While acquisition gets all the hype in business, retention is what makes or breaks a brand, especially when it comes to subscription-based services. Case in point: Harvard Business Review notes that it costs up to 25 times more to find a new customer than to retain one. In other words, the value of retention deserves a second look.
Your work is just beginning when a customer says “yes” to your product or service. And with 40 percent of revenue dependent upon repeat orders or subscriptions, you need to quickly and gracefully move beyond the excitement of the sale and into the long-term commitment phase of your customer relationship to keep your company afloat.
Maximize Retention by Rethinking Your Renewal Process
Approximately one second after you’ve hooked a customer, you should switch your mindset from sales to retention. Every word counts at this point, hopefully contributing to your customers' overall sense of satisfaction. When customers' expectations are not met or exceeded from the get-go, they’ll have no reason to renew their subscription or place another order.
If you haven’t created a protocol for the renewal process or if you're in need of some major updates, use the following tips to guide your company toward a model that’s efficient and effective:
1. Plug renewals at the right time.
Sure, you want renewals; that’s obvious. However, you can’t afford to push renewals on brand-new customers. Early shoves toward renewing a subscription can sour audience members. Furthermore, if you request for renewals too late or without proper notice, you could waste just as much valuable time.
Avoid possible conflicts by evaluating your current method of drip renewal notices to subscribers or buyers. Test to see where the critical retention turning points are, and then create content that encourages action without annoying purchasers. Additionally, try beta tests on select accounts to see which methods produce optimal returns.
2. Avoid a salesperson's tactics.
Retention isn’t direct sales, so don’t treat it that way. Far too many renewal content pieces include a laundry list of features and benefits. This is a huge turnoff to customers because they can feel frustrated that they either didn’t know about the perks beforehand or haven’t taken advantage of them. Ideally, your sales speak should take place before the customer signs up, not afterward.
To resolve this problem, act like a utility company. Think about it: Electricity and water bills don't plug advantages; they simply assume consumers are going to pay. This way, there are rarely any questions about the value of the company-consumer relationship. Instead, the business is taken care of and the two parties move forward together.
3. Lower the renewal hurdle.
Making the renewal bar high and difficult comes with no advantages. Instead, create an easy approach for consumers to stay with your brand rather than fall away.
Want your customers to renew online? Focus on ease and security by using a single sign-on functionality or direct-to-the-payment personalized URLs. If you make consumers hunt for their login credentials and wander through your website to find the payment page, you've lost them.
Put yourself in your customers' shoes and think about how you'd feel about the renewal process and next steps. In doing so, target your attention on how your customers prefer to pay, and then simplify this process where possible.
The holy grail is an auto-renew on a preferred credit card, of course. However, that comes with its own challenges of maintaining an active card on file and a solid chase stream if the card fails to post. Or if customers are auto-renew-averse, give them an attractive alternative to renew for multiple terms. By doing so, you avoid the attrition windows, and consumers reap the benefits.
4. Turn renewals into a team effort.
Retention marketing should not be limited to the employees who send out renewal instructions. Everyone who touches part of the renewal process plays an integral role in setting and keeping the right cadence in customer retention.
Start this delegation with your customer-facing team. Do their actions convey that they believe in your product and that they are empowered to satisfy the customer? Additionally, evaluate the personality and engagement of your customer communication messages. Ask yourself (and answer honestly): Are we customer-driven? Or do we make our decisions based on "the system"?
Check in on your team by secret-shopping your own call center, and take note of individuals who carry through in successful customer renewal efforts. Celebrate a happy customer, and reward the staff members who consistently blend the needs of the customer with the health of the company.
5. Develop early warning indicators.
First-time renewers, often referred to as "converters," behave differently than those who have renewed multiple times. Consequently, you should break down your renewal prospects by converter versus renewer or similar cohorts within your particular audiences. This makes it simpler to take action if a subset is underperforming.
Keep in mind that not all customers are equally likely to renew, nor will all of them renew for the same reasons. The buyer wooed by a promotional offer or free trial may be less apt to renew than the loyal purchaser who has been around for months or years. Determine customers' key motivators using Net Promoter Score surveys and other data sources. Then, leverage the results to get ahead of the “renewal cliff” for each group.
Remember, customers engage because they want to, not because they have to. Use the power of persuasion to reinforce customers' decisions and keep them active, satisfied members of your brand community. Although it might not have the same sizzle as acquisition, retention certainly will have far-reaching payoffs in the future.