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4 Ways To Reduce E-Commerce Churn

Ecommerce
25 April 2021
Sam Pettiford
Sam Pettiford

If you run an Ecommerce business, then one of your main goals will be to increase orders, but reduce your churn rate.

"Churn rate" refers to the number of customers that cease doing business with a company. Churn can be voluntary, such as someone choosing to cancel a subscription, or involuntary, due to a subscriber forgetting to update payment information.

No matter how churn increases, it results in lost revenue. While some companies experience "acceptable" churn rates it can affect smaller businesses hugely preventing growth, or in contribute to downsizing.

The following four tips suggest ways to address high churn rates, and create stabilised monthly income.

Incentivise Prepayments
Offering flexible subscription plans, such as month-to-month options, is great for customers but often can mean unpredictable churn for companies. Encouraging subscribers to pay up front at a discounted rate is a win-win. The customers receive a discount on the service, and the company has guaranteed revenue for the amount of time the subscriber opts to pay. Rather than having a customer who could cancel after 30 days, the company has a contract that's paid up front.

If a product or service is difficult to discount, companies should consider offering exclusive benefits or a free month to those who prepay. To further reduce churn, companies can invest part of that prepaid income in customer acquisition activities to help offset monthly churners.

Survey Churners
If a company sees large volumes of voluntary churn, like active unsubscribes, simply asking customers why they chose to leave is a tried-and-true method of gaining valuable insight.

For example, on an unsubscribe or opt-out page of a website, companies can host surveys that gather feedback from customers on their decisions and that data can be used to make educated choices regarding the subscription model moving forward. Should a company see similar response at a high-enough rate, changes can be made to programs to prevent future churn.

Businesses might be hesitant to host surveys for various reasons, but in these cases the customers are already lost, so there isn't any harm in posing a question before they go.

Let Subscribers Skip & Pause
Customers appreciate freedom when it comes to subscription programs. If subscription standards are strict, companies should not be surprised if subscribers opt out or cancel due to unforeseen circumstances, or when a competitor offers a comparable plan that's more flexible.

Allowing subscribers to pause their subscription, or even skip a month of the program, encourages them to use those options if it really is a break they need. Once a subscriber opts out, getting them back is much more difficult and leads to more revenue lost as opposed to letting them pause their subscription.

The option to pause or skip also provides peace of mind when making a decision to sign up, without the pressure of committing to a certain period of time. Oftentimes customers won't have the need to skip or pause their subscription, but it provides value that encourages initial sign-ups.

Reward Loyalty
Everyone wants to feel they are part of something special -- that's where loyalty programs create a huge draw for customers. Companies should create loyalty programs tailored to customers that provide an extra value to those who choose to subscribe. It can be something small, like a one-time gift at sign-up, or something ongoing like a free webinar each month.

It also needs to evolve with the lifetime of the consumer. If the customer's needs shrink or multiply -- say a person travels for a few months and needs to put their subscription on hold or has a growing family and wants to add to their subscription service -- the incentive program should also evolve.

Members of customer loyalty programs generate between 12 percent and 18 percent more revenue, according to Accenture, meaning longer subscription times and less churn. Proving the value of the program, it is more profitable to keep current subscribers happy than it is to acquire a new customer.

While companies cannot avoid churn, they can avoid high rates. With the right plans in place, revenue streams from programs can become reliable.

As an experienced Ecommerce agency, MWB has the experience in design, usability and conversion to ensure your online business works as hard as possible to attract new, but also retain your existing customers. Contact us to talk about your new website.

Photo by Cardmapr on Unsplash

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