Hello and welcome to our “Give me 5 Series!” » where we share five useful ecommerce tips that will help you improve your strategies and pave the way to success.
In our new episode, Alina Motorga, Product Manager at 2Checkout (now Verifone)talked about five tested strategies to help you reduce voluntary churn.
Naturally, the churn rate of your business has a direct effect on your revenue, your profit margins and, ultimately, your entire business.
To minimize these risks, there are countless strategies you can implement to reduce voluntary churn and increase your revenue and customer loyalty.
This brings us to the five proven strategies on how to increase your recurring revenue.
Number one: encourage your customers to auto-renew
Automatic renewal is a billing model in which your customer’s payment information is automatically billed at each billing interval, without requiring any additional action.
It’s safe to say that auto-renewals are a win-win situation for both businesses and customers because they give the customer complete control, as they can choose to turn off auto-billing at any time.
As a result, customers can enjoy uninterrupted service without worrying about losing access to your product, including their stored preferences, or having to re-enter payment information after a subscription ends.
Number two: give your customers the freedom to pause their subscriptions
A highly effective way to reduce voluntary churn and increase trust in your brand is to provide customers with the ability to pause their subscriptions.
For a variety of reasons, customers need to minimize their spending, and understanding their needs will help you win them back later. This will also give you important information why they choose to stop, which is an important pillar for the marketing department.
Number three: correctly manage renewal reminders
Now that we’ve established what renewals are and how they can benefit both parties, the next step is to take advantage of them by choosing the optimal timing and frequency.
Reminder emails for manual renewals can be sent 30 days, 7 days, or even just 1 day before expiration, and they should all include consistent offers and special discounts to enable auto-renewal. You can even act early, with an email reminder campaign that starts 180 days before the expiration date to ensure longer-term loyalty.
Another idea is to create discount campaigns which apply to all or even some upcoming recurring charges of a subscription plan and target certain customer segments with discounted renewal prices. When doing so, make sure to offer specific discounts before their subscription renews.
One thing to keep in mind, regardless of which option you choose, is that renewal notifications should be simple and effective, so as not to create frustration for customers.
Number Four: Strengthen Retention Using Undo Flows
Although it may seem illogical, you might consider incorporating “cancel feeds“, or clear paths in your apps and customer portals that give customers the option to cancel your service. Providing your customers with a clear exit path will make them feel in control and build trust in your brand.
For this you can use incentives such as free “trial” upgrades for a predetermined period, rewarding loyal customers with discounted upgrades, or discounts for converting to a recurring billing plan for added convenience.
As I mentioned earlier, timing is everything and using tools to analyze past actions and the results to predict income flowAds will help you identify warning signs your customers are showing before they can cancel.
Number five: optimize your support and renewal processes
Being attentive to the needs of your customers is essential.
Don’t just rely on what you think might work for your clients. Instead, try to carry out tests on renewal notifications (models, deadlines, prices), renewal emails and migration campaigns. By doing so, you can determine which strategies are truly effective and which are not.
Another aspect to consider in this area is your support flow because it’s how your customer communicates with your brand. If you think about it, making it easy for your customers to know that they can contact you at any time with questions about renewals, or anything else, can have a very significant influence on their decision to renew.
Like a extra tipalways be proactive and ask your customers for feedback. This will create an excellent foundation for satisfaction and retention.
There you are! Now you have five key things to consider when thinking about how to reduce churn rates for your business.
Thanks so much for watching! If you have any questions or suggestions, please feel free to share them in the comments section. We wish you good luck and see you next time with new, more innovative tips!
Check out our previous ones “Give me 5!” episode here to learn five best practices that will help you understand why partnering with an approved merchant is an optimal solution for running a global online business.