For many companies, the key metric they look at is how many new subscribers they are bringing on board but this misses an important point about leaky buckets.The larger the hole, the more water you are going to need to put in to fill it, and if you stop filling then your bucket will empty very quickly indeed.
Your subscription base is a leaky bucket and the simple fact is that it doesn’t matter if you have the best proposition in the world, you’ll always have a hole in it because you are always going to lose people at renewal time.
What successful subscription-based companies have realised is that reducing the size of the hole is vital and so increasing your renewal rate will make a massive difference to your revenue.
Many organisations fall into spending vast amounts of money on customer acquisition and then ignore them when it comes to renewal time, so in this post, we’re looking at ways you can improve your subscription renewal rates.
In this post;
If you want to improve your renewal rates then the first place to start is with your customer knowledge.
Understanding how your customers use your system, what they value, what they hate and why they might leave is the key to defining what strategy you use to improve your renewal rate.
For example, imagine if a significant slice of your customer base hates paying on annual terms but that’s all you do. They may choose to go to a competitor with an inferior product just because they allow monthly payments.
Carpet bombing all of your customers with special offers is a waste of money and a lot of the time is counter-productive.
Why would you offer a 20% off renewal coupon to customers who are going to renew anyway?
Instead, target your renewal offers to the types of customers that churn the most. You’ll know who they are because of your customer knowledge that you have already developed.
If the only time you ever speak to your customers (or more importantly listen to them) is when you want money then you can expect their loyalty to be very low.
Admittedly you may have customers who are happy to never hear from you, and that’s fine but you also have many others that need love.
Make sure you are producing really useful content and sending out newsletters letting them know what’s going on.
Remember that you’re not overtly trying to sell people things, just give them helpful resources and industry insight that will give them a warm feeling.
Give people exclusive access to events like webinars and podcasts but don’t make the mistake of thinking that if take-up is low, it isn’t working.
In fact, you are building your brand and just because your webinar on the state of play in the concrete moulding sector isn’t massively popular, doesn’t mean they don’t value the fact that you care enough to put it out there.
Offer a suite of different payment terms and methods so that your customers have as little reason to quit as possible.
What we are looking to do is to use people’s natural inertia that only causes them to cancel when something is really annoying them.
By giving them as few irritants as possible you can help increase your renewal rate considerably.
Continuous Payment Authority or CPAs are a great way to make sure that your customers don’t leave just because they forgot to pay their subscription.
Expecting people to receive an invoice, log it on their system and then remember to pay it is a bit much nowadays, especially when there are automatic ways to pay.
Setting up CPAs take all the effort needed away.
Sticky product features are ones that make it inconvenient to leave or give users value that they can’t get elsewhere.
Amazon Prime is a good example of a product that has sticky features in the form of added value. Users may join for the free delivery and streaming video but they may stay for the books, music or many of the other included services.
An example of a sticky product due to inconvenience would be Google Drive. Sure you can download all the stuff you have saved on there but the longer you store stuff the more you have and the more difficult it is to move away.
If you want to stop people leaving because they are really annoyed then check out your service tickets.
Make sure you have a regular process of reviewing high numbers of service calls by user and then make sure you understand fully why it is happening. Is there something that you can change that would make things better for your customers?
People leave companies but they don’t leave communities.
With simple and cheap forum and bulletin boards systems, Linkedin and Facebook groups and multiple ways to keep people included and in the loop, there really isn’t any reason to not work on community development.
One by-product is that an active community will often propose great service improvements or will help each other get over simple system issues.
Evangelists are people who love your product and are happy to tell people about it.
If you have effective evangelists then they will often provide peer proof that your service is better than the opposition without it looking like the hard sell from you.
Encourage your enthusiastic supporters and work out ways to reward people who use your product a lot. Make sure you have a recommendation rewards scheme too.
You’ll know how long before expiry most of your customers renew so if you have people that are inside this period then you can use a pre-cancellation offer.
For example, suppose you know that if they are going to renew, most people will do so more than 14 days before expiry.
You’d send a renewal reminder more than 14 days out, followed by a mail that offers a discount for people renewing at less than 13 days.
Then just before they get to the cancellation date, you’d send out a ‘hate to lose you’ email, offering an even better discount.
Once people have gone then wait a short while and send a ‘please come back’ email offering a discount.
This is especially useful if your service holds their data. You can send a mail saying that you’ll be deleting their data after a certain time (as per GDPR requirements) and also offering a special rate if they come back.
Make sure that you find out why people have left and not come back.
This is probably the most valuable part of the renewal process because it will help you inform how you can stop people leaving in the future.
You have to be open and not get defensive and it’s often a good idea to pay an independent survey company to run post-cancellation interviews and surveys so that you get honest answers.
Don’t be shy and don’t be afraid of hearing bad news because as long as you take steps to make things better then your company will be better as a result.
Improving your renewals rate isn’t a one-time thing.
If nothing else, you know that you will always have competitors nipping at your heels, improving their services in the hope of pinching your subscribers.
So it is important that renewal rate is one of your Key Performance Indicators that you are always looking at and monitoring for any issues.
Remember that it’s cheaper to keep customers you already have than find brand new subscribers so a little time and effort could pay massive dividends for your company.