Churn is the ‘five letter word’ that keeps subscription eCommerce business owners of all sizes up at night. Whether you are a just starting out or running a major brand – you most likely obsess over how to reduce churn. No small wonder, as it is the metric that most significantly impacts revenue and the overall health of your business.
People don’t love subscriptions. They love experiences.
With subscription businesses churn not only impacts current revenue but future recurring revenue. You depend on long-term relationships to provide predictable revenue growth. Churn can dramatically undermine your business since the cost of replacing lost subscribers not only makes it challenging to meet growth objectives but also quickly drains cash flow.
No business can eliminate churn entirely, according to a recent McKinsey study nearly 40 percent of eCommerce subscribers have canceled their subscriptions at some point. You can, however, reduce churn and develop strategies and tactics that mitigate churn.
Winning the fight against churn requires a multi-pronged approach. You can think of churn as falling into two major buckets – Voluntary and Involuntary. Voluntary churn is when a subscriber actively cancels their subscription, whether due to dissatisfaction or changed circumstances. By contrast, involuntary churn occurs as a result of a failed recurring payment rather than a deliberate action by the subscriber.
A Membership Mindset is a powerful tool to help you reduce churn
Delivering an outstanding experience requires more than a ‘set it and forget it approach’ – a recurring revenue model requires an understanding that you are in a long-term relationship with your customers. Subscription in its most straightforward term is a financial arrangement. Membership is emotional – it ensures a great personal experience and a sense of belonging. Membership delivers on a promise from the first moment of delight throughout the customer experience. Cultivating a Membership Mindset lays the foundation for a holistic approach to combatting churn.
Creating a Membership Mindset E-Book
Download the e-Book and start building a membership mindset.
The e-Book includes:
– The commonly overlooked causes of churn
– Best practices for a membership mindset
– Tips and tricks on how to use data insights to reduce churn