It is crucial that your customer stays with you in a subscription business for a more extended period to make a profit. The Customer Acquisition Cost (CAC) in a subscription business is pretty high. Therefore, it is essential that your customer stays with you for a minimum period of 6 months to break even. Furthermore, they need to stay for a more extended period if you want to make a significant profit. Thus, customer churn can highly impact the growth of your business significantly if the churning percentage is increasing every month.
What is Customer Churn?
Customer churn is when your customers or subscribers stop using the services you provide. Customers can churn for any reason. However, most of the business focuses on two types, namely, voluntary or involuntary. A voluntary churn is when the customers willingly decide to leave your services. On the other hand, an involuntary churn is when the customers leave your services because of management or technical issues. For example, a customer may churn involuntarily due to credit payment failure.
How to prevent and reduce customer churn?
If you run a subscription business, you must learn the ways and mean to reduce customer churn. Preventing your customers from churning is the key to achieve growth and make a profit in your business.
Here is a list of the things you can do to prevent and reduce customer churn.
Provide quality product or services
Your customers will inevitably churn if your products or services are not up to their satisfaction. So, it is crucial that you provide good services to your customer to earn their loyalty. Also, it is essential that you offer better services than your competitors and constantly upgrade the features of your service.
Provide excellent customer care service
Customer care services play a significant role in gaining customer loyalty. Most of the customers will engage with a subscription business that provides exceptional customer service. Your customer care team must be amiable and helpful.
Build on your dunning management
Dunning management is essential to keep a check on the involuntary churning of your customers. An unanticipated decline of payment or credit card transaction failure can lead to customers canceling their subscriptions. Thus, the software and your technical issues must be adequately managed to avoid involuntary customer churn.
Offering incentives and discounts
Existing subscribers are more likely to renew their subscriptions since they have experienced your services. Moreover, the customer acquisition cost is higher than the cost of retaining the existing customers. Therefore, you should make attractive offers and provide incentives to retain your current subscribers. For instance, you can lower the package price or offer discounts while renewing their subscription.
Engage with your customers across all channels
You must interact and engage with your customers to build a strong bond with your customers. Communication is the key to build a stronger relationship. Thus, you must communicate to your customers across various channels such as emails, apps, phone calls, etc. Providing a different platform to your customers increases communication and also reduces customer churn.