Controlling subscription box churn - 12 strategies
The subscription business model depends on a healthy customer retention rate. Churn is the opposite of retention - it is the inevitable loss of customers over time.
There are several ways to calculate churn but one of the easiest and most effective is to work out the number of customers lost as a percentage of new customers gained in a specific time period.
For example, if you signed up 500 new members in a month but lost 50 customers over the same time period, your churn is 50/500 = 0.1 (10%).
Here are 15 strategies for keeping your churn as close to zero as possible:
1. Choose a sub-niche
If you are still in the research or early experimental stages of your subscription box business, it is worth thinking about whether you would benefit from targeting a smaller sub-niche. For example, if you are planning a jewellery subscription box business, what about focusing on necklaces and pendants?
Targeting a sub-niche means accepting a smaller target audience but that audience will be easier to market to and there will be less competition. Since your subscribers will be a closer match to your product, you should also experience less churn.
2. Know your subscriber
Churn occurs when there is a mismatch between what you are offering and what your customer wants. There are two ways to build up a deep understanding of your customers’ needs: market research and customer feedback. Both should form a central part of your business strategy so you can continually adjust your offer in light of new information.
3. Surprise your members
Just like any relationship, it is sometimes necessary to inject a little spontaneity to keep the magic alive. Every few months, be sure to throw in a surprise lifestyle gift, launch a special event or give some other meaningful token of your appreciation (e.g. a special discount, a handwritten card or some free cinema tickets).
4. Offer unique benefits
Your subscribers need to know they are getting a special deal by doing business with you. If they believe they can get what you offer somewhere else they are more likely to churn. Supplier collaborations, limited edition products and rewards programs are just some of the ways business owners can keep their subscribers loyal.
Vinyl Me, Please, a subscription box business in the vinyl record sub-niche, collaborate with artists and producers to create customised records for their subscribers. It’s safe to say that they wouldn’t get that kind of musical experience anywhere else.
5. Be accessible
Customers will always have questions about or issues with your boxes. Make sure they can easily get in contact with you. Unhappy customers rarely have a high patience threshold and if they can’t speak to someone quickly, they might simply cancel out of frustration.
Responding promptly to customer feedback is also important and this interaction will help you to better understand your customers’ pain points and adapt your offering where appropriate.
6. Know your shipping schedule
Do you know what the most frequently asked question in the subscription box industry is?
According to Cratejoy, it’s: ‘Where is my box?’
Now you know, make it your business to always know exactly what stage of the process your subscription boxes are currently at. You should also know how long your chosen postal service will take to deliver the boxes. By giving realistic and accurate information, you will build trust and loyalty.
7. Make it easy to cancel (yes, really!)
It may seem counterintuitive to suggest that making it easier to cancel will reduce churn but it offers subscribers reassurance that they won’t be locked into a subscription against their will. It is, in fact, a classic example of reverse psychology: promoting a possible behaviour with the intention to encourage the exact opposite. Why cancel now when you can cancel whenever you like?
It is no coincidence that many top subscription services (e.g. Amazon Prime, Netflix, Birchbox, etc.) clearly highlight this right of subscribers to ‘cancel at any time.’ Rather than obstructing unhappy subscribers, it is far more productive to focus on the many positive ways to reduce churn.
8. Build your brand
The subscription box industry is very competitive and if your business is purely transactional, you could find your customers are tempted elsewhere by lower prices. You could even find your key suppliers enticed elsewhere.
The most resilient businesses will be those with strong, positive branding. Powerful brands convey a strong, consistent message across all platforms: physical, web ,email and social media. They can build genuine connections with their subscribers, reduce churn and keep their prices and profit margins stable.
9. Delight your members
Digital branding is important because your advertising, social media activity and website content lead to new subscribers. Ultimately though, subscription boxes are all about the physical user experience.
To minimise churn, never skimp on product presentation or curation. This is the heart of your business and you want your subscribers to look forward to seeing their box come through the letterbox. Even the physical act of unboxing should be a special - even sensual - experience.
Spend time with your product team focusing on the fine details: How do you want the box feel? What will people see first when opening their box? How will the packaging sound? Will there be a certain scent?
The better experience your subscribers have, the more likely they are to stay with you and refer their friends and family members in the process. Low churn and viral recruitment is the ‘Holy Grail’ of the subscription business.
10. Provide options
When you sign up with Netflix, you can choose a different package based on your budget and viewing preferences. With Dollar Shave Club you can select shaving products, shower products or both. Birchbox gives you the choice of monthly, six-monthly or annual beauty boxes.
By offering different content and frequency options, you make it easier for people to sign up for a package they feel comfortable with - and comfortable people are less likely to churn.
11. Know your conversion rate
While this chapter focuses on churn, it is also important to have a firm grasp of your figures at the other end. If you know your conversion rate, you know exactly how many people you need to bring into your sales funnel to hit a specific number of subscribers. If churn goes up, you will at least know how much extra marketing work you need to put in to compensate by increasing new customers.
Of course, reducing churn should still be a priority as it is a lot more expensive to recruit new customers than it is to hold on to existing ones.
Finally, you should constantly reflect on every aspect of your business to make sure you are making the most of your opportunities to reduce churn.
Is there another sub-niche you could enter? How are your customers reacting to a new potential competitor? Is there a customised line of product you could launch with an exciting new supplier? Are you meeting your stated shipping schedule?
There is always something more you can do in the effort to control churn and strengthen your subscription box business.
Topic: Subscription websites