Churn Prevention

Saving customers. Why everyone is talking about subscription retention.5 min read

Mar 9, 2022 4 min

Saving customers. Why everyone is talking about subscription retention.5 min read

Reading Time: 4 minutes

Did you know you have a 60–70% chance of selling to an existing customer as opposed to 5–20% for a new customer? Therefore, the best thing your business can do, besides acquiring a new customer, is to retain an existing customer. An established relationship with a customer works well for both parties, especially after the rise of the subscription economy.

Subscription economy

The subscription business model encourages recurring payment for goods and services instead of a one-time payment. Businesses prefer this arrangement since it’s easier to predict income over an extended period. In addition, a subscription allows for pre-empting and delivering on customer expectations. Subscription establishes an ongoing and profitable relationship between your business and your clients as long as you minimize subscription churn.

What is subscription churn?

Subscription churn is the number of customers who stop paying for your products and services. It is a percentage of customers who stopped paying compared to the total number of subscriptions. Churn indicates problems in your sales cycle, product or service, stiffer competition, or ignorance of customer feedback. Whichever the case, you need to reduce churn to avoid making losses and the expenses of increasing your subscription base.

What causes subscription churn?

The product or service wasn’t the right fit

A customer may have fallen for your excellent marketing but later discovered that the product doesn’t solve their needs. On the other hand, you may have marketed your offering to the wrong customer. The customer will cancel the subscription for something more suited to their needs in both cases.

The product or service doesn’t deliver

Customers approach your products and services to solve their specific needs. Your product or service is a means to an end, not the end itself. Therefore, your product may be perfect, but customers will move on if it doesn’t give satisfactory results.

Poor customer support

Customers expect to be acknowledged. Whether they’re asking for answers to a specific problem, need information for something they don’t understand, or have feedback to share. As such, your customer support channels need to be open and convenient.

Your competition is doing a better job

It’s easy to think you lost a customer because a competitor offered a better price than you. However, several factors give your competition the upper hand. In most instances, the competition has answers for all the other causes of subscription churn. Price is an essential factor, but selling for cheap is usually the proverbial straw.

There’s a payment hiccup on the customer’s end

An example is when a customer’s credit card expires. Customers find it hard to revive the process after getting used to the comfort and consistency of regular payments. Nobody wants to start calling their bank and get a new card. As they keep putting it off for some later date, their subscription will expire too.

Types of churn

Voluntary churn: This is where a customer intentionally cancels their subscription. Most of the reasons for subscription churn speak to voluntary churn.

Involuntary churn: Circumstances beyond their control lead to a customer dropping their subscription. It accounts for about 20-40% of total churn cases, and usually involves a failed payment attempt.

It’s important to note that all businesses have an acceptable level of churn. It is impossible to cater to all your customers’ needs. Additionally, you’re likely not to implement every feedback item you receive. An acceptable churn rate is 5-7% annually. While this figure applies to SaaS operations, it resonates with other businesses.

Subscription retention ideas

The success of your business in this subscription era depends on how you minimise churn and attract new customers. Remember, you need to cover the acceptable annual churn rate.

1. Understand your customer needs

Nowadays, personalised solutions are more appealing than any other offerings in the market. Customers will happily subscribe to your business if they feel you’re addressing their specific concerns. Therefore, you must research your target market to know their concerns and expectations. If you’re already in the market, customer feedback is vital for helping you tailor your offerings to meet those needs.

2. Find ways to engage your customers

Once customers have subscribed, don’t cease communication. Besides collecting their feedback, you need to educate and inform them. For example, ask them to sign up for your newsletter where you could offer tips and other advice. You could also create a buzz around holidays and other noteworthy days on the calendar and run campaigns that engage your customers.

3. Add value to the subscription packages

A typical example is rewarding customers who bring in more customers through the referral program. You could also make it cheaper for existing customers to upgrade their packages. Another way to add value and ensure continued loyalty is to offer a free month for customers who pay their annual fees upfront. You’ll generate more engagement and hold your customer’s attention when you keep refreshing such value-adding activities.

4. Remove any hitches in the billing process

It would be best to eliminate involuntary churn by making the billing process trouble-free. Despite the automated billing process, notify your customers every time there’s a deduction on their account and ensure you send reminders a few days before the deductions. Additionally, you should share monthly and annual statements. You must notify customers who may need to renew their credit cards in time.


Subscription is the new way of doing business. One critical success factor in the subscription business model is understanding your customers. A significant source of that data is customer feedback. Most businesses have neither the time nor the resources to sustain such extensive exercises, but don’t be among those who approach customers blindly.

At Upzelo, we offer detailed insights into your customer base to enable you to make moves to retain existing customers. While these subscription retention ideas work well, we’ll tailor solutions specific to your customers. Book a demo with us to see how you will enjoy success in your customer acquisition and retention efforts.

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