This is the seventh in our 10-part Beyond the Product subscription series. In our next chapter, we connect with enterprise food and beverage brand Metabolic Meals to discuss the enormous value of membership data and how to translate it into revenue growth and lifelong customer loyalty.
When a subscriber clicks the “cancel” button, successful subscription brands shouldn’t see that action as the end of a relationship; rather, they should view it as one more marketing channel to optimize, says Patrick Campbell, CEO of Boston-based Profitwell, which helps subscription brands succeed at every step of the shopping journey.
He divulged his suggestions on how to combat churn and boost retention in his second appearance on the Own Your Commerce podcast, hosted by Bold Commerce co-founder Jay Myers. In this informative interview, Campbell encourages subscription brands to be proactive against both voluntary and involuntary churn.
Offboarding members shouldn’t be seen as a loss. “The moment between hitting cancel and no longer being a customer is ripe for opportunity,” Campbell says.
We break down the interview into several key takeaways designed to help subscription brands thrive in the face of churn.
What you can do about involuntary churn
When someone leaves your subscription brand for technical reasons, such as payment issues, don’t sit on your hands, advises Campbell, especially since this area of churn is so common. “Credit cards fail all the time. And a lot of times we don't have the structure to get those folks back…and typically this is about 20 %to 40% of your lost customers.”
To help stave off this kind of churn, Campbell suggests brands strength their payment backbone by having ACH in place, meaning direct bank account access, which will help reduce failure rates. Ushering PayPal into the payment ecosystem can benefit both members and brands because “PayPal is working to recover that payment failure with you,” Campbell notes.
But most importantly, if a subscriber is easing away from the brand due to involuntary churn, treat this funnel as a marketing channel, he says. “Send out plain-text emails to inquire more about the payment failure, and plain-text often has a 60% better open rate than heavily branded ones.”
Some customers need a nudge here. “Treat it like a relationship,” Campbell says. “Like, ‘Hey Jay, Patrick here, I noticed your credit card failed.’ And all of a sudden people are a little embarrassed. So they'll say, ‘Oh my gosh, I'm so sorry Patrick, I’ll go update it.’ Or they won’t respond and just go update it.”
Tactics for reducing voluntary churn
The type of churn that can also infect a subscription brand is voluntary, when a member decides they want to cancel their subscription. The reasons can range from dissatisfaction with the product to financial challenges to ageing out of the product offering.
To combat cancellations, ecommerce brands can take action from the outset with their delivery terms. “Be sure to offer quarterly, six-month plans or annual plans,” advises Campbell, adding how these terms will see less cancellations than, say, a monthly plan that gives subscribers more opportunities to leave.
“From a very tactical standpoint…offer some kind of longer term plan,” he adds.
If that cancel button is clicked, the next step a brand should take is launching their reactivation strategy, Campbell says. What that means is contacting the customer soon after they cancel, and building on that relationship established when they first signed up.
“Go back to those customers and tell them you have some new flavors, some new colors available, and what we’ve found interesting is that you’ll be able to recover somewhere between 20% and 30% of those cancellations,” Campbell says.
It can only buoy a brand’s reputation if they also follow-up with departing members by sending them an email with multiple-choice questions, asking them why they left, what they found favorable and unsatisfying about their membership experience. “And somewhere in there I’ll give them an offer, to encourage them to come back,” says Campbell.
And one of those offers could be a pause plan, he suggests. This idea revolves around the subscriber pausing their plan for one or two months, which may even be a feature they never knew existed. “You can say something like, ‘How about for a dollar a month I save all of your settings, so that when you come back, you can get started right away.’” It's not great, but something is better than nothing here.”
On offboarding in general, he says, “It is one of those things where you're judged by not only the first impression, but you're probably judged by the last impression of your customer.”
Campbell revealed more strategies to reverse churn, and cited several brands excelling at optimizing in this area, but to get the full scoop on the topic, you’ll have to listen to the episode!
Stay tuned for chapter eight, where we meet up with enterprise food and beverage brand Metabolic Meals to talk about the power of (responding to) membership data.