Reducing churn is all about understanding your customers; why they signed up, how they use the product, and why they're considering canceling. Everyone who signed up for your product was hoping to get value out of it. They chose to create an account and chose to put down their credit card information.
So, if a customer at some point after willingly signing up and after willingly putting down credit card info, clicks your product’s cancel button, it’s not because they want to be there. In fact, they're probably still hoping to get the value out of your product that they originally imagined. Churnkey is built to help you figure out what went wrong, and then help with any course correction.
Below is a collection of best practices that we've seen put into action from real Churnkey users that have yielded great results.
The Three Customer Segments You Need
Recently, Churnkey launched customer segmentation. This allows you to group your customers according to different data points - subscription age, billing interval, subscription price, the exact plan they're on, and more - and present different offboarding flows to each segment. Every customer’s experience with your product is unique, and segments are a way to create experiences which resonate better with each group.
Segment I: The Newly Acquired
Without knowing a thing about your business, I can pretty safely say that a customer is more likely to churn in the first month than any other subsequent month. When a new customer cancels, it's almost always because of one of the following three reasons:
- Your product isn’t what they thought it was (marketing miscommunication)
- They didn’t figure out how to effectively use your product
- Your product doesn’t provide recurring value (common for resource based products like online courses or legal doc template generators)
Your first job is to figure out which of these three reasons the customer is cancelling. This is easy enough to do with Churnkey's survey step.
Example customer segment and survey questionnaire for newly acquired churners.
Reason #1: Marketing Miscommunication
If a customer signed up and your product isn’t what they thought it would be, it's unlikely you'll keep them on as a paying customer. So use this moment to say “Sorry it’s not what you thought it would be. What did you think it would be?” Freeform input is great here to collect what's likely to be a wide range of responses.
Reason #2: Couldn’t Figure Out Your Product
These customers need more time. Maybe they signed up, got side tracked and temporarily put your product on the back-burner. Re-excite them and give them a free month + step-by-step email tutorial.
Concretely, create a 100% off for one month coupon and copy similar to the following:
Then, use Churnkey callbacks or webhooks to follow up with everyone who accepted this free month sending them a starter-level guide to using your product. Or better yet, a weeks worth of bite-sized tips to keep your product at the front of their mind.
Reason #3: Diminishing recurring value
Churn will be an uphill battle with products which provide the bulk of their value in the first month. But not all hope is lost. Depending on the product, you may be able to provide more intermittent value. In the meantime, you want to keep your product on these customer's radar and remind them that you're around when they next need you. Offer 2-3 heavily discounted months (35-75% off sticker price).
Segment II: The Long-Timers
These customers are just the opposite of the early churners. They've been around for a while and typically cancel their subscriptions for very different reasons. Customers who have been with you for an extended time commonly cancel because:
- Something on their side changed, and they no longer have a need for a product like yours
- They are moving to a competitor
I'd recommend tailoring your survey question to get to the bottom of this, and follow up accordingly as below.
Reason #1: Something on Their Side Changed
Because of external circumstances, these customers are getting less (or potentially zero) value from your product now. Unfortunately, there isn't usually a lot you can do about this. Thank them for for being a long-time customer and offer them a month on the house in case they change their mind.
Reason #2: Switching to competitor
If you've built a lucrative business, there will inevitably be other players in the space. And it's likely some of the competition will build good products right along side of yours. But here's the thing: nobody wants to switch products. It’s a pain. They already know your product well and would rather not learn the ropes of another. Use this to your advantage. Thank these customers for being with you for so long, ask for product feedback, and then offer a generous coupon to get them to stay. You could even follow up with these customers and ask which features of the other product made them consider switching (see below for webhook integration with CRMs).
Segment III: Annual Customers
If you have annual customers, you should architect a flow specifically for them. In particular, “pause” offers, which tend to perform well with monthly subscribers, don’t really make sense in the context of annual payments. Instead, offer "stacked discounts". That is, a coupon on top of the built-in annual discount that already comes with your product. And then draw explicit attention to this discount stacking.
For example, if you charge $20 a month for the monthly plan, but only $180 for the annual plan (3 months free / 25% off); offer an additional “20% off for 12 months” coupon. Then, in your offer copy, tell the customer that this works out to only $12/month, compared with the usual $20/month - a total savings of 40%!
At Churnkey, we've built a no-code editor so that you can easily adapt, revise, and rework your offboarding flow. Below are a few ways you can use this to your advantage.
Experiment With Coupons
Churnkey makes it incredibly easy to experiment with discount offers and figure out what works best for you and your customers. I’d recommend something called a “grid search", a technique commonly used in machine learning to find the best parameters for a given model.
For instance, create a segment of monthly customers on Gold plan. And for a month, run a 30% off for 2 months coupon. Then change it to 30% off for 3 months. Then 20% off for 2 months, etc.
Find a surface area of coupons you’re comfortable giving out, and calculate which gives the best returns.
If you have session recording enabled, it can give you a wealth of qualitative information revealed through subtle customer interactions. This is particularly helpful in seeing if a customer is just on the cusp of accepting a pause or discount offer; you can see customers notably hover over the accept button before taking you up on it or continuing to cancel.
Experiment With Survey Questions
You can use the survey step to ask about anything, not just why customers are cancelling. It’s likely that your survey responses follow similar patterns over time, so change things up to pull more information out of your user base. For a couple of weeks:
- Ask about customer’s favorite features instead of why they’re leaving
- Ask about which features that would have kept them around
- Ask how happy they were with the product overall
To take it one step further, tailor these questions to customers on different subscription plans.
Product expert Scott Hurff has written about how some of the most successful tech companies are effectively using exit surveys.
Experiment With Copy
Subtle changes to copy can move the retention needle in surprising ways; and good copy comes from knowing your audience well. Use segmentation to finely tune the message you’re relaying to each customer. For instance, segment by subscription age and thank long term customers for being with you for so long. Or segment by subscription price and let lower budget customers know that you’re a budget conscious seller. After each change, take note of offer acceptance rates and overall save rates, and keep iterating to optimize.
Reactivation after Cancellation with Webhooks
It doesn’t stop once your customer cancels their subscription. Finely tuned reactivation campaigns can be more efficient than new user funnels. Use Churnkey webhooks to update your CRM with critical information and follow up on promises.
For example, if a first month customer with cancellation intent responded that they couldn’t figure out the product (or that they didn’t get around to it), you should be following this up with an easy to digest tutorial email.
You can also store data about which customers were looking for additional features, and send outbound updates to this audience after features have been launched.
The Next Generation of Best Practices
As we continue to build out features, we look forward to seeing how Churnkey users are making the most of them. Drop us a message if you want to share your own Churnkey best practice.