Customer canceling subscription

Know Your Subscription Cancellation Reasons

Why Subscription Cancellation Reason Is Important

As a growing subscription eCommerce business, it is vital to understand why customers are churning down to their actual cancellation reason. Without this knowledge your acquisition strategy may take an unintentional plummet, as there needs to be a full-circle feedback loop between your customer experience and the reason why your subscribers found you in the first place. Knowing your subscription cancellation reasons is one of the most powerful, ground-up insights that will guide you toward a more scaleable full-funnel approach to your overall Lifetime Value and Retention. Here are a few key take-aways for how to approach subscription cancellation reason and how you can take actionable insights into your growth strategy.

Cancellation Revenue Lost by Cancellation Reason

1. Identify Top Subscription Cancellation Reasons by Revenue Loss

You will find that there are going to be a variety of cancellation reasons and all of them will seem equally important in priority. In order to prioritize which actions need to take place as part of a short-term vs long-term strategy, it will be essential to group your cancellation reasons by the actual revenue lost to each reason. If you don’t have a way to aggregate that data in an accurate and automatic way, try plugging your store and billing data into the Sublytics free 30 day analytics trial.

2. How to Analyze Your Top Priority Cancellation Reason

In the example above, you can see that the number one reason for subscription cancellation had to do with having too much product in the initial shipments. By the time the next shipment made it to the customer’s doorstep, the average subscriber realizes they haven’t run through their initial product and do not need more. Learn more about consumption rate and how it impacts churn. The action items taken from this insight would be to either to adjust the product quantity or adjust the charge frequency options for this offer. For each cancellation reason, first think of why this must be happening. Once you understand the reason, then think of the variable that first needs to change – either product quantity or charge frequency. Lastly think of the processes impacted by this change. If you change product quantity does this impact your Cost of Goods Sold (COGS) due to volume discounts you may have negotiated with vendors? This 3-step process for analyzing your subscription cancellation reason can be applied with each reason regardless of type.

3.Cancellation Reason Data Collection

When collecting subscription cancellation reasons it is important to think about how you’re collecting the data. If you are using a pick list drop down there is a balance to strike between aggregating like reasons and going to broad in your cancellation reason definition. For instance, Customer Service Team Cancellation is too broad of a definition to take any action items away from. Cancellation reason is a great place to start normalizing customer feedback data, because you don’t want to have hundreds of cancellation reasons to make sense of, just make sure your normalization clusters guide your optimization strategy. If you’re using open text fields to capture this data, commit to a timeline to stop and analyze the reasons coming in from customers to decide on more accurate and meaningful pick-list drop downs.

4. Identify the Low-Hanging Fruit

While the “Too much product, don’t need to renew just yet” reason may be responsible for the most revenue loss – and therefore is going to a be the number one priority, the implementation of those action items may be part of a long-term strategy. Identify at least one cancellation reason to take action on that can be a low hanging fruit. In this case, “Passive churn” is a good example. A simple credit card activation campaign will help you reduce your lost revenue due to expired credit cards while you work on bigger picture product strategy in the background.

If you want to see your top subscription cancellation reasons aggregated by revenue lost – get in touch with us today!

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