Cancellation is not a new phenomenon. Where there are subscriptions, there will be cancellations. But controlling churn is the key to long term profit and sustainability. Here's how you can do it.
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DTCÂ brands work very hard to create a substantial subscriber base over years. However, because of poor subscriber experience, cancellations start happening.
That's heart breaking for DTCÂ brands.
As per a research study by Mckinsey on box subscriptions, consumers quickly cancel services that don’t deliver superior end-to-end experiences.
"Overall, we found that nearly 40 percent of e-commerce subscribers have cancelled their subscriptions. These rates are similar across replenishment, curation, and access subscription services. The higher the churn rate, the more difficult it becomes for subscription e-commerce companies to cover their acquisition costs and to scale their revenues."
So how do brands tackle this nightmare of high churn? The answer is simple => better-quality subscriber experience.
And here are 5 straightforward ways in which DTC brands can easily do that:Â
After doing an in-depth analysis of our brands' subscription cancellations, we observed that cancellations spike right after the first order.
Rewarding subscribers is like a nourishment that reaps benefits in long-term.
At Loop Subscriptions, we have made it easier for brands to gamify the whole rewards system and made the whole experience enjoyable and engaging.
Using workflows in Loop (called as Loop Flows), brands can set up personalized rewards for different subscriber journeys.
Imagine surprising your subscriber base with a freebie after 3 orders. A new product launch party after 5 orders. A 15% discount after 2nd order.
Brands just need to come up with their rewards strategy. And it can be easily done by using Loop.
Try out Loop Flows to personalize subscriber journeys through automation and workflows.
As a recent Eli Weiss newsletter suggests that:
Obviously, the goal is to create enough friction that customers think twice about cancelling, both from having to call and being pushed to stay by the team tasked with keeping you there.
To create the necessary friction, Loop has created cancellation flows within the app. Cancellation flows enable brands to add a GIF, Tik-Tok, image, text or video when a subscriber tries to cancel their subscriptions. The idea is to make them think twice before they cancel.
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Sometimes people just want to cancel. They have enough of stock. They are out of town. Some reasons are out of your control. So make sure as a brand you have this flexibility in your customer portal to turn these potential cancellations into a paused subscription or a skipped subscription.
A cancelled subscription is permanent but a skipped/paused one is only temporary.
Examples:
With Loop’s cancellation analytics you can closely track a lot of important metrics:
Loop gives you a snapshot view of all the reasons behind cancellations in a single month. Once you understand the major reasons, you can take apt action to fix each one of them.
Loop shows you how many cancellations took place after a certain number of orders, and what was the top reason for cancellation.
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After understanding all this data, you can leverage it to find a list of segmented customers with their cancellation reasons and use Loop +Â Klaviyo integration to send them super customized emails. For instance customers customers who cited "Too expensive to continue"Â as a reason can be nudged to restart their subscription with a 20% discount!
Subscribers want something new and innovative. To keep them engaged with new products is a great retention strategy.
Take the example of a Matcha brand:
With Loop, if you see that a customer has had say three orders of one product say Matcha Latte already delivered, then you can nudge them to swap with a different product say Coffee Beans on the fourth order.
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This is explained pretty nicely in Eli Weiss' newsletter:
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Cancellation is not a new phenomenon. Where there are subscriptions, there will be cancellations. But controlling churn is the key to long term profit and sustainability.
"The bigger challenge facing subscription e-commerce companies is churn. These businesses depend on their long-term relationships to provide predictable revenue growth and deep insights into customer behaviour to personalise the experience. Churn can dramatically undermine their viability, since the cost of replacing lost subscribers could not only make it difficult to meet their growth objectives but also quickly drain their cash reserves." ‍
Cancellations are tough to control. But after working with so many DTC brands, we have realised that a great subscriber experience can work wonders for reducing cancellation rates.
Book a demo now to reduce your subscription cancellations.
Emma Johnson is celebrated for her strategic brilliance and innovative flair. By seamlessly blending creativity with data-driven insights, she has propelled Loop’s brand to new heights, establishing it as a formidable force in the Shopify Subscriptions space.
Cancellation is not a new phenomenon. Where there are subscriptions, there will be cancellations. But controlling churn is the key to long term profit and sustainability. Here's how you can do it.
