Ep #016 - How Paying Attention to Subscribers Can Lower Your Churn Rate

ben fisher -

Matthew Holman, Head of Growth at QPilot, believes communication is the key to keeping subscribers long term. Most people don’t cancel their subscriptions because of the product itself. They cancel their subscriptions because they aren’t getting the right amount of product at the right time and in the right way. But if sellers listen to their customers’ needs and adjust their subscription packages accordingly, they’ll be able to keep their subscribers happy for longer. On this episode of Subscription Radio, Ben and Matthew discuss the importance of getting feedback from your customers, what you can learn from friction points, and how sellers can best meet the changing demands of their user base.

Show Topics

  • Meet changing demands
  • Know your limitations
  • Monitor your delivery outcomes
  • Regulate your subscriptions
  • Communicate with the customer
  • Listen to your customers
  • Give reminders
  • Take a step back
  • Learn from friction points
  • Find opportunities to upsell

Show Links

Key Takeaways

3:47 – Meet changing demands

Brands want to be able to offer faster shipping times to keep up with changing client demands, but that’s a challenge with subscription packages.

“We started with this concept of a box subscription. And the beauty thing about a box, as far as operations goes, it's very predictable. You don't have to track inventory. You don't have to worry about shipping. People are expecting to be surprised, they're expecting to just get it around the same day of the month. And it's really easy from an operational standpoint to do that. And from a brand experience standpoint, people are more interested in what's in the box than about when they get the box. But what's changing now is we're seeing so many more brands that are going from one time to offering a subscription, whether it's pet food, whether it's CBD, whether it's razors or essential oils and all these other different types of products, supplements. People are actually starting to have expectations around when they need that. And if you can't meet that expectation, they're going to stop. They can go to next-day or two-day on Amazon, or they can go to the CVS down the street. So I'm seeing a lot of brands now that are more interested in delivery and shipping outcomes, where they want to know when they're going to get it. And they want to be able to either have a service that's faster, or be able to pick the service on a subscription order.”

5:40 – Know your limitations

Delivery time is important, especially for fresh products like food or juice. You have to know what you can offer your clients and whether that’s compatible with your product’s needs.

“There’s a huge rise of fresh food and fruit and meat. And I know some customers are selling kombucha and rod juice and the types of things that will spoil. They can't take 7 to 10 days to get there. They need to get there in 1 to 2 days and often need to be packaged with something that's cooling. And so for them, the delivery is really, really important. If there's a big gap in when you're going to get it and the customer doesn't realize that it's in the mail already, they might go to cancel and now you lose the shipment completely. For those types of businesses, especially with COVID, the desire to be able to want to order fresh food delivered straight to your home rose drastically, for pets as well. And so if you can't offer that as an experience, those businesses are between a rock and a hard place. It's like, I want to be able to offer subscriptions, but if I take somebody outside the cart, I lose all this functionality and it goes pretty well, but they churn people because something goes wrong.”

8:02 – Monitor your delivery outcomes

You don’t want to spring surprising costs on your customers. Make sure the delivery price they see in the cart is how much they’ll be charged.

“One of the reasons I joined QPilot is because of my background in logistics, that was the marketing I did at a previous company was shipping technologies. We do have a USPS integration so that somebody can update or see live rates in the cart, how much their shipping is going to cost. And then we also have an integration with a technology called shipper HQ, which I'm not sure if you're familiar with, but they're fantastic for delivery outcomes and rates and stuff. We don't have a ton of people using it, but one of our merchants Renova Worldwide uses them so that they can see international shipping rates on a subscription order, as well as delivery outcomes, because they're selling all over the place. And so they were running into issues where there was a discrepancy between the price in the checkout and the price they thought the customer was going to get. And if you're off on an international order, you can be talking $30, $40, $50 an order, because international rates can change so much. So they needed a live integration.”

10:25 – Regulate your subscriptions

People are afraid they’ll end up with too much product if they start a subscription, so help them figure out exactly how much product they need.

“A lot of the reasons why people don't like subscriptions or they cancel subscriptions, you hear it all the time in any survey, any brand, any industry: ‘I'm either worried about having too much product, or I have too much product.’ And so I don't want a subscription because I don't want a shelf full of crap that I'm not sure when I'm going to use. That's a really common thing. So approaching the problem from the perspective of helping to educate somebody on how much they need. So a couple examples is if it's a bottle and it's 30 pills in a bottle and you're supposed to take one a day. I get that that's obvious, but you need to make it even more obvious on the product page. There are 30 pills in this bottle. You are supposed to take one a day. So your subscription should be one a month. Literally being that explicit.”

12:24 – Communicate with the customer

The best way to keep customers from churning is by staying in touch with them. Make it easy to pause or speed up their subscription so they always have the right amount of product.

