- TECHNICAL CENTER
Customer cancellations are a fact of business for any company operating on a subscription billing model. They’re also a great time to evaluate your product and engagement strategies. To cut down on churn and improve your customer loyalty, ask the following questions each time a customer unsubscribes from your service:
Customers expect they won’t be billed after canceling a service, but this doesn’t always happen. In early 2016, Tidal charged several people for its premium service months after they ended their subscriptions. One former customer, Chris Welch, broke the news with an article on The Verge after noticing a $19.99 charge on his credit card.
“Wasn’t my account essentially closed?” Welch asked. “Without any action or permission on my part, Tidal has re-enabled my inactive username. I’m not particularly thrilled about that idea.”
Incidents like this spread rapidly through social media, essentially creating negative word-of-mouth marketing. What’s more, billing customers after they cancel increases your company’s risk of chargebacks. Even if your Terms of Service says you will charge customers an additional billing cycle after they unsubscribe, they still might attempt to dispute the charges. By forgoing these charges, you end interactions with this subscriber on a positive note and avoid bad press.
@chriswelch Just read the TIDAL story you wrote a few months ago about bogus charges. Tidal just charged me in June after I cancelled in Feb
— Jeffrey Norris (@mrjeffnorr) June 9, 2016
Effective communication is fundamental in reducing customer churn rates. If you notice several people cancelling subscriptions around the same time, evaluate your customer relationship management strategies to make sure they still work in your favor.
Use your email open rate to determine whether the marketing messages you send to subscribers are relevant and engaging. According to Hubspot, a healthy rate hovers between 30 and 35 percent. This number depends on several variables, including company size, the scale of the email campaign and whether the company is a business-to-business or business-to-consumer organization.
Your customer support department is also an indicator of your ability to communicate with subscribers. Look at the average time it takes a member of your team to solve a ticket. Customers contacting support are already upset, and a long resolution time with infrequent correspondence makes them more likely to cancel their subscription. Try improving your helpdesk with self-service support options like client-facing forums, wikis or FAQs so customers can find answers according to their own schedules.
Subscribers aren’t instantly hooked when they sign up for a new service. According to Chief Marketer, the onboarding process can take up to a year. Customers need about three months to decide if they like your product and up to 12 to develop brand loyalty.
Assess how well you engage customers during this time. As Business2Community contributor Vanessa Rombaut noted, some companies bombard new customers with emails, annoying them so much they decide to leave. Others don’t adequately explain their product or user interface, confusing customers and essentially forcing them to a competitor that’s easier to understand. The writer recommended creating walkthrough tutorials and periodically testing the customer experience to make the first 12 months as smooth as possible.
Customers who leave your service are a great resource. Think like an email marketer and use unsubscribe exit surveys to understand what could have convinced these people to stay. Include a checklist with a few suggestions and a comment box so customers can provide specific details. Also, survey what your competitors are doing. What do they offer that could be drawing your customers away?
Keep in mind that no product or service appeals to everyone. Before attempting to re-engage a former customer, review what market research says about that person’s demographic as well as your customer acquisition costs. If your product is still unlikely to appeal to this person, trying to get them to subscribe again will be a financial waste.
People who unsubscribe are more than a statistic that influences your bottom line – they’re an opportunity to review your business practices and minimize future customer churn.