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Churn Prevention 101: Strategies To Prevent Cancellation For DTC Brands

churn-prevention-101:-strategies-to-prevent-cancellation-for-dtc-brands
Churn Prevention 101: Strategies To Prevent Cancellation For DTC Brands

Customer churn, or the loss of subscribers to your business, is one of the leading measures of the health of any direct-to-consumer (DTC) ecommerce brand. High churn equals volatility—you’re losing customers fast, potentially faster than you can acquire them or quicker than you recoup your acquisition costs.

On the other hand, a low churn rate and high customer retention are promising signs of a satisfied customer base. They signal that subscribers are content with your brand, products, and value. They can also help you plot the trajectory of your subscription business and provide a steady platform to grow.

In this blog, we’ll uncover the basics of churn and the top strategies your brand can use to stave it off.

Key takeaways

  • Mitigating customer churn is vital for DTC and subscription businesses, which rely on a steady income from satisfied subscribers.
  • Multiple factors, including product satisfaction, pricing, and subscription management options, cause churn. Addressing each one requires a specific approach.
  • Proven ways to reduce churn over time include flexible subscription management, data-driven improvements to your products and services, and an authentic brand story that resonates with customers.

How to churn factors into DTC retail

An industry-wide issue…

Customer churn is a problem everywhere in retail, though its effects can vary in different sectors. A traditional retailer or marketplace like Amazon, Walmart, or eBay has some natural churn defense built in—the variety of brands and products it features. A customer who loses interest in one brand or product can easily find an alternative right on the same site and may shop for many different types of products while they’re at it.

…magnified in DTC ecommerce

On the other hand, a DTC brand has a much narrower range of options (just its own). Once a customer churns, it can be extremely difficult to lure them back, and the brand will lose revenue for good.

That’s why cancellation prevention is critical to a DTC brand’s success—with customer acquisition getting more difficult and expensive, you’re better off focusing on customer retention and developing a satisfied, dependable base of subscribers.

The leading causes of customer cancellations

Customer churn can occur for many reasons, so there’s no one-size-fits-all solution. Customers may end subscriptions because they weren’t satisfied with the products they received or because they found a better fit with a competitor. They may see a subscription as too unwieldy or inflexible to maintain and opt for a simpler alternative. They may even feel disconnected from the brand and look for one that better represents their values.

If you were hoping for a quick answer to low customer retention, we’re sorry to disappoint—the solutions are as varied as the causes. While cancellation prevention may be complex, it’s far from impossible to tackle.

How to prevent customer churn

Suppose there’s one underlying key to churn prevention. In that case, it’s flexibility—flexible subscription management for your customers and flexibility with your products and services, leaving room for them to adapt and improve.

Make subscriptions easy to manage.

Ecommerce success is about meeting customers where they are. If they can’t get exactly what they need from a brand when they need it—in other words, if a subscription becomes more trouble than it’s worth—they’re likely to bounce to an alternative that’s easier to manage.

It can be challenging for customers to calibrate exactly how much product they need each month. The simplest way to solve that problem is to offer a range of quantities and delivery cadences, enabling customers to find their sweet spots.

An image of the subscription overview page for Dae Hair.
Dae Hair subscription shipments can be anywhere from one to six months apart—a vast range likely to cover almost any subscriber.

But there will still be edge cases to accommodate. For times when subscribers need just a little less than usual, offer partial shipments. And for occasions when they’re genuinely overloaded, make it easy to pause subscriptions instead of canceling altogether—and you can even provide the option to gift a skipped shipment to salvage customer cancellations.

Don’t skimp on customer service.

This may seem obvious, but customers won’t always be able to solve subscription issues with self-serve options. Your brand must have a well-staffed, knowledgeable customer success team to provide timely assistance when those options fall short—delayed or incomplete resolutions are every bit as likely to result in a lost customer as a clunky or rigid subscription experience.

Improve your customer experience with feedback & data

Every part of your brand impacts the customer experience: website, products, delivery options, packaging, pricing—the list goes on. With so many factors potentially influencing churn, narrowing down which ones harm customer retention can be hard.

But there’s no need to guess what your customers are looking for. Give them the opportunity, and they’ll often let you know directly.

Get input early and often.

Simple solutions like questionnaires and feedback surveys can help you collect a wide range of feedback at various touchpoints.

Craft brief, easy-to-complete surveys about specific aspects of your customer experience and surface them at key touchpoints: checkout, confirmation emails, account creation, etc. Soon, you’ll have a wealth of data about sentiments toward each aspect of your brand and how they impact customer retention.

With those insights, you can enhance your customer experience and mitigate future customer churn. Prioritize the elements that directly impact customer satisfaction, especially your products themselves—customers won’t keep paying for even the most delightful brands if they’re not ultimately happy with their items.

But don’t discount the impact details like your site UX and subscription management can have.

Offer a smooth, pleasant UX.

There’s a simple principle in retail: the harder it is for customers to spend money on your products, the less likely they are to do so. So invest in your site to minimize the friction between your shoppers and a completed order.

There’s a lot to consider in this area, but here are some top items to focus on.

Page load times

Slow websites discourage customers. Test your site to make sure it’s snappy throughout.

Navigation

It should be easy for shoppers to identify and move between different areas of your site.

Product organization, sorting, and filtering

Ecommerce is highly personalized. Make it easy for customers to find the products they need by organizing them into specific categories and collections, then provide an assortment of ways to sort or filter items: size, price, purpose, special features, etc.

An image of the navigation bar at ZeroWasteStore.
ZeroWasteStore’s environmentally-conscious products are even classified by values like plastic-free or vegan, enabling customers to find the products that mean the most to them.

Offer data-driven cancellation prevention alternatives.

