Report: Retention critical to growing subscription economy, but ownership and tactics need work


Share on LinkedIn

Subscription businesses are growing, big time. From cloud-based technology providers like to consumer-focused brands like Stitchfix, increasingly the strategy is to convince customers to commit to recurring payments rather than a one-time charge at the beginning.

Gartner forecasts that cloud revenue will exceed $300B by 2021. And the subscription e-commerce market alone is sized at over $10B annually.

Most of the technology that runs is paid for on a subscription basis. I like the predictable costs and, frankly, the ability to cancel and try something else if it’s not working out. For streaming TV (e.g. Hulu, Sling) I feel the same way — if the service is not delivering value, kill it!

Customers cancel for a variety of reasons (more on that in a moment). The key question is: What should be done to try to “save” them?

You may remember the bad old days of AOL and cable companies making it so hard to cancel it made the evening news. Thankfully, those horror days are mostly gone, but according to Guy Marion, CEO of Brightback, there are still a lot of “bad actors” that force a call and route to a call center “save team.”

Making Cancellation a Positive Experience

Sometimes customers are so fed up they just want to cancel. Putting up roadblocks won’t change their mind; it just makes them mad. So in this scenario, make it easy and live to fight another day.

However, this group is fairly small. According to respondents to a new Brightback-sponsored study, 2020 State of Industry: Customer retention in subscription businesses:

Companies know their customers are slipping through the cracks. And they want to do something about it. An astounding 96% of subscription businesses believe customers cancel for reasons that could be managed or fixed.

The good news: 43% of companies save between 6-25% of customers, by using offers or engaging when canceling.

What works? Marion says that for consumers, one-time discounts can be effective. Or, help the consumer pause their plan and restart when they are ready to use it again. For B2B, it helps to take a personal touch. Listen to the customer complaint, apologize, and try to solve the problem.

Here’s a breakdown of different tactics used, per the research.

BTW, the Brightback solution used a data science-based approach to test offers and decide which should be applied to different situations. You can read more about this in my article Could a “Customer Success” Mindset Save the CX Industry?

The survey found that 93% of professionals say customer retention is just as or more important than acquisition. But while marketing and sales are usually owners of acquisition, the owners of retention are more widely distributed. Customer Success organization lead the way at 27%, but the report found:

Four different departments were cited as the owner in more than 80% of respondents, which hampers execution, accountability and impact.

There’s lots more in the report, which you can download here (free registration required).


Please enter your comment!
Please enter your name here