Regularly
Sometimes customers cancel a subscription simply because it has gone unused. Buying a subscription is not the same as actually using it. If you aren’t engaging with your customers, especially immediately after signup, they may never become active users. This why it’s extremely important to engage with customers on a regular basis and educate them on the value they can get from using your product.
Always Be Improving & Stay Ahead of the Competition
When a customer leaves and goes to one of your competitors, it means they offer something your business does not. It could be lower pricing or more features, but either way, the competition is doing something better than you. When this happens, a business should focus on finding out what that is and address it. You should examine what features the competition offers and see if you can offer the same or even better. It’s important to be constantly innovating and adding more value to your offering to keep customers engaged and active.
Running a subscription business is sustainable and beneficial if it is done correctly. If you focus on customers’ needs and delivering consistent value, your business will have no problem keeping customers around.
Here at BMT Micro, we also provide all the tools a business would need to run a successful subscription program. Your customers can sign up for your subscription using a credit card or PayPal and we will take care of rebilling them when necessary so you can concentrate on other business needs. If you would like to learn more about our services and offerings please contact our vendor services at vendors@bmtmicro.com for more information.
