Subscription Cancellations: Reduce Churn 12 Ways

It’s a competitive subscription market so it’s even more important than ever to focus on reducing subscription cancellations.

Retaining subscribers is the ultimate goal for long-term success in your business.

So how do you retain your customers in a noisy market? That’s what we’ll cover in this article today.

We understand your time is valuable so we’ll cut straight to the good stuff, and give you real actionable ideas that you can then use on your ecommerce business to reduce subscription cancellations which can then increase your overall monthly recurring income.

How You’ll Benefit from Reading This Article

Look, I don't want to waste your time, so in this article we'll talk about real actions you can take to make your online ecommerce store have fewer subscription cancellations.

The end goal is to lower your subscription churn rate.

We’ll focus on proactive strategies so you can address problems before they occur, as well as how to fix a sinking ship if you’re having a lot of cancellations and just don’t know what to do about it.

If you’re new to subscriber churn, you’ll come away from this article with ideas for how to make your business better, learn how to get people stop cancelling your subscription products so you can make more money, and hopefully enjoy the process.

So let's deep dive into how you can reduce your subscription cancellations.

Subscription Cancellations = Lost Revenue

Let’s go over what subscriber churn is and the dire implications it has for your subscription-based business.

Basically if someone unsubscribes, then that is considered subscriber churn.

They left.

And all the recurring money that comes with that subscription is gone forever.

And you’ll never get that back.

Once they leave, it’s pretty hard to bring them back.

When you get a new subscriber, you’re not only getting their current order, but all their future recurring orders.

So when someone cancels their subscriptions, they aren’t just stopping their current order, they’re stopping all future recurring orders.

This has a direct impact on the amount of money your ecommerce website makes on a monthly basis.

The more people canceling subscriptions, the lower your revenue will be.

And the more subscribers stay on, and you gain new subscribers, the more compounding effect the subscription revenue will have, and it can snowball bigger and bigger.

Why Do I Have So Many Subscription Cancellations?

There are a several reasons why people might be cancelling their subscription with your company.

Some factors contributing to high churn rates are: lack of engagement,, competitive alternatives.

It’s time to get really honest with yourself, and ask yourself “How can I improve my subscriptions?”

Asking yourself this question is great because it really focuses on a broad range of reasons instead of just one, and allows you to have a multi-pronged approach.

Things aren’t perfect, they never are, but here’s 10 ways to reduce subscription cancellations.

1) Surprise Perks and Delightful Surprises

Creating surprise perks to make subscribers happy and builds loyalty.

Let me give you some example of surprise perks for subscriptions such as limited-edition items, early access, or unexpected discounts.

Limited Edition items: You could offer limited edition items, like if you purchase this subscription box, we’ll throw in a limited edition item for free.
Early Access: People love exclusivity. If they are able to see, hear or get their hands on something that others can’t this creates a huge appeal. Offering early access to new product lines, can really make your customers feel special.
Deeper Discounts: For subscriptions, you can create a one-time code that can be applied just to your subscription products. This helps you push subscription products instead of one-time purchases.=Surprise elements create a positive brand association - basically people think of your company in a good way because they know you’re giving away exciting perks.

Surprise elements also make the subscriber relationship stronger because people are more inclined to open your email, or buy your products if you’re engaging them.

2) Engaging Content and Experiences

By creating engaging content is one of the best ways to retain your subscribers interest.

Think of the brands that have captured your attention because they create awesome content that reminds you about their products that you like.

It’s not enough to just create valuable content, but it should also be personalized and consistent.

Think of a weekly newsletter that is scheduled to go out every Tuesday. This is important for a business because it allows you to plan your content on a regular basis.

Some ideas are you could create exclusive offers like a discount coupon code that is only available on the newsletter which allows you to capture leads on your website even if someone isn’t ready to buy now, maybe they’ll buy later.

Anther thing you could do is offer behind-the-scenes. Say you’re a candle maker, you could show the process in your Tie Tok videos, which can then be cross-uploaded to Instagram as a real and Youtube as a short.

Lastly, you could also showcase nice reviews customers have written which helps you create trust and confidence in people who haven’t purchased your products, but are curious.

3) Personalized Re-Engagement Campaigns

Personalized re-engagement campaigns are ways to capture your customers attention if you’ve been quiet lately with content or newsletters.

You can use subscriber data to tailor campaigns, such as product recommendations based on past purchases.

It’s super powerful to take the extra time to personalize your emails when you’re asking inactive subscribers to take action.

If you have their name, use it in the email template. If you know their preferences, you can present a targeted subscription product they’ll actually be interested in.

The worst thing you want is to do a cookie cutter email to everyone with the same offer, and then get a bunch of unsubscribes from your newsletter.

