Tackling Churn with Tailored Solutions
Reducing subscription churn to its lowest possible rate demands a clear understanding of the two types of churn that challenge subscription businesses: voluntary and involuntary. By implementing specialized solutions for each, companies can significantly enhance customer retention.
- Voluntary Churn: Occurs when customers actively choose to cancel their subscription.
- Involuntary Churn: Happens unintentionally when a customer’s payment fails due to a bank’s declined authorization request.
Identifying the root causes of churn is the first step in decreasing churn rates and boosting retention. It's crucial to recognize that a cancellation request or a declined payment signals the start of the recovery process, where strategic recovery tools should be employed.
Most companies are aware of the opportunity to recover customers who express a desire to cancel. Typically, this involves a series of actions from the customer support team to persuade the customer to stay, often requiring significant promotions or incentives, as the customer has already decided to leave.
However, many subscription businesses overlook the potential to recover a large percentage of customers lost to involuntary churn. The silver lining is that recovering these customers is relatively low-cost, as they didn’t intend to cancel in the first place. This makes their lifetime value (LTV) and the revenue from future billing cycles after a successful recovery particularly valuable.
What you do when a payment fails sets you apart from other subscription businesses. It’s vital to treat customers with respect and understanding, even when their payment fails—they’re still your customers. Effective recovery strategies should both minimize involuntary churn and enhance the overall brand experience.
Crafting the Ideal Involuntary Churn Customer Experience
The most effective way to eliminate involuntary churn is by working directly with the payment system to recover a failed payment without the customer ever knowing there was an issue. An example of this is our team's innovative solutions for the recovery of failed payments.
An optimal failed payment solution quickly achieves a high recovery rate, ensuring that, from the customer's perspective, the payment failure never occurred. Service continues without interruption, the customer remains unaware of the issue, and their subscription carries on seamlessly. A swift, successful recovery is also advantageous as it eliminates the chance for the customer to reconsider their subscription.
Our non-intrusive solutions are best suited for scenarios like false declines, NSF, and other soft decline types. However, there are instances where customer involvement is necessary, such as hard declines due to stolen cards or other issues that cannot be resolved as easily.
Remember, a customer remains valuable even when their payment fails, so maintaining a positive customer experience is key to retention. The worst approach is sending your valued customers to collections or dunning processes when a payment fails. Such actions can severely damage your brand's reputation.
Instead, work collaboratively and respectfully with your customers to preserve your relationship.
Our team's innovative solutions utilizes email and SMS to engage customers, fostering a sense of partnership in resolving the payment issue. The solution employs various branded themes to find the most effective approach, including education (informing them of the failed payment), empathy (acknowledging they didn’t cause the issue), self-agency (empowering them to fix the problem), reminders, and creating a sense of urgency to save the subscription before service is disrupted.
Why Customer Experience and Recovery Rates Matter Long-Term
The goal should be to reduce involuntary churn as much as possible. While short-term success is measured by customer recovery rates, long-term revenue and profits depend on high recovery rates and prolonged customer retention post-recovery. The longer a customer stays after recovery, the higher their LTV. Profits from reducing involuntary churn come not from minimizing recovery costs but from the ongoing revenue generated by these customers who continue to renew their subscriptions.
Soft Declines
Hard Declines
The Power of Combining Two Innovative Solutions Together
To maximize customer retention and LTV, subscription businesses need a recovery experience that is either invisible to the customer or creates a positive, collaborative effort to resolve payment issues. Our team's innovative solutions offer precisely this approach.
The ideal payment recovery experience is either invisible to the customer or creates a partnership with them to successfully solve the failed payment.
Our non-intrusive solutions can achieve recovery rates as high as 70-80%, ensuring maximum customer retention. Our next level solutions add an additional 20-30% in recovery rates on top of the base solution, giving you the highest possible success rates. While results may vary, our team is uniquely positioned to help subscription companies of all sizes reduce their involuntary churn rate to the lowest possible level.
Our team helps subscription companies of all sizes achieve the lowest possible rates of involuntary churn.
Is your business experiencing failed recurring payments? Contact us today to explore solutions that will recover up to 80% of your failed recurring payments, increasing your cash flow and profitability.