Lessons in retention and LTV

Lessons in retention and LTV 800 533 Scriberbase

A lot of subscription brands are fearful of giving more control to the consumer; specifically when it comes to their subscription plan.

We’ve come across plenty of organizations who under-invest in customer support, live agent servicing, etc., while simultaneously hiding ‘contact’ links and support phone numbers.

In turn, customers can’t seem to find an acceptable level of customer service if they want to pause, hold, defer, transfer, and/or cancel a subscription.

However, the data is clear on this.

There is a direct correlation between ‘customer control’ and ‘LTV’, whereby increased customer control = greater lifetime value.

Said another way, brands that make it difficult for customers to pause, hold and/or cancel a subscription see higher churn, refund, and chargeback rates; and indeed, LOWER LTV’s.

While customer acquisition is crucial, arbitrage opportunities exist for brands savvy enough to focus equally hard on customