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Blog/Making Data-Driven Decisions to Reduce Subscriber Churn

Making Data-Driven Decisions to Reduce Subscriber Churn

If your business strategy hinges on the subscription model, you have to work consistently to minimize churn’s impact to your bottom line. You can do that by leveraging data and analytics to pinpoint issues, derive insights, and refine the user experience for your subscribers.

Let’s look at an example. But first, let’s look at all the metrics you might make use of as you start to dig into the details of your churn.

This metric involves breaking your customers down into cohorts based on any number of factors, so you can identify the patterns and trends that might not be visible when looking at your customer or subscriber base as a whole.

Look at the churn rate for each cohort to help you identify specific issues impacting different groups. But don’t look for all bad news, either — this can also give you insight into how to make them stay.

Churn rate by product/SKU

One way you’ll want to slice and dice your churn data is by product. Let’s say you run the subscription program for a wellness brand, and your overall churn rate is 15%. 

What that doesn’t tell you? Subscribers to Product A might be churning at a rate of 7%, while Product B’s churn rate is much higher.  

This is important to know because, for one thing, it can identify product quality issues. If you see churn rates spike on one particular product, you can identify potential shipping, manufacturing, or a whole host of other issues.

But this data can also surface patterns in preference. 

To build on the previous example, imagine your drink mix powder comes in two different flavors: mango and chocolate. If you see a much higher churn rate on the mango flavor, you might want to try to get the chocolate alternative in front of more people, sooner. (We’ll cover that more later.) 

Churn by cohort

If you’re only measuring churn by calendar month — 15% in July, 14.5% in August, and so on — you’re missing another valuable set of data points: the length of time your subscribers stick around, and on which orders they’re most likely to churn. 

You need to know your churn rate by number of shipments. How many subscribers cancel after their first order but before their first recurring shipment? Where are other key drop-off points? 

After working with hundreds of subscription brands, we’ve noticed some recurring behavior patterns that can be helpful to understand. 

Brands will typically have two distinct points in the subscriber lifecycle that are especially important as you optimize your program: the churn cliff, and the churn plateau. 

The churn cliff is your steepest drop-off point. We see nearly across the board that the churn cliff happens early in the subscription lifecycle: typically between the initial order and the first recurring shipment.

The churn plateau is the point in the subscriber lifecycle that churn — you guessed it — plateaus. After that milestone, the odds of churn decrease significantly. 

Think about the subscription lifecycle as a funnel to push subscribers from the first order, through an obstacle course to the churn plateau.

How Stay Ai Helps Brands Easily Understand Their Churn

Stay Ai’s powerful analytics can deliver a wealth of insights into your subscription business, helping you improve your program and reduce churn: 

Detailed customer insights: Understand your subscribers’ behavior, including purchase history, product preferences, and engagement with the customer portal. You can use this information to identify high-value customers and proactively prevent churn.

Cancel reasons: Hear directly from your customers why they’re canceling their subscription, so you can optimize your program based on trends or tailor follow-ups and winbacks based on their reasons.

Churn forecasts: Stop spending so much time pouring through your data when with Stay you can easily see which customer segments are at risk, so you can take proactive actions to improve your program.

Use Data-Driven Insights to Optimize Your Program and Keep Subscribers Longer

In today’s competitive and fluctuating market, it’s rarely if ever profitable to focus on customer or subscriber acquisition alone. You need retention — and you can get there, with a deep understanding of your subscriber churn. 

Leverage your churn data to identify patterns, understand the underlying reasons for customer behavior, and personalize the user experience accordingly, so you’re not just responding to churn — you’re addressing it proactively. 

Embrace the power of data, gain invaluable insights, and navigate your business towards growth and profitability.

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