How to Retain Customers (The Right Way!) Before They Cancel
Whenever we experience some particularly bad luck, someone’s usually there to remind us that “ stuff happens”. Depending on how bad your luck is, “stuff” can be replaced with something a bit more colorful.
Subscription and DTC companies like to replace it with another dirty word: “churn”. When it comes to retaining customers, it’s true — churn does happen. It’s an unfortunate industry fact that some customers will end up leaving for one reason or another.
Here’s the thing though: just because churn happens, doesn’t mean you’re powerless to stop it.
The fact is that churn isn’t a statistic, it’s an event. And the most crucial, yet overlooked part of this event? The point of cancellation. Unfortunately, many businesses handle this critical stage in the customer journey ineffectively, and worse still — impersonally.
Companies often apply broad solutions as part of their churn management. This makes the cancellation process either too difficult or too easy and leads to one of two undesirable situations: hostage-holding or outright surrender. Each of these outcomes does nothing to convince a customer to stay and leaves them either too angry or too complacent to consider returning.
Personalizing the cancellation process helps eliminate these outcomes and turns it into an opportunity to address your customers' specific issues instead. This works because 80% of customers don’t actually want to leave, they’re just looking for a solution to a problem they’ve been experiencing with your product or service.
A customer-friendly cancellation flow makes your customers feel heard during a crucial moment in their relationship with your business. Not only does it have the potential to convince them to stay (especially compared to hostage-holding or surrender strategies), but it’s likely to increase their loyalty going forward.
How to Build a Subscription Cancellation Flow
Your cancellation flow is a set of procedures custom-built for your business to handle customer offboarding. The key to building a customer-friendly offboarding process is understanding which strategies improve retention while still leaving customers with a positive impression of their cancellation experience.
Fortunately, there’s plenty of data to collect at each step of the cancellation process to help you determine which approach works best. Use the steps below as a template when designing your offboarding process and incorporate customer feedback to optimize their cancellation experience.
1. Ask why they’re leaving
Include a exit survey at the beginning of the cancellation process so customers can provide their reason for leaving. This lets you know which cancel resolution will be most effective for them to see first. It also allows you to track the reasons most frequently cited by your customer base for canceling so that you can take steps to address these issues.
2. Based on that response, make an alternative offer
Your cancellation process should make it quick and easy for customers to review their options while still providing enough cancel resolutions to entice them to stay. We recommend having at least 6 cancel resolutions on deck to address each reason for leaving (the customer will only see one at a time, but you should have 6 options ready).
Here are some ideas for types of offers!
- Mediation/Contact Support
If a customer is experiencing a technical/service issue, then it’s best to offer to connect them with your customer support staff right off the bat. There’s no need to offer promos or discounts for issues that your team can help resolve.
- Monetary discounts
Discounts and waived fees (% off, $ off, free months) are the most common offers used by companies to convince customers to stay. While effective, it’s important to monitor these types of offers to make sure they make sense for your business and ROI. Experiment with different types of discount offers to find which ones appeal to customers without hurting your bottom line.
- Relevant information
Customers are likely to cancel services they haven’t used in a while. This is a great opportunity to inform them about recently added features or other updates coming in the future. For example, many subscription boxes will offer a “sneak peek” of what will be included in the next box to convince customers to keep their subscription active.
If a customer feels that they aren’t getting enough functionality out of your product or service, offer to upgrade them to a higher tier option at an introductory price (e.g., pro for the price of basic for one year). Likewise, if a customer feels that they don’t use all of their current tier’s features and are paying too much, let them know how much they can save by switching to a lower tier.
The type of gifts you can offer to your customers is unique to your business and can include any number of things: promo codes, extra products, subscriptions to a complimentary service, etc. If a customer declines one of your first offers (e.g., discount, upgrade) then bundling it with a gift can be an effective way to tip the scales.
3. Pause subscription
If a customer isn’t interested in any of these cancel resolutions, give them the option to pause their subscription temporarily (1–3 months) instead of canceling. If their circumstances have changed recently (e.g. financial difficulties, relocation) then the convenience of resuming their service at a later date without the hassle of signing up again might appeal to them.
4. Ask the customer if they’d like to know about offers in the future
Before they leave, ask the customer if they’d be interested in receiving additional offers in the future. It’s possible that even though they weren’t interested in any offers now, the right one could convince them later down the road. It’s always best to leave the door open.
5. If you can’t retain them, add them to a win-back program
Just because a customer cancels doesn’t mean they’re lost. In fact, 8 out of 10 customers are waiting to be won back. And since you’ve made their cancellation experience easy and painless, they’re far more likely to consider returning in the future. Keep track of their reasons for leaving and add them to your win-back program to return them to the fold.
Automate this process
Once a customer decides to cancel you have a limited window of time to convince them otherwise. That’s a short window of time to retain someone even with an effective cancellation workflow in place.
This is where machine learning comes in. Tools like Bellwethr’s RetentionEngine can streamline each step of the cancellation process and track the results. This helps build the best possible retention strategy for your business.
The RetentionEngine uses reinforcement learning to understand customer behavior. Once you input your cancellation offers, it tracks your customers' responses and gradually adjusts your offerings. Over time this maximizes their effectiveness and boosts your retention rate.
Not only does this make the lives of you and your team easier, but the RetentionEngine can detect patterns in customer behavior that are easy to overlook. This is critical when it comes to addressing issues relating to customers taking advantage of the cancellation process to obtain discounts, gifts, etc.
Just because a customer is headed for the door doesn’t mean they’re already gone. Optimize your cancellation workflow and take the opportunity to recapture the hearts and minds of your customers before they leave.