Tactics for Reducing Subscription Churn

In last week’s article, we discussed what subscription churn is, the different types of churn and how it affects your business growth. This week we will dive a little deeper into voluntary churn and discuss ways to combat it.  For a quick review, voluntary churn is user initiated. Meaning, the customer takes steps to opt out of their service. There can be a variety of reasons a user decides to cancel; the cost, the quality of content, seasonality, service issues, just to name a few. To have a targeted approach to lowering your churn rate, it is essential to understand the reasons why customers are leaving the service and have a plan to combat each of the main customer scenarios.

Why is Reducing Churn So Important?

Most companies spend a large amount of time, money, and resources just to attract new customers to give their service a try, then lean in to make sure their first experiences in the service will help them convert to paid subscribers. Casting a wide net to increase the number of people entering the top of your acquisition funnel, through advertising, marketing campaigns, promotions, exclusive access to content can be an expensive proposition and more than half of companies have little to no system for saving or reactivating lost customers.

It is important to understand the amount of money spent acquiring a new customer and how long it takes for that customer to become profitable to your business. While you can, and should, break these numbers down to the specific acquisition channels used to entice a customer into becoming a subscriber there are top-level heartbeat metrics you can look at to get a top-level view into the health of your service offering. The Wicket Scorecard provides key metrics that show your performance in acquiring and retaining customers. You are able to see the current view and quickly compare monthly and annual trends. This information is directional to help you ask the right questions and focus retention efforts.


Fig. 1 – Key metrics show your performance in attracting and retaining customers.

Comparing the Customer Acquisition Cost to the expected Customers Lifetime Value will show you how profitable your business is at a high level and how that compares over time.  A low ratio would alert you to dig deeper into your channels to understand the campaigns that are not only bringing in lots of customers but customers that tend to stay in the service for longer periods of time and direct your spend accordingly. In fact, a Harvard Business Review study found that in subscription models, “the high cost of acquiring customers renders many customer relationships unprofitable during their early years” and “increasing customer retention rates by 5% increases profits by 25% to 95%.” Because in most customer relationships you only get one bite at the apple in converting customers, once you have them, these numbers illustrate the importance of understanding their behavior and keeping them happy and engaged. 

Now that we understand the importance of keeping customers, let’s discuss some things you can do to ensure happiness and increase your retention rates. As stated above, understanding why customers leave is vital in developing a strategy to keep them engaged. Proactively engaging with your customers at different points along the customer lifecycle is critical to understanding their behavior and predicting their propensity to churn. Too often companies take the easy way out and question customers on their way out the door, or worse, survey them after they leave the service. Waiting until this point puts you in a reactive position and dramatically decreases your ability to save or win-back that customer. In addition, the information you receive is skewed to the negative or relies on customer service agents to accurately categorize the reasons a customer leaves.

Engaging Your Customers

Engaging your customers through a variety of channels while they are invested in the service: in-app surveys, emails, special offers, social media, etc will allow you to engage your users, collect more actionable data, and will have the added benefit of showing your subscribers their happiness is important to you. People naturally want to provide feedback both good and bad to help improve their experience. Waiting until they are ready to bolt will help you understand why customers leave, but will be less helpful in determining a more important question:

  • Why do they stay?
  • What do they love about the service?

If you have a great offering, don’t be afraid to ask your customers what they love about the service and reward them for participating. This can help turn someone from a subscriber to a fan, to an evangelist.

Engaging your users is an easy way to make them feel special and valued by the service. In video subscription businesses, many times a customer is attracted by a single piece of content they chased from an ad or social media post. This will help get them to a trial. Being sure they are able to find more interesting content quickly and accessing additional content they find interesting is what will keep them coming back.

Additionally, understanding what people are watching and how much will help you narrow in on customers that will stick with the service. It is important to quickly demonstrate the breadth of your offering and monitor the amount of content consumed and how that relates to the lifetime value of that cohort. The Wicket Scorecard analyzes these trends from multiple data sources and overlays in easy to interpret graphs to find the sweet spot of an engaged user.


Fig. 2 – Understand what people are watching and how much they are consuming with the Wicket Scorecard charts allows you to find the sweet spot for an engaged user.

Why stop there?

Understanding the lifetime value of customers that engage in multiple content types (movies, additional series, etc) will help engage other users. Getting them to the right content expeditiously and helping them discover new content is a key factor in creating a “super fan”. Engaging and learning from your best customers and helping them engage and learn from each other will drive customer loyalty and content engagement across the whole service.

Furthermore, the Wicket Scorecard allows you to quickly monitor the frequency of both paying subscribers and trialists to gauge the appeal of your content offering. You can view the monthly active subscribers over the lifetime of their subscriptions and look to see when activity begins to drop off for certain cohorts.

Chart of customers by subscription length

Fig. 3 – Monitor the frequency of paying subscribers and trialists to gauge the appeal of your content offering by viewing the ratio of weekly active subscribers vs. monthly active subscribers (WAU/MAU Ratio).

Chart of lost customers by viewing activity

Fig. 4 – Lost customers by viewing activity. Voluntary and Involuntary.

If you notice churn spikes in either segment, this will helps to understand the relationship and focus retention efforts on a specific churn driver. Lost Customers will also show you the percent of stalled users, those that have not watched content in the last 30 days, and give you opportunities to re-engage those users by promoting content that will bring them back to the service.

Content is King

There is an old saying in video services, content is king. This is absolutely true. But in a world where access to content is changing rapidly, a hyper-competitive landscape of new offerings, and a growing number of ways to access content, making your service a routine destination is paramount to long-term success. In next week’s post, we will delve into additional tactics you can use to combat churn, specifically how you can use your customer data to improve your overall experience, engage new users, find great new content, and help them promote your service to new potential customers.

Combat Churn Whitepaper

You know that churn is a potential hurdle for your service. Click the button below to download the Understand & Combat Subscription Churn Whitepaper to see how the Wicket Scorecard can help you recognize and reduce churn in your video business and begin to maximize audience lifetime value.


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