The customer churn rate tells you how many customers stop using your product or service or cancel their subscriptions with your business within a certain period. Subscription businesses might face customer churn for several reasons, including dissatisfied customers, complex payment systems, or poor onboarding for new customers.
Learn more below about six strategies on how to reduce customer churn and how Revolv3 can help your business improve payment systems to nurture loyal customers.
1. Enhance Customer Onboarding Process
After your customers sign up for your products or services, there is a chance they will cancel almost immediately if they can’t figure out how to use them. A poor onboarding process can prevent customers from receiving value instantly and prompt them to look elsewhere for it.
Use some of these strategies to improve your onboarding process and reduce customer attrition:
- Send a personalized message to welcome your new customers and let them know how they can find help if needed.
- Ask your customers why they signed up for your product or service to better understand the goals they’re trying to achieve.
- Walk your customers through the steps that will signal them to feel like they are achieving something (i.e., initial software setup, completing user profiles, funding accounts, etc.).
- Automate communications, so you can ask customers if they need help when they take too long to complete onboarding.
- Get in touch with customers who haven’t used their subscription in a while to pull them back on track.
Continue to tweak your onboarding process as needed to improve the initial customer experience and reduce the likelihood of your customers canceling subscriptions before they can truly put them to good use.
2. Streamline Payment Processes and Improve Authorization Rates
Involuntary churn occurs when a customer doesn’t actively choose to cancel their subscription. It often results from failed payments and issues with payment processing, which are one of the primary reasons for customer churn in subscription businesses.
Failed payments can happen for several reasons, including system errors, expired cards, insufficient funds, and fraud protection. Your payment processes should be able to avoid these issues as often as possible and improve authorization or approval rates.
One way in which payment processing systems can avoid and prevent payment problems is with dynamic routing. Software with dynamic routing can process payments more efficiently by choosing routes based on factors such as traffic levels.
Automated payment retries can also help. However, there are regulations regarding the number of retry limits, so pair your retries with customer communications to update billing information. Informing your customers about the potential payment issues can go a long way in acting promptly to prevent them — and involuntary churn altogether.
3. Personalize Customer Engagement and Communication
Personalized marketing and communications are easy but effective ways to attract potential and current customers to your business. The customer journey involves many steps, from the need and learning stages to the decision and customer loyalty stages. Personalized messaging throughout the entire customer lifecycle is crucial to showing your customers that you know and care about their wants and needs.
To set up a personalization strategy, consider the most effective places to personalize your messaging. You could personalize emails and messages, account setup processes, product packaging, or other essential placements.
In addition to basic information, like your customers’ names, you could also personalize customer engagement through custom subscription packages, various payment methods, or tailored discounts. Any steps to improve the user experience can help reduce voluntary churn.
4. Optimize Subscription Management and Billing
While your payment systems can enhance payment processing on your side, you also need to optimize the client side of subscription management and billing. Many failed payments occur due to inaccurate or outdated card information. Since you can’t update that information, you need to make it easy for your customers to do so.
When you identify that there has been a problem with billing, contact the customer immediately to tell them what went wrong and how they can fix it. In addition, many card issuers (like Visa and Mastercard) offer services to monitor card information and update it automatically.
Finally, create convenient ways for your customers to change their subscription settings. While it may seem counterintuitive to let your customers easily cancel, delay, or cut back on their subscriptions, it shows your customers that you’re focused more on their satisfaction than money.
5. Provide Exceptional Customer Service
Your sales team and customer success team are vital to improving customer retention. Both should provide information for potential customers to make buying decisions and supply help for new and existing customers using your product. If these two teams can’t answer your customers’ questions, these customers will likely move on to a competitor that can.
Make it easy for your customers to reach your customer service team, especially during onboarding. Have a convenient contact page on your website, place a help button on customer accounts, and list your phone number and other contact methods where they’re visible.
Your customer service team should also try to reach out to customers before they need help. Using this method shows your customers that you’re thinking of them and keeps you in their minds (although, be careful not to spam). Offering periodic discounts, sending promo emails, or having a loyalty program are also convenient to include in your churn prevention systems.
6. Utilize Data Analytics for Customer Insights
If your business isn’t gathering data, start as soon as possible. Data can tell you a lot about your customers, such as their demographics, likes, dislikes, how they use your product or service, and how they feel about your business. At the very least, you should keep track of customer feedback, transactions, and overall behavior so that you can use the data to improve your business model and products.
First and foremost, customer insights can help you determine which customers might be ready to churn. If you can spot the warning signs of churn, you might also be able to stop it. For example, if you see a customer hasn’t used their subscription in a week, you might anticipate a higher level of churn risk.
In this case, you could use proactive customer service to reach out to the customer to see if they’re having trouble with your product. Maybe you discover the product is missing a feature your customers need, or the subscription is too expensive for them at the moment. Whatever the reason, the more you learn about why your customers are churning (or might churn), the easier it will be to prevent it.
You should also gather data about the effectiveness of your churn management strategies. Track the changes in churn rates for different retention methods to see which works best for your customers.
Reduce Customer Churn Rates with a Payment Optimization Platform
If you need help combining your different strategies to reduce customer churn, Revolv3 can help. We offer a subscription management platform that uses modern technology to improve payment approval rates and reduce revenue churn. And you only pay for the payments that are approved.
Contact us today to learn more about our innovative subscription payment system.