To grow digital subscriptions for a website or an online service, it's critical to cast your net as wide as possible. Then you draw those potential customers to a point of purchase. Some of them then make a payment and initiate a subscription.
But what happens after a month or a few months? What happens if customers encounter a technical or other problem? At some point, they may cease to be subscribers, and as a consequence you will struggle to sustain growth for your business.
Customer churn is a normal part of doing business, and the reasons customers churn are diverse, but they fall in two buckets: voluntary churn and involuntary churn. Understanding the difference between the two can dramatically improve your marketing approach (with help from the right tools).
- Voluntary churn is when an end user decides to end her subscription, either by going to a website and clicking cancel or phoning customer support.
- Involuntary churn is more common. A customer doesn't want to churn, but his subscription fails—because of a payment issue or a change of email, or perhaps because an auto-renewal was never set up. Ultimately, your system cancels the subscriptions, and these users disappear.
The Sweet Spot for Retention Efforts
During a customer's journey, a marketer may tempt him to subscribe with a trial period. Generally, it lasts for three months, during which people test the service—and maybe leave (voluntary churn) or stay.
A person who stays 12 months or longer can be considered a long-term customer; avoid upsetting him, and offer enhancements from time to time to keep him happy. Many customer retention service providers suggest leaving these people alone entirely, but I recommend monitoring them over the long-term. Settling for happiness today can lead to obsolescence and frustration tomorrow.
It is the period between 3-12 months that is critical for managing churn, especially involuntary churn, so keep a close watch on new customers in this stage.
Identify High-Risk Potential Churners