There isn’t one silver bullet to increased customer retention, with so many variables at play and one big goal, the entire undertaking can feel pretty daunting at first. That doesn’t mean there isn’t a good step by step process you can follow to increase customer retention rate. These next six steps for improving your retention will break down our tried and true process into logical steps so you can move the needle without pulling your hair out.
1. Identify Themes in Retention Rate
First you need to analyze your retention rate by breaking your aggregate number down by different variables. Optimize your marketing strategy and product development based upon the themes you learned in analyzing retention by discount, source, and product. Are promotions above a certain discount rate attracting high-churn (we call them the bargain shoppers) customers? Is a particular acquisition source producing customers with a long lifetime and consistent charges? Does retention rate vary by initial product purchase? You will gain actionable insights by slicing retention rate down by these different variables and answering these different questions.
2. Cross Examine Themes
Before drawing definite conclusions about these findings, be sure to cross examine your findings. For instance, a particular discount – let’s say your BOGO 50% Off – may be responsible for attracting low retention customers. So when you look at your acquisition sources – let’s say it’s Instagram – you may feel temped to shift funds away from that source. First see if your Instagram is producing high-churn customers because that is where you primarily run your BOGO 50% Off promotion.
3. Optimize
Optimize your marketing efforts and product development based upon your learnings. If you find that your record-high retention rate comes from those acquired on discounts between 15 to18% then turn off programs leveraging discounts higher than your sweet spot. Your retention rate by source could translate into shifted budget among acquisition sources. If you find a product tied to a low retention rate, try positioning this product as a cart upsell or abandoned cart promotion rather than leading with it in acquisition messaging. Or – you made decide to cut this product line all together. As you can see there are a variety of optimizations that come from customer retention rate analysis!
4. Setup Alerts
Keep an eye on quick cancels (churn in the first 72 hours) and first renewal retention rates to help normalize early retention data. This is an early indicator of low quality traffic and can be used to proactively optimize. You may also want to setup alerts on for programs dipping below a certain retention rate so you are in the know right away as critical data changes take place.
5. Implement Dunning Strategies
“Dunning” refers to the continued attempt to collect accounts receivable. If a customer has churned because their credit card has expired, we see this as a low hanging fruit for increasing customer retention rate – create a campaign to address those with expired credit cards with a single CTA to update their billing information. You don’t have to re-sell them on the value of your service, just a little administrative upkeep in their account to keep getting the subscription service they love!
6. Implement Customer Retention Strategies
Explore innovative ideas like cycle-level discounts and gifts to get more people through your high-churn cycles. For instance, we see the average subscription business experience churn spike between cycles 3 and 4. In order to decrease churn and increase customer retention it could be wise to throw in a ‘surprise and delight’ item into those cycle offers so that your subscription base is less likely to feel that fatigue and cancel. Learn more on why your customers are canceling.
If you want to see the Sublytics Retention Report in action with your own data– get in touch with us today!
