Churn is the major subscription headache of our time. Here are eight challenges that we often see in large organizations!

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By Morten Suhr Hansen

The modern consumer loves subscription and over the latest years, we’ve seen the number of subscriptions in Danish households rise, as more and more companies offer exciting subscription solutions. And during COVID, many subscription companies were enjoying impressive growth!

However, in these months we are experiencing an unprecedented storm as the private economy for many households are heavily challenged. Rising prices on food, electric, heat and many other products result in a falling consumer trust. This also means that many households are now looking through their fixed costs to see, where to save a few bucks.

This hits subscription companies hard. Some are already experiencing rising churn and others will experience it over the winter. We see that in Subscrybe as well, where more and more enquiries are about how to reduce churn.

Eight key challenges in fighting churn

Luckily, this is a theme that we’ve been working with for many years. We constantly help larger subscription companies with fighting churn. Below, I’ll try to describe some of the biggest challenges with churn that we see in these companies.

  1. Missing insights into what drives churn. Why do customers cancel their subscriptions? The easy explanation is that they don’t use the subscription enough, but we often find more complex reasons which are important to know in order to fight churn.
  2. No coherent strategy for retaining subscribers. Is churn something that we fight through customer service or is it a focus across all business units? Obviously, the latter, but a strategy for how to ensure this is often missing!
  3. Increased focus and budget for acquisition instead of retention. It’s easy to measure what it costs to win a new customer, but much harder with retention. This moves the focus to new customers, instead of existing ones.
  4. Missing system and data foundation for predicting churn. Which subscribers are most likely to churn? This is important knowledge, but often times, systems and data is simply not there and methods aren’t set up for identifying the most important subscribers to keep.
  5. Missing or poor acute retention efforts. It should be so simple! When a customer contacts the company to cancel their subscription, the best rescue mission should be initiated! Unfortunately, this rarely happens.
  6. High degree of involuntary churn and too few efforts to meet this issue! All forms of payment fail now and then. Whether it is a payment card, automatic payments or something else. This results in too many subscribers disappearing involuntarily and without reason.
  7. Antiquated CRM systems and ongoing communication. Retention efforts exist in the entire lifetime of the subscriber, but often we experience insufficient efforts to support the subscriber’s experience on an ongoing basis.
  8. Poor onboarding of new customers results in high churn too early. When does the work with retaining subscribers begin? The same day as they sign up. This seems obvious, but can be hard to understand.

Implement a ‘Churn Team’ to reduce churn significantly.

Perhaps you can see your own subscription company reflected in the above-mentioned challenges. In that case, there is reason to consider strengthening your efforts around Anti-Churn.

One method is to implement a ‘Churn Team’ with members that come from around your organization and who has the mandate to act and has the attention of the director’s team. We’ve done this with a number of clients and it’s not unrealistic to experience a reduction in churn on around 10-20% within 6 months, if you work with Anti-Churn the right way.

To underline my point around the importance of working with churn right now: At Subscrybe, we’re hosting a seminar in November, with a focus on Anti-Churn. This seminar was sold-out in 24 hours, but we will be releasing most of the content in our podcast Subscription Talks. (If you wanna hear more about how we help our clients with fighting churn, you’re welcome to contact me or a fellow subscriber).

Read more Subscription POV here.