More Tips for Improving Customer Retention

Back in July, SegPay CEO Cathy Beardsley wrote about customer retention strategies for subscription-based businesses, in particular how important it is to understand why customers are leaving (a.k.a., “churn”) before you can determine the best ways to retain them. Cathy defined a few different types of customer churn and suggested ways to combat each type:

  • Proactive churn – the customer cancels intentionally.
  • Payment failure churn – an expired credit card, or other payment error, causes the cancellation.
  • “I have to stop for now” churn – the customer can no longer afford the service, for example.
  • Trial churn – cancellation happens during, or shortly after, a free trial period.

We wanted to build on Cathy’s article by specifically addressing proactive churn – when a customer intentionally ends the relationship with your company. What can you do to change their mind?

In that July article, Cathy offered a few suggestions, including retention offers – discounts to entice customers to reconsider their cancellation. SegPay merchants who employ retention offers save, on average, 6% of subscribers who otherwise would have cancelled.

We know retention offers work, but how can you make it less likely for customers to hit the Cancel button in the first place? Cathy’s recommendations included: keeping content fresh, and using email marketing campaigns targeting members who’ve recently left with discounts or other incentives.

Those measures will go a long way toward boosting retention rates along with the average lifetime value of your customers. But there is more you can do:

  • Consistent communication: Keep customers informed about product updates so they know you’re working hard to make the service better, and  can tangibly see reasons to stick around and experience what’s coming next. Start a blog, or an email newsletter, or update your social media presence – or, better yet, do all of the above.
  • Give ’em more of what they want. Find out what your customers like, and give them more of that. Implement a “star” rating system on your content and track what is most popular. Use heat maps to track which areas of your site are getting the most visits. Direct members to the most popular content, or features, especially if they haven’t seen it yet. The more people feel that you’re helping them get the most out of your service, the more likely they are to stick around.
  • User testing. Invite customers to beta test new features when they are available and share their feedback. Make members truly feel like they are part of your community and have a stake in your product.
  • Spring the occasional surprise. Do something unexpected and nice for your customers every so often, such as promo offers or free gifts. For example, send a thank you note to show someone your appreciation for their business. Use the occasion to ask how you are doing. Offer surprise discounts to customers who contact you with questions. We all love to be pleasantly surprised.
  • Embrace the bad news. Take negative feedback seriously, and learn from it. When customers complain, listen. Often, they’ll uncover legit issues that you may have overlooked. You get the dual benefit of resolving an issue and creating a happy customer who knows you are listening and care what they think.
  • Webinars. Any opportunity to share knowledge with your customers will be appreciated. Walk them through an issue related to business, or anything else, that affects their lives and can teach them something. Demonstrating that you are a partner as well as a service provider helps cement a long-term relationship. Webinar hosting platforms such as make it easy to conduct your event. Along the same lines, use your blog to share business tips, product reviews and/or other unbiased takes on issues that affect your customers.

Cathy closed her July article by saying that understanding why a merchant’s customers are choosing to opt out is the first step towards reducing churn. Do you have a good understanding of why certain members are leaving your service? Have you implemented any of the tactics outlined above? If so, have you had success? What other customer-retention tips can you share? Please share your thoughts in the comments below.

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