Contributed by Gold SUBTA Resource Partner, Segpay
Capturing and Keeping Subscription Customers
Tips from a Payment Processor
Retaining customers for the long haul is what makes the subscription-based billing business profitable. Recurring revenue is what gives subscriptions their power but, as we know, that comes with constant ups and downs, since customers can choose to leave at any time. This rate at which you lose subscribing customers is, of course, known as churn. Churn rate is the key metric for gauging the health of a recurring-revenue business. While you can’t totally control what customers do, there are many ways to keep churn rates as low as possible.
As a company that specializes in subscription billing, customer retention is crucial to Segpay and its merchants. When merchants provide their customers with a great experience, they keep them around longer which, of course, means more revenue. Everyone wins! It’s in our best interest as a biller to help merchants improve their retention. During our 15-plus years in business, we’ve developed some tools and techniques to improve retention rates and wanted to share a few of them with you.
We continually study and track data to try to help merchants’ better market their products. For example, we’ve found that consumers who sign up for a trial offer rebill (or renew) an average of 2.1 times; but when buying a full subscription, without a trial, the number of rebills rises, on average, to 2.8. But how can merchants improve those numbers? Cancel/Keep offers are one proven way. Cancel/Keep offers let merchants counter would-be-cancellations with discounts. We see these merchants save 7%, on average, of subscribers who otherwise would have canceled their subscriptions. Not surprisingly, the more aggressive that merchants make these discount offers, the higher retention rates we see – rates as high as 10% are not uncommon. Cancel/Keep offers are no-brainers – they take minutes to set up and can save merchants a lot of money by increasing the number of renewals, thereby extending the lifetime value of a customer.
It probably goes without saying that it’s important to understand your customers. Are they returning your products or canceling memberships at a high rate? Find out why. Turn a potentially negative situation into an opportunity to interact with your customer before it’s too late. A simple automated survey that is triggered by a return or cancellation can help you learn valuable feedback and adjust accordingly to improve your existing customers’ experiences and retain those memberships over the long term. It’s more cost-effective to keep an existing customer than to find a new one.
Of course, no matter how great your efforts, some customers will leave. That’s why it’s important to have a strategy to win them back. Reactivation Offers make it easy for consumers to reinstate a canceled subscription without having to re-register. Merchants can automatically include reactivation links in emails sent to a customer to confirm their cancellation. Create periodic email marketing campaigns targeting these ex-subscribers and include reactivation links along with an incentive to re-up the subscription. Merchants who surveyed their customer and learned the reason(s) for their cancellation can then segment these marketing emails according to the specific cancel reason(s) and use targeted messaging to win back these customers. Along with letting someone know that you’ve heard their complaint and addressed it, you can potentially offer customers optional plans that address their specific issues.
Another overlooked but crucial tool for keeping customers happy and minimizing churn – especially in recurring revenue models which depend on long-time customer memberships – is good customer support. Consistent, regular communication can go a long way towards retaining your customers. When a customer tells you what he or she likes, provide more of that. Find ways to make people feel special, perhaps by offering a chance to beta-test new products or occasionally sending special promo codes to help customers feel like a valued part of your community. Always be open to feedback, either good or bad. Customers want to know you’re listening to them.
The costs associated with offering retention discounts or special promotions typically amount to much less than the cost to acquire a new customer. These are investments, just like the initial investments made in the marketing and sales efforts that bring customers in the door to begin with. All future recurring revenue from those customers is gravy. Tools such as Retention Offers help keep that revenue recurring with minimal effort required of the merchant. And what’s better than that? Questions, need advice? We’re here to help. Contact us at Sales@Segpay.com.
Written by Cathy Beardsley — President and CEO, Segpay
Learn more at https://segpay.com/
Cathy Beardsley is president and CEO of Segpay, a global provider of merchant services specializing in subscription-based billing, high-risk payments and fraud mitigation. Segpay offers secure turnkey solutions to accept online payments, with a guarantee that funds are always safe and protected with its proprietary Fraud Mitigation System and customer service and support.