We all know it’s hard to acquire customers—so once you do, it’s absolutely crucial to keep them around. We also know that it typically costs much more to acquire a new customer than retain an existing one. But there are so many reasons customers can churn from your business that it can be hard to know exactly where to start with efforts to prevent churn and other types of revenue leakage for subscription businesses.
Our most recent webinar on How to Prevent Subscription Revenue Leakage, featuring Kathy Greenler Sexton, CEO of Subscription Insider, and Laurentiu Ghenciu, our very own VP of EMEA & APAC Sales, helps you figure out where to start by covering various reasons for revenue leakage and how to address them. In this post, we’ll give you a helpful sneak peek at three specific strategies for preventing revenue leakage.
For the rest, including a convenient checklist of ways to combat subscription churn, check out the full webinar.
1. Switch to automatic renewals (by offering incentives)
Everyone wants to know how they measure up when it comes to churn rates. The data may be surprising: the average churn rate varies widely between the different types and frequency of subscription renewal. Churn can range from 35% for manual annual account renewals to 1% for automatic monthly renewals. That means switching your renewal type could have a huge impact on your revenue leakage.
While the convenience of autorenewal alone might be enough to convince some of your customers to make the switch to automatic, others need you to sweeten the pot. We’ve found that about 5% of manual subscribers will respond to incentives to switch to automatic. Given the huge impact that the switch can have on renewal and revenue, offering such an incentive for autorenewal can definitely be worth it.
2. Ask people why they cancel (with a popup)
Most companies already have a strategy in place for surveying customers who cancel their subscriptions. However, that strategy—typically an email message—may not always be the most effective approach. We found that businesses can achieve 6% recovery rates for subscribers who attempt to cancel by simply giving the survey as a pop-up at the time of (attempted) cancellation. This keeps more revenue coming in.
Bonus tip: clearly displaying a support phone number is a useful way to keep customers from canceling.
3. Explore revenue recovery tools (especially the most effective ones)
There are a variety of revenue recovery tools that can make a big difference when it comes to involuntary churn. From account updaters to help with expiring cards bringing in 5.6-8% revenue uplift, to configurable retry logic or pre-expiration billing, a few revenue recovery tools working together may be just what you need to combat revenue leakage and keep building your subscription business.
We hope these three straightforward strategies for revenue leakage prevention give you a great start in this area. But don’t miss the full webinar for additional strategies, plus a comprehensive checklist of proven churn prevention approaches.