“Without even getting too far into technology and how you can create automation and flexibility and all this stuff, it's really just about messaging. If you're communicating with the customer via email or text saying, ‘Hey, your renewal's coming up,’ asking that question, ‘How much product do you have? Go look, because if you've got enough, click this link, pause, skip, push out the frequency.’ The whole idea is to retain that relationship. Don't give them a reason to churn. And so I know a lot of brands feel like if they remind people that they could do that, they're suddenly going to lose all their customers. But I look at it from the other side, which is communicating and being upfront, that transparency, and then actually understanding what your consumer is using. It means you're going to keep people around longer.”

14:40 – Listen to your customers

If a product isn’t working for your customer, you need to find out why so you can offer them something different that might work better.

“Remind them why they bought the product. Like, ‘Hey Ben, how's your workout going? How's that plan going? Is this helping?’ And if it's not, or you're like, ‘Ah, you know what? I hate this. I'm not using this product anymore.’ Then that's an opportunity to upsell, try something else, or try something different. I think we talk about the future subscriptions. I mean, this is not too far of a pipe dream or pie in the sky, is the idea of while this supplement might be on average taken every 30 days, for a 42-year-old white male in Utah it's every 27. And so I'm now on a 27-day subscription. And if I make a change or a pause, there's machine learning that's going to know, oh, actually, you need it every 25 days and triggering the shipments to happen in a different way, so you're getting it the day before you need it or two days before you need it. You're never getting too much. You're never getting it late, which is the other huge problem of selling out of inventory or having it arrive late so that you go shopping somewhere else.”

18:07 – Give reminders

Figure out a cadence of reminders to help your customers check their supplies. The frequency of these reminders will be different for every brand.

“Personally, I recommend always send two. Send one a little ways out and then send one the day or two before. So that it can be in your mind. Like if I say, ‘Hey, Ben, your subscription is going to process in 10 days. How much protein powder, how many doggy diapers do you have left on hand?’ And then you're thinking about it. And maybe you check, maybe you don't, but then you get another one the day before saying, ‘Hey Ben, this is set to fire tomorrow.’ Maybe not say fire, ‘This is set up for tomorrow. What do you think?’ Because that, again, it's trying to stay top of mind, trying to be useful without being too pushy. Every brand is going to be a little different, there's some brands where they could message a hundred times a day and they're going to get all kinds of positive reactions and others, you send one email a month and I'm unsubscribing. So it is something that each brand has to figure out with what their consumers are happy about.”

26:56 – Take a step back

Do regular surveys of people who buy your product to find out why they like it, why they buy it, and why they choose a one-time or subscription offering.

“I'm assuming that a lot of people listening to this are already selling. Whether they're doing subscriptions or not, or they're at least doing one time, you've got a ton of data already. You should be finding out by doing regular surveys of why people are buying your product. Why they're buying a one-time segment? Why are people buying a subscription? If somebody opts into that subscribe and save option, they should be getting questions directly related to why they chose to pick that. Understanding if that person picked that after doing a one-time or not is a really good stat as well. Is it somebody who came in cold or relatively cold, attribution stuff on that, and they picked it, why did they pick it? So getting that data from your own customers is the best place to start. Understanding what they like, why they bought it, that lets you craft more and double down more on the brand, double down more on the messaging. It allows you to focus more on conversion efforts.”

29:29 – Learn from friction points

If you want to reduce your churn, you have to understand why people are leaving. Create surveys and look at the data points in Excel to find the friction points.

“Excel is still the tool of any good marketer. That's literally what you have to do is pull out lists and do some VLOOKUP tables and pivot tables to get that information, and then manually upload a new segment into Klaviyo or whatever tool you're using. That is the only way to do that. I mean, honestly, that's a great approach to understand why people are canceling, a good pop-up or something. If they're pretty mad or pretty disappointed when they do it, they're more likely to tell you why. But yeah, oftentimes it's not the product problem, it's they had too much product or they did not like the subscription. They forgot one month or they were out of town for a month and they didn't like that they couldn't cancel it. You can learn a lot from what people are running into as friction points.”

33:46 – Find opportunities to upsell

If you want to get your customers to try something new, you have to give them an incentive to do so. Tie discounts to a new product or offer a free sample size to get people interested.

“I know that brands understand this, that they need to upsell, but finding the opportunities to do that well and effectively, sometimes there seems to be a gap in understanding how to do that well. But with product recommendations and other things like bundling options, personally, I think that's the best place to use discounts. It’s not, ‘Here's a discount on your order,’ but ‘Here's a discount to try this product,’ like add this product to your order and you'll get 20 percent off your order. Those are great ways to incentivize people to use it. The other one I recommend a lot too is, depending on whether you have this, not every brand is doing this, but either sample products or a smaller count, something whether it's again a trial size or something like that. Because from a shipping standpoint, again, the shipping guys, it's easy to just put into the box. Here's something free. We’ve got something coming, or here's a free sample and here's an insert. It's not technically very hard to just start.”