While improving your customer experience should result in fewer subscription cancellations, it won’t eliminate them. But that doesn’t mean there’s no room left to improve!

You can still gather data from customers as they cancel—and when you understand the remaining factors behind cancellations, you can even prevent customers from canceling by offering targeted alternatives.

Many customers who submit a cancellation request are open to maintaining their subscriptions. They have a specific problem to solve, whether related to pricing, logistics, products, quantity, or something else, and either don’t know how to solve it or don’t realize they can.

Finding out why customers plan to cancel can open the door to solving those problems and increasing customer retention. Do they receive too much product each month? Swap them for smaller quantities or less frequent deliveries. Are prices too high? Try a cheaper option or offer a discount on an upcoming order.

An image of Bokksu's personalized offer to customers who cancel their subscription boxes due to subscription pricing.
The exit survey presented during Bokksu’s cancellation process offers discounts to customers canceling due to costs.

Here’s a tip: Recharge’s Cancellation Prevention feature takes care of both steps. Use it to present a cancellation survey to canceling customers, then assign targeted alternatives to the most common cancellation reasons. It’s helped some Recharge merchants save over 20% of cancellations.

See how Wildgrain saved 22% of cancellations with Cancellation Prevention

Enhance customer retention with brand connections

We often talk about churn as a tactical, short-term metric, measuring it every month and offering solutions that address it head-on. However, softer approaches can enhance customer retention more effectively over the long term.

Entice customers with loyalty programs & benefits.

The long-term success of subscription businesses depends on going beyond transactions. Customers don’t just want to buy your products—they want to feel valued and rewarded, to have a reason to keep coming back instead of trying a competitor’s products.

Loyalty programs are the perfect solution. They’re endlessly customizable and can provide many ways to give back to customers: freebies awarded at different purchase tiers, points to be applied to future purchases, or exclusive benefits like early access to upcoming products are all great options. And you can even engage in tit-for-tat by offering bonuses in exchange for subscription referrals—everybody wins!

As always, data is critical here. Survey your customers to determine what incentives they’ll respond to and which loyalty program best suits your business.

Craft a compelling brand story.

Remember what we said about marketplaces being less susceptible to churn because of the range of brands they represent? That’s true in some ways, but the DTC model has some advantages.

DTC brands can put their brand front and center, building closer customer relationships based on the values and traits they represent. And with customers increasingly preferring brands who share their values, that’s an advantage for your brand to press.

Many DTC brands dedicate a section of their website specifically to explaining the genesis of their products, especially when a social or environmental good is involved.

Bite, for example, chronicles its journey from its founder’s desire to reduce plastic waste in the ocean to becoming a certified B Corp. Their commitment to the environment takes center stage, making it abundantly clear that their products are intended for customers who value the same things.

An image of Bite's brand story.
Bite’s story and values are well-documented, helping their products resonate with like-minded consumers.

Lean on enthusiasts and brand ambassadors.

Simply stating your brand’s goals and values and promising that your products are great won’t be enough to win customers. They’ll want evidence for your claims, especially from trustworthy sources.

Brand advocates are the answer—users who spread positive messages about your brand and build trust. While brand advocates can include groups like your own employees or sponsored influencers, we recommend sourcing them organically from your customer base.

Try encouraging user-generated content like in-depth reviews and social media posts, and watch for exceptionally enthusiastic subscribers. Cultivate relationships with them—your loyalty program may be a great avenue to encourage and grow brand advocates.

Before you know it, you may have a mutually beneficial dynamic with superusers who are willing to tout the benefits of your brand and products. It’s one of the most effective customer retention strategies you can implement.

An image of the brand ambassador program signup page at DripDrop.
DripDrop uses an ambassador program to encourage customers to become brand advocates.

Watch out for passive churn.

Most of the churn reduction tactics we’ve covered so far target active churn, which results from customers choosing not to maintain their subscriptions. However, a lot of churn is passive, which unintentionally results from expired payment methods or declined transactions.

Luckily, since customers who churn passively didn’t intend to, their subscriptions can often be saved. However, many brands aren’t equipped to track or prevent passive churn and ultimately leave revenue on the table.

You’ll need automated tools to spot failed payments and prompt customers for updated payment details to stop passive churn. Don’t miss out on passive churn monitoring—it can be a simple way for your business to recover lost revenue.

Retain customers with smooth subscriptions & personalization.

Churn is endemic to the DTC marketplace and is caused by factors ranging from product dissatisfaction to confusing site design or payment issues. While your brand may never stop churning altogether, you can still do plenty to mitigate it.

  • Different resolutions exist for causes of churn, such as inflexible delivery, high pricing, and unsatisfying products. During the cancellation process, find out which ones impact your brand the most and offer targeted alternatives to each one.
  • Make sure your customer experience is smooth overall to minimize friction. That includes building a snappy, navigable website and making it easy for customers to find the products they like and receive them at the right cadence.
  • Share your brand’s values and story to build lasting personal connections with customers. Foster a community and elevate brand advocates who can spread positive buzz. With a few of these customer retention strategies in place, you can knock churn down to background noise.

Sources

[1] Ecommerce UX: Design Strategies and Best Practices for 2024 (HubSpot)

[2] How to create customer surveys: 8 tips and examples (Zendesk)

[3] Ecommerce UX (Shopify)

[4] ZeroWasteStore (ZeroWasteStore)

[5] Bokksu (Bokksu)

[6] People prefer brands with aligned corporate purpose and values (World Economic Forum)

[7] Bite (Bite)

[8] Brand advocate (Sprout Social)

[9] Drip drop (DripDrop)

The post-Churn Prevention 101: Strategies to prevent cancellation for DTC brands appeared first on Recharge Payments.

 

This article originally appeared on ReCharge Payments and is available here for further discovery.
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