So how do you group up customers into different batches to market to them effectively?

We’re glad you asked, we’ll talk about that next.

4) Segmenting Your Subscribers

Segmenting is like sorting customers into groups based on how they're similar.

When you put all the customers together that are alike together, it's easier to understand and take care of them.

Customer segmentation helps you re-engage specific groups so they can buy more from you.

You can figure out who your customers are in three different ways which are: customer behavior, preference and engagement patterns.

I’ll explain what I mean and also give you real life examples.

Customer Behavior: Their behavior is what they purchase, how often they visit, and how much they spend.

Real Life Example: Let’s say you have customers who have higher spending habits. Customers who are high spenders can be segmented as "High-Value Customers" or "VIP Customers.”

Customer Preference: Customer preference is their favorite products, brands, colors, or styles.

Real Life Example: Let’s say Tom enjoys buying products in a specific collection, such as Industrial Pool Cleaning Supplies. You could segment customers who are interested in a specific collection, so your communication with them is very targeted.

Customer Engagement Patterns: The last one is customer engagement pattern which means the different ways someone likes to play or talk with a store's stuff, like how often they visit and what they buy.

Real Life Example: Imagine there's an online store specializing in natural skincare products. One customer, named Mia, has a distinct engagement pattern. Every 4 weeks, she has an automatic subscription through Ongoing to replenish her favorite skincare items, like a gentle face cleanser, hydrating moisturizer, and a special acne treatment. Mia also regularly leaves positive reviews for the products she buys, sharing her experience with other shoppers. Additionally, she's subscribed to the store's newsletter, where she eagerly reads about new product launches and skincare tips. Mia's engagement pattern involves regularly shopping for her trusted skincare routine, leaving reviews to help others, and staying updated with the latest skincare trends through the newsletter. This is how she takes care of her skin and connects with the store.

5) Offering Flexibility and Control

It’s extremely important to offer flexibility in subscription management.

It should be super simple for your customer to be able to take a look at their subscription and make any changes they want.

Let’s say they want to pause their subscription, this is helpful because they can come back later.

Let’s say they want to change their quantity, Ongoing allows them to easily increase or decrease their quantity with one click.

Subscribers should be able to change their product selections. Ongoing allows customers to easily swap products and change variants.

A customer should be able to adjust their delivery frequency which will help them stay subscribed.

Providing control to your subscriber increases the subscribers' sense of ownership and reduces the likelihood subscription cancellations.

Ongoing Subscriptions has a password-less Subscriber Portal that lets your subscribers make any changes they want to keep them on.

6) Feedback and Continuous Improvement

How can you expect your business to get better if you don’t know what your customers think about your products?

Collect feedback from subscribers to understand their needs and pain points.

Hear their thoughts about what products are good, which ones are not so great or products they wish you offered.

Your customers are your best source of wisdom for how you can improve your products.

By talking to your users, you can make small improvements consistently which leads to happier customers.

One example of a company that has successfully incorporated customer feedback into their subscription models is Amazon.

Amazon, the e-commerce giant, takes your feedback seriously.

Your suggestions for organic or eco-friendly products actually shape what they offer. They take your feedback for the goods you desire and make it happen.

So, when you speak up in those product reviews, you're not just a shopper, you're helping shape the Amazon shopping world.

7) Building a Sense of Community

Starbucks is a great example of a brand that has built a sense of community around its coffee products.Starbucks has created a global community of coffee lovers who gather at their cafes around the world, collect branded coffee mugs in different cities, share their Starbucks experiences on social media, and participate in promotions like the Starbucks Rewards program.

This community is united by their love for coffee, and Starbucks provides a platform for them to connect, share, and engage others.

It’s important to build a community with subscribers because it creates a loyal following and a strong brand identity.

A strong sense of community fosters a deeper emotional connection to the brand and encourages customers to share their positive experience with your brand, so that people are more likely to remember your company and become subscribers.

Check out our full tutorial on how to use Social Media Marketing to Maximize Your Subscription Business.

5 Ways to Build a Community for an Ecommerce Brand

Here are five ways you can create a community for your ecommerce brand.

Private Facebook Group: A private Facebook group can serve as a dedicated space for customers to connect, share experiences, and have discussions. It provides an exclusive area where members can interact, ask questions, and receive personalized support, strengthening their loyalty to the brand.

Online Forums or Communities: Create an online forum or community platform where your customers can connect with each other. This can be a dedicated section on your website or a separate social media group. Encourage members to discuss their experiences, share tips, and ask questions related to your products. Actively participate in these discussions to foster a sense of belonging and trust.

Interactive Events: Host virtual events or webinars related to your products. For instance, if you sell gourmet food products, you could organize cooking classes or tasting sessions via video conferencing. These events allow customers to interact with each other and with your brand in real-time, creating a shared experience and a stronger bond.

