The recurring business model criss-crosses just about every industry. Subscription-based billing is front and center for many of us and, as we know, can be very profitable. However, for merchants counting on the revenue, it can also feel a bit like a roller-coaster ride. Customers at any time may decide to leave. This churn — the rate at which you lose subscribing customers — is the key metric for gauging the health of a recurring-revenue business. While losing customers is a fact of business life, there are many ways to keep churn rates down.
Recently we brought together some of the best and brightest at the Phoenix Forum in Arizona for a panel discussion covering customer retention strategies. Despite an early morning start, the event was well-attended, demonstrating how much interest merchants have in this topic, so I wanted to share with the readers of XBIZ World some of the best practices that came out of our discussion.
Merchants making more aggressive offers have seen save rates as high as 10 percent.
As a billing company, Segpay obviously cares a lot about retention. When our paysite merchants are providing the best experience for their customers, they’re keeping those customers for longer periods, which of course means more billing. It’s a win-win for everyone. It’s in the biller’s interest to help merchants improve retention. To that end, we track a number of statistics to try and help merchants better market their products. For example, we have learned that the average number of rebills (renewals) for consumers who sign up for a trial offer is 2.1; but when buying a full membership, without a trial, the number rises to 2.8. We’ve also built tools to help improve retention.
Our merchants who use cancel/keep retention offers — which counter would-be cancellations with discounts — save, on average, 7 percent of subscribers who otherwise would have cancelled their memberships. Merchants making more aggressive offers have seen save rates as high as 10 percent. Cancel/keep offers take minutes to set up but can save merchants lots of money since the longer a customer stays, the more lifetime value he or she brings to a business.
With that, here are a few highlights from our customer retention panel:
- Sam Rakowski of SK Intertainment says gamification can foster engagement and prolong retention. He is currently devising a system that will allow members to accumulate rewards and earn deals as a way to incentivize their continued membership.
- Gary Blumenthal from OLB Media talked about keeping content fresh. He has found that twice-monthly content updates work best, with anything more frequent showing diminishing returns. Gary learned this through old-fashioned trial and error. Finding the optimal price points for discount offers is not an exact science.
- Reactivation should be as easy as possible. For example, the ability to keep the same username and password has proven, for many returning consumers, to be more important than price! This suggests that you might not want to totally delete a cancelled member’s account. More than one of our panelists have found success in letting consumers maintain access to membership areas after cancellation. Even with their ability to view content restricted, allowing ex-members to continue logging in — with calls to action reminding them that they need to repurchase to see new content — makes reactivation easier and more likely.
A recurring theme when it comes to customer retention is that good communication is key. We’ve experimented with a few different aspects of this, as well. For example, consumers are more likely to accept a cancel/keep offer from an agent over the phone than via online chat. And, for customers who ultimately reject these offers, surveying them to find out why can help you learn how you can improve your service to keep people more engaged. We recently gave merchants the ability to customize their list of cancel reasons to improve response rates and the knowledge gained from them.
One final note: don’t be afraid to communicate with both current and former members. Conduct surveys, develop new content and share important announcements. All of these have paid off for many of us in the past. To keep customers engaged, it helps for merchants themselves to be engaged by frequently reaching out to ask people how they’re doing. Good communication is crucial to keep customers riding with you for as long as possible.
Cathy Beardsley is president and CEO of Segpay, a global leader in merchant services offering a wide range of custom financial solutions including payment facilitator, direct merchant accounts and secure gateway services. Under her direction, Segpay has become one of only four companies approved by Visa to operate as a high-risk internet payment services provider. Segpay offers secure turnkey solutions to accept online payments, with a guarantee that funds are always safe and protected with its proprietary Fraud Mitigation System and customer service and support. For any questions or help, contact compliance@segpay.com