How to Enhance Customer Engagement and Retention in Your Subscription Business
All successful subscription businesses focus relentlessly on three key metrics: customer acquisition, customer retention, and customer churn. They’re all inextricably linked—acquisition gets new customers through the door, retention means you’re holding onto the customers you have, and customer churn tells you about the success—or failure—of your efforts.
Increasing retention rates and reducing churn risk is one of the most effective strategies for ensuring long-term subscription business survival and growth. The question is, how do you engage with your customers and enhance the likelihood of them using your subscription services for the medium- to long-term?
Good news—there are several powerful approaches you can use to drive up customer engagement, enhance retention rates, and decrease the likelihood of losing a customer to the competition.
Get a Deep Understanding of Customer Retention and Churn Metrics
Good businesses rely on strong data, and that means measuring the right areas. Get robust monitoring and reporting in place for every part of your subscription business. This might include:
- Customer relationship management (CRM) leads and prospects.
- Conversion rates between prospective to paying customers.
- Accurate forecasts for subscription renewals.
- Sales and onboarding process successes and failures.
- Engagement metrics like product feature usage, breadth and depth of services used, how often customers log in, how long they spend using the service, access by type of device, etc.
- Personalized recommendations for each customer on how they can be more successful adopting your product and gain more value.
- Segmentation of customers into groups of customers with similar attributes and behaviors, so that you can treat them appropriately.
- Customer service and support to identify potential issues for specific customers and overarching problems.
- Surveying customers to see what they think of the services and value you offer.
- Recurring revenue and lifetime value.
Ultimately, all of these metrics are just starting points, as every subscription business is unique. You likely already know some of the areas you should be focussing on, so be sure to create solid data monitoring and reporting to get the insight you need.
Understand the Warning Signs that Lead to Greater Churn Risk
Once you have some good data, you can start to establish a correlation between your metrics and when customers stop using your products and services. Look for commonalities between what the data is telling you and when customer retention fails. For example:
- Were there significant customer service issues?
- Did the customer start logging in less?
- Did they spend less time using the product?
- Did they only use low-value product features?
- What were their purchase patterns?
You should carry out some deep data analysis to establish the main failure points that lead to churn, so you can identify and avoid potential issues in the future.
Create Thresholds and Alarms to Identify Customers Who Are at Risk of Churn
When you know what metrics potentially show a customer leaving your subscription business, create thresholds and alarms for existing customers who may meet those criteria. That way, you can deploy initiatives and resources aimed at stopping those customers from lapsing.
This is also a great opportunity to see if there are major underlying issues that cause customers to churn. For example, do many customers churn after using your service on a mobile device? Perhaps it’s not correctly optimized for mobile use. Are there customer service issues that come up again and again that indicate a deeper problem? Do they seem to get stuck on the product feature adoption maturity curve and if so where? Use the metrics as a springboard for further investigation and improvement.
Get Personal and Increase Engagement with Communications and Offers
The number one reason customers leave companies is simple—they don’t believe that the business cares about them and they don’t believe they are getting enough value from your offering. Your customers want to trust your subscription business and part of that is about establishing relationships. If you want to enhance customer retention outside the specific problems shown by your data analysis, you need a broader approach to keeping customers engaged and happy.
Make Customer Communications Personal
Find ways to personalize how you interact with customers. Whether that’s through emails, newsletters, social media, in your app, or through other means, always ensure the recipient is treated as an individual. Customize your messaging based on their name, demographics, needs, or other factors. Provide bespoke advice and specific recommendations on how to get the most out of your subscription services.
Demonstrate the Value Your Subscription Service Provides
Sometimes, you’ll need to remind customers why your subscription product is awesome. Whether it’s saving time, making things simpler, lowering costs, generating more revenue, making communications easier, or something else, tell your customers how your service removes their pain points. You can do this through case studies, videos, podcasts, blog articles, and other media.
Reward Your Customers for Their Loyalty
Without customers, you don’t have a business, so it’s time to show your appreciation. Identify your most loyal and profitable customers, and give them a reason to stay with you. Whether it’s discounted pricing, a good special offer, personalized services, or something else, make sure that they know you care about them. This can also help turn customers into advocates for your business and encourage them to share your products and services with others. It’s a great way to build a network effect.
Ask Customers Why They Left
There’s an extremely powerful way to improve retention—when customers leave, ask them why. Just like an HR department might conduct an exit interview with a departing employee, you could ask past customers why they’re no longer using your service. If possible, dig into the underlying reasons so you can understand what they believed was at fault. You can use those insights to drive future improvements.
Invest in Really Good Customer Service
The real moment of truth for a customer, that often decides if they leave or stay, is when things go wrong. When that happens, you need customer service agents who can sort out issues and problems quickly and effectively. Give your support team all the tools they need to communicate with your customers, quickly identify incidents, and troubleshoot solutions.
Every shift you make will enhance customer engagement, increase retention, and lower churn rates. Use the right metrics to understand how customers are using your subscription services, identify “at risk” customers, build up how you communicate, and ensure your customer service is second-to-none.
Remember, too, that customer engagement is never quite “done.” There will always be tweaks and improvements you can make to how you interact. If you learn from the data, refine your approach, and ensure your customers feel valued, you’ll sustain your organization and grow it into a thriving subscription business.