User-Generated Content Campaigns: Encourage your customers to share their experiences with your products through user-generated content campaigns. Ask them to submit photos, videos, or testimonials showcasing how they use and enjoy your consumable products. Share this content on your website and social media, giving credit to the contributors. This not only highlights your customers but also demonstrates that you value their input, creating a sense of community around your brand.

Go Live! - Going live on Instagram" is an excellent way to create a sense of community for an e-commerce brand. When you go live, you can interact with your audience in real-time, answering their questions, showcasing new products, and providing behind-the-scenes glimpses. This two-way communication fosters a personal connection with your followers, making them feel valued and engaged, which, in turn, builds a stronger and more loyal community around your brand. Additionally, live sessions often allow viewers to interact with each other through comments, further enhancing the sense of belonging and community.

These strategies help foster a sense of community among your customers, making them feel more connected to your brand and to each other, which can lead to increased customer loyalty and engagement.

8) Beat Competitors with Ideal Pricing

As an ecommerce store offering subscription products, how do you beat your competitors?

You’re always going to have competitors, so it’s time to think about ways you can one-up them.

One important place to focus on is subscription pricing.

With pricing for subscription products, the sweet spot is when you make a good amount of profit.

✅ Is your Price Too High?

If your pricing is to high, you might be limiting the amount of people who will buy your subscription product. Example: $39 shea butter cream…maybe make it $29

✅ Is your Price Too Low?Your pricing could also be too low, which can make you seem not trust-worthy. Example: $2.99 shea butter cream …maybe make it $12.99

✅ Are you giving any subscription discount? If you aren’t you might want to consider offering this because your competitors could have a better deal than you.

✅ Are Your Shipping Costs Too High?

You can always incentivize shoppers to buy a subscription product with free shipping. If you’re worried about losing money, you can require a minimum spend amount.

Think About Your Value

Think about value you bring to your customers who subscribe to your products.

Are your subscription products one that a person can’t live without?

If your products are consumable, chances are your customers will want to keep subscribing to those products on an Ongoing basis as long as the product lives up to its reputation.

If the product is amazing, you’re more likely to experience high customer retention.

However, if the product isn’t that great, people are more likely to unsubscribe resulting in high subscription cancellations.

Next, we’ll talk about ways to get subscription data about your subscription cancellations that can help improve your product.

Reduce Subscription Cancellations with Ongoing

Ongoing Subscriptions displays cancellation feedback to the merchant so they can know exactly why the subscriber decided to cancel.

Ongoing shows you exactly all the different reasons why a subscriber left.

Having information about your subscription cancellations is super helpful for understanding the “why”.

The subscriber can let the merchant know if they simply don’t like the product.

They can leave details about what they don’t like about the product, that info can be used to make the product better.

If your shipping prices are too expensive, Ongoing will let you know. If your product price is to high, Ongoing will let you know. If your customer plans to be back, Ongoing will also let you know.

You can make decision around improve your company based on the subscription cancellations data.

11) Create an Affiliate Sales Channel

The truth is that subscription cancellations cannot be avoided, but it can be reduced so it's important to bring on as many subscribers as possible so you can outpace your churn rate.

This means you'll always have people who cancel. Maybe they don't like your product. Maybe they no longer afford your product. Maybe they moved, and don't have the time to update their address. Maybe their credit card expired and they never entered their new card number. There are dozens of reasons why subscription cancellations occur.

My point is you have to think a little bigger, and bring on more customers, so that even though you have people leaving, you have new people coming in and taking their place.

Check out our full tutorial on how you can start up your own affiliate marketing program for your website (don't worry it's beginners).

Think about it, if you just have people cancelling and no new subscribers, your business will fail.

So it's important to always keep your marketing and sales channels prospecting and on-boarding new subscribers to carry your business forward.

12) Get More Subscribers To Sign Up

Acquiring more subscribers for your subscription-based business can help reduce churn.

Churn occurs when existing subscribers cancel their subscriptions, so increasing your customer base can offset the revenue loss from churn. Here's how it works:

Increased Subscriber Base: When you acquire new subscribers, you're essentially expanding your customer base. The revenue generated from these new subscribers adds to your overall Monthly Recurring Revenue (MRR).
Churn Rate Impact: As your subscriber base grows, the impact of churn on your total revenue becomes proportionally smaller. This is because the lost revenue from a smaller percentage of your customer base (churn rate) is balanced by the revenue gained from new subscribers.

However, it's important to note that reducing churn isn't solely about acquiring new customers.

You should also focus on retaining existing customers by providing excellent service, addressing their needs, and offering value to encourage them to stay. Balancing customer acquisition with customer retention strategies is key to the long-term success of a subscription business.

While increasing your subscriber count can help offset the effects of churn, it's essential to have a holistic approach that includes both customer acquisition and customer retention efforts to maintain a healthy and sustainable subscription business.

Check out our article on how to start doing your own Subscription Marketing.

Measure Your Subscription Cancellations

The first thing you need to do is start tracking churn metrics regularly.

I’ll say that again. Step number one is start tracking churn metrics.

The reason this is important is you can only improve something if you know where you began.

How can you improve if you don’t know where you currently are. The idea here is to just measure where you’re at.

You just need to know what the numbers actually are, so if they’re bad, you can improve them.

And if they are good, you can still improve your numbers. Because a business exists to make money, and the more value you bring to people, the more money your company will make.

Key Metrics of Subscription Cancellations

Know metrics of a subscription cancellations (aka: churn) can be broken down into 3 main things.

✅ Revenue Churn

Money lost when people cancel their subscriptions.

The average revenue churn for subscriptions is about 5-6%

If your churn is higher than 6%, you can work on reducing it by exploring our strategies for keeping customers on-board.

If your subscription churn is lower than 1-6% churn, then congrats.

✅ Customer Retention Rate

The percent of customers who stay subscribed.

The average retention rate for customers is 70%. Ideally you’ll want to get as close to 100% as possible because every subscriber is a recurring order.

If your retention rate is lower than 70%, you can work on experimenting with ways to keep customers engaged with your subscription products so they won’t cancel.

If your retention rate is higher than 70%, then kudos to you.

✅ Customer Lifetime Value (CLTV)

Customer lifetime value is like adding up all the money a customer spends on a store's stuff over a long time to see how much they're worth as a shopper.

The formula for calculating Customer Lifetime Value (CLV) is:

CLV = Average Purchase Value × Average Purchase Frequency × Customer Lifespan

The goal of knowing your Customer Lifetime Value (CLV) is to understand how much money a customer might spend over time, so a business can make smart decisions to keep customers happy and make more money in the long run.

Let's Talk More About Revenue Churn

Revenue churn is a metric used to measure the amount of recurring revenue a business has lost from existing customers over a specific period, typically expressed as a percentage.

To calculate revenue churn, you can use the following formula:

Revenue Churn = Lost MRR (Monthly Recurring Revenue) / Starting MRR x 100%

Here's what each component of the formula represents:

Lost MRR (Monthly Recurring Revenue): This is the total amount of recurring revenue that you have lost from existing customers during the chosen period. It can include downgrades, cancellations, or any reduction in revenue from existing customers.
Starting MRR: This is the total Monthly Recurring Revenue you had at the beginning of the period you're measuring. It represents the revenue you started with before accounting for any changes during that period.

Multiply the result by 100% to express the churn rate as a percentage.

For example, if you started the month with $100,000 in MRR and lost $5,000 in MRR from customer cancellations and downgrades during that month, your revenue churn rate would be:

Revenue Churn = 5,000/ 100,000 x 100% = 5%

So, in this example, your revenue churn rate for the month would be 5%.

This means you lost 5% of your recurring revenue during that month due to customer attrition or downgrades.

Lower revenue churn rates are generally better, as they indicate a healthier and more stable customer base.

Best Software for Reducing Subscription Cancellations

If you are interested in lowering your churn and reducing subscription cancellations, you should definitely check out Ongoing.

Ongoing is the #1 Shopify Subscriptions app for offering repeat orders and automating recurring payments.

The Ongoing subscription analytics help you keep track of your subscribers so that you can know exactly how your business is doing, so you can make improvements to help reduce subscription cancellations.

Ongoing also has a great off-boarding system that helps to retain your customers and keep them on, by offering flexible options, so they can update their order, and not cancel.

If you're looking to migrate to another Shopify Subscriptions app, check out Ongoing Subscriptions which offers seamless migrations. Get in touch here if you'd like to discuss migrating to Ongoing.

Conclusion

There are many ways to reduce subscriber churn, and thus lower the amount of subscription cancellations you experience.

I can’t emphasis enough how important it is to start talking to your customers BEFORE they cancel.Once customers cancel their subscription, it’s extremely hard to get them back.

They’ve already moved on to your competitor, or a better deal, or a company with a community.

That doesn’t mean that you shouldn’t contact customers AFTER they’ve unsubscribed, they may be interested in coming back, and it’s always prudent to keep the communication open.

Customer-centric strategies are the foundation of successful churn reduction.

It’s all about your customers, so make sure to talk to them, and get them to interact wit your brand, because that’s the best way to create a loyal following of people that will always buy your products, and continue their subscriptions.

Try mix matching a variety of the tactics described in this article to create long-term subscriber loyalty and business growth.