Nothing Tugs at the Heartstrings Quite like Subscription Churn

Last modified on October 15th, 2021

Nothing can tear at your heartstrings worse than a breakup, and for many business owners that is exactly what churn feels like. When you’re passionate about your business and your product, a single customer cancelling can leave you reeling like you’ve been punched in the gut. Just like breakups, when you’ve been hurt in the past thanks to churn, you can end up building walls to insulate yourself against it.

Building up walls, however, is a short sighted strategy, as it will prevent you from understanding why your customers cancel and go through the subscription churn process. A bunker mentality, where you refuse to understand why a customer might abandon your product (oh the temerity!) is a guaranteed way to limit your company’s potential. Embrace the pain of learning why someone is cancelling their subscription and you will significantly reduce your subscription churn and boost your business’ viability.

Churn in infinite variety, infinite combinations

For the less initiated or more forgetful we have a good subscription churn rate explanation. Your subscription churn rate is the number of individuals or items moving out of a collective group over a specific period. In essence, it is simply the number of people who quit a company or product. Churn is a common phenomenon in any sales focused business and is particularly important to subscription box based businesses (though we should remember that every business is a subscription business).

There are several reasons why someone might decide to drop your product, indeed they might appear as myriad as the multitude of companies operating today. However, they usually come down to the following causes;

  • Finances – A customer may discontinue their subscription as they simply do not have enough money to do so, or a force majeure type event has occurred preventing them from continuing their subscription.
  • Lack of perceived quality – For whatever reason the customer decides that they don’t need your product anymore, or that it is of lower or diminished quality. They may also be oversubscribed and possess too much of a given product.
  • Emotional triggers – The customer may feel aggrieved or disappointed by poor customer service, perceived rapaciousness due to price changes or increases, or they may have failed to receive the product entirely.

Why is churn important?

Churn is important because it is far more sustainable, and cheaper, to retain current customers than to rely on acquiring new ones. Beyond sales figures, it also gives you a good indication of how satisfied your customers are with your products. Based on this dual bedrock you can build a successful business strategy. Returning customers equals returning sales.

The amount of churn you can expect to face varies according to the industry you’re working in. In SaaS, for example, the standard annual churn rate is 5%, with churn of 3% or less considered to be a good target. However this can vary according to company size, market etc.

Some aspects of churn you can control, others are more difficult. Therefore, it is important to have a plan that can both mitigate the damage caused by an unpreventable churn whilst also ensuring your company is well set up to prevent, well, preventable churn. Good news then, as the secret to mitigating the damage of subscription box churn is simple to understand and implement.

How do you prevent churn?

Anything you do to combat churn needs to be based on understanding why customers cancel, as this is the only way you can make effective changes. It might sound simplistic but listening to customer feedback and acting on it will ensure that you can significantly decrease your churn rate.

  1. Offer a customer who’s considering cancelling a change to their subscription model a discount, or some other financial incentive.
  2. Offer your customers special deals – you don’t have to leave this until they cancel! If they express dissatisfaction beforehand, act then to prevent churn.
  3. Set up customer surveys that you can send out during normal interactions or when they are in the process of cancelling. Use their feedback to bolster your churn prevention efforts.
  4. Reach out to former customers via email or social media and offer them new deals or discounts. The churn process need not end at cancellation.

Subscription churn may still occur but you will find that if you put our tips into practice you will likely experience it to a far lower degree than before. Welcome constructive criticism and embrace negative feedback. You will find that adopting this kind of low ego mindset will have tremendous rewards, not just regarding churn, but in all areas of your business too.

What can Subbly do to help?

If you have any experiences with churn and want to share them with the Subbly community we would love to hear from you. Perhaps you were experiencing a lot of churn and were able to turn the issue around, or maybe you are experiencing churn trouble right now? Get in touch, share your experiences with us, and in the meantime, rock on.

Register now to start your 14-day free trial and see how Subbly can help reduce your business’ churn rate!