The number one marketing difficulty for most firms is generating traffic and leads. The challenge to keep existing customers interested might be linked to the battle to generate new demand for a business. Simply explained, the churn rate is the percentage of consumers who terminate their membership.
It’s the percentage of subscribers who cease paying you after a certain period. Let’s assess the churn rate, which is an important indicator to track. Church rates are higher for Box plans, according to statistics from the “Subscriber app” – possibly because users’ “eyes are bigger than their stomachs.”
Customers may change their views after experiencing a subscription-based strategy and revert to their traditional methods of purchasing when necessary, or they may prefer the option to switch items or companies.
Today, I’d like to share some tactics that have proven to be effective in lowering the churn rate of consumable product brands via subscription programs or subscription boxes.
What is a subscription churn rate?
The pace at which a subscription company loses subscribers due to cancellations or lapses is called ‘churn.’ As a result, revenue is lost. For subscription businesses, churn rates are critical since they are a key predictor of long-term performance.
Furthermore, churn rates are linked to your subscription business’s client lifetime value (LTV). Therefore, reduced churn not only boosts LTV but also leads to a higher return on your client acquisition cost.
As a result, one of the most significant activities you can take to improve the effectiveness of your subscription business is to reduce churn. Nowadays, there are several Shopify subscription apps will help you deal with this issue.
Shopify’s Subscriptions are Growing day by day
Understading the important of the Shopify’ subcriptions, more and more Shopify subscription apps is generated. The first step is to set up a Shopify subscription app. The difficult aspect is keeping those customers as your eCommerce business expands.
You’ll need two things to boost Shopify subscription revenue:
- First, incoming subscriber growth is stable, and customer churn is low.
- Reduce churn (the rate at which a company loses subscribers or customers due to cancellations and cart abandonment) and grow your Shopify subscription business.
As a result, you’ll increase the average lifetime value of your customers, which means higher ROI for every marketing dollar spent, greater brand loyalty, and more confidence in your future growth.
E-commerce subscription sales are nothing new, but there has been a significant shift in the way people think about eCommerce and subscription-based products in the previous decade.
According to McKinsey data, the leading online subscription sellers increased by roughly 100 percent between 2011 and 2016, moving from $57 million in sales in 2011 to $3 billion in 2016. This trend is even more pronounced in the Shopify subscription landscape, where e-commerce subscription sales have increased by 4,461 percent over the same period.
Tips to reduce subscription churn rate in 2022
- Setting Pre-Arrival Expectations
The interval between when someone purchases a subscription and when the first product comes to their home is known as pre-arrival. This is the moment to give content or information that will adequately set their expectations so that they are not disappointed when they receive the product.
When a customer’s expectation isn’t realized, your subscription rate lowers (or your turnover rate rises). As a result, you may use email flows or SMS campaigns to set expectations about what will be in that box. You can also include a complimentary gift or send free samples. These are the elements that will exceed their expectations and entice them to utilize the product and continue the subscription.
- Engage and Reward Your Most Valuable Customers
Instead of focusing on every customer at risk of churning, refocus your attention on the most profitable customers on the verge of churning. Many customers are not worth retaining since the cost of keeping them is more than the money they bring in.
As a result, rather than simply minimizing churn, firms should concentrate on increasing earnings. Offering incentives, whether a promotion, discount, loyalty program, or something else, provides customers a reason to stick around.
- Nurturing After Arrival
This is the period following the receipt of the customer’s subscription box. You should now send them the information they require to use the product effectively. This will boost adoption and assist reduce churn for the following month’s subscription.
This can be accomplished by distributing video content, inspiring content, instructions, and other types of content via email or SMS channels.
Ascertain that the largest possible percentage of people open the box, open the product, and use it. Increased adoption leads to increased consumption. So, instead of canceling or unsubscribing, they’ll run out of the product and be ready for the next one when the next subscription comes around.
- Use the Correct Cancellation Message
As a subscription business, you must be present at the digital touchpoint when customers cancel their membership. A customized list of cancellation choices can explain why customers cancel their subscriptions while also allowing for client retention. High AOV and retention rates can help to balance out high churn rates.
As a result, customers stay to what they enjoy once they find it. The advantage of employing the church rate as a way to educate customers. A consumer, for example, may cancel their membership because they are unaware of the ability to skip their order.
Customers can miss a single order rather than cancel their subscription entirely by making the skip choice a stand-out visual. High AOV and retention rates can help to balance out high churn rates. Customers stay to what they enjoy once they find it.
- Identifying Peak Churn Times
Use your past six months’ data to identify the timeframe when customers are most likely to churn or unsubscribe. This will depend on the frequency of your deliveries or the types of subscription plans.
You can set up email automation or SMS automation to deliver high-quality content, which will keep them engaged and excited leading up to that peak churn time. For example, let’s say you noticed that the peak churn period is 60 days. So customers receive their first month’s subscription, and they receive their second. And by the third, people are canceling and leaving the program.
You can use this tool to create a series of email campaigns sent four weeks before the regular peak churn period. You can employ instructional information, social media content, or social proof in these ads to assist them in feeling more confident about their choice. The aim is to convince them that making this purchase was a good decision.
E-commerce Subscriptions’ Effect on Churn
You understand why customers enjoy eCommerce subscriptions. It doesn’t make sense to place manual orders every month for some products. Instead, they can choose their delivery schedules and have things delivered to them regularly.
But, for a Shopify seller, what are the advantages of eCommerce subscriptions? Reduced churn and recurring revenue. The overall monthly eCommerce subscription churn rate is 5.6 percent, according to Recurly, with a higher rate of 7 percent for direct-to-consumer enterprises.
Churn reduction helps you avoid losing subscription revenue. It also serves as a predictor of long-term success: if you can reduce churn, every new customer you recruit will be more likely to stay with you for the long haul (LTV). In addition, your average cost of customer acquisition (CAC) will be lower the longer you keep clients.
Because attrition is lower, every marketing dollar you spend will go further.
You can reduce churn by following up on abandoned carts and sending SMS messages to clients tailored to their individual needs. You’ll have a far more robust LTV for each client if you can incentivize loyalty, offer incentives to reduce churn, and communicate with your consumers before they leave.
Try to apply the above-mentioned tips to bring the least rate of churn.