Active customer churn is the thorn in the side of every company that operates on a subscription billing business model. A dramatically increasing active churn rate spells financial uncertainty and can cause business leaders to panic. As a result, many end up scrambling to return their subscriber numbers to what they once were. Yet this is the time when clear thinking is most necessary to preserve the remaining user base.
In fact, the customers who stay deserve much of the attention during these times of need. They must not be forgotten about, lest they follow the same path as the other deserters. Unfortunately, it's all too easy to divert 100 percent of the focus to acquisition, leaving customers to flounder in the same conditions that made others leave.
When subscribers cancel a service, companies should take a comprehensive approach, instead of channeling their efforts solely toward acquisition and reacquisition. These are certainly important, but subscription services should focus most on making sure their existing customers are satisfied and unlikely to leave.
What can companies learn from churn?
A high active churn rate is certainly dangerous for a business's bottom line, but it's also a learning opportunity, providing a chance for subscription services to gain more insight about what their users want and what causes them to leave. Ultimately, this process allows companies to improve the customer experience, engage current subscribers and reduce future churn. In addition, the consumers who recently left may be encouraged to sign up again once they see a company has fixed whatever caused them to unsubscribe originally.
"The solutions they put in place must address the customer experience."
Of course, companies need to make sure the solutions they put in place actually address engagement and the customer experience. Otherwise, they risk investing in methods that ultimately provide no benefit. To address churn the right way, subscription services must scrutinize every bit of customer-related data they can. They can look to Netflix for guidance. According to Kissmetrics, the company monitors all aspects of user activity, including:
The number of users watching an episode.
The number of users who completed a series.
The point at which a user stopped a series and didn't return.
When users pause, fast forward, rewind or stop a video.
What day, date and time users watched videos.
What devices users watched from.
The ratings users gave videos.
Browsing and scrolling habits.
Data from the videos themselves, including actors, directors, screenwriters and even common colors.
Netflix uses this information to tailor content specifically toward its customers. For example, when its original drama "House of Cards" premiered, Netflix knew how to best target people who might watch the show. Kevin Spacey fans were shown trailers with only him in them, while people who enjoyed "Thelma and Louise" saw trailers featuring House of Card's female actors.
Additionally, IBM recommended observing historical data, which is very helpful for predicting churn. Subscription businesses can observe the exact moves a customer made before churning and take steps to prevent points of friction for those who remain. Companies should consult with their subscription billing provider for assistance and expertise in preventing customer churn.
The path to recovery from a sudden increase in active churn is often difficult, but subscription businesses mustn't forget their existing customers.
Kevin is an industry veteran with extensive experience in strategic marketing for enterprise software companies and SaaS-based businesses. His 15-plus-year track record includes developing integrated multi-channel marketing programs and partnerships that yield financial results, expand the customer base, increase market share, and build brand affinity. Prior to joining Vindicia, Kevin held senior marketing positions at STEALTHbits Technologies, Tripwire, Epicor, Baan, and Adobe Systems. He holds a BSBM degree in marketing and business management from the University of Phoenix.
Which Billing Platform Is Right for B2C Subscriptions?