Inflation has gone up substantially in the past few months and with it comes higher prices and job insecurity — not exactly the ideal environment for extra consumer spending, even if your subscription product or service is typically well-loved and needed. People are tightening their economic belts and that could mean more churn and reduced revenue for you. Increasing subscription customer retention when the economy is tough doesn’t have to be difficult, however.
While it’s certainly a different fiscal environment for subscription businesses that were riding an unprecedented wave of growth and opportunity the past few years, times have changed, and your customers could be faced with a hard decision: do they keep your subscription or cancel it to help the family budget?
Offer your customers another option
The decision isn’t so black and white if you offer your customers another option: the pause button. If you’re focused on increasing subscription customer retention, the pause button might just be the simplest way to do it.
Giving your customers the ability to pause their subscription for a short amount of time is a great way you can help customers reduce their financial load without losing them completely. Letting them take a break from recurring billing for a month or two while money is tight will help them temporarily reduce costs without making you go through the entire sign up/account activation process again since they aren’t cancelling their subscription outright. It’s a win-win for both of you.
Letting your customers pause their subscription doesn’t mean you’re losing their business forever.
Keep customers from cancelling
While offering the pause option may seem counter-intuitive because you’ll be missing out on their revenue while the subscription is on hold, it’s actually a great way to keep customers from cancelling all together. There’s always a risk when times are tight that customers will cancel and not sign up again when the economy improves. Anything that helps you retain customers is a good idea when they could simply walk away from you and never look back.
According to a study by McKinsey and Co, more than a third of subscription customers cancel in less than three months, and over half cancel within six months. Giving your customers the option to pause their subscription for a short time can help you prevent this churn while helping you learn more about their needs.
Learn and improve
Smart subscription businesses will ask customers what they like or don’t like about the product or service by means of a short satisfaction survey when a request to pause the subscription comes in. Acting on these valuable insights could help you reduce churn even more. This information is your guide to making sure you’re providing what people actually want to buy. In the end, a brief subscription pause can lead to more customer satisfaction and an overall increase in revenue if you use it as an opportunity to learn and improve.
Provide an excellent customer experience
Subscription businesses need to continually deliver customer value and must avoid giving their customers any reason to churn. Allowing customers to pause their subscription is a simple way to ensure you’re providing an excellent customer experience in ways that the competition might not be.
While hitting the pause button can’t fix a retention problem caused by poor quality products or services, this isn’t an issue if your business is strong. Instead, offering customers the option to pause a subscription is a powerful way to improve your customer service and build brand loyalty while increasing subscription customer retention.
To learn how FlexPay can help your subscription business improve retention and create a positive customer experience, check out How To Improve Subscriber Retention by Building Stronger Relationships or schedule a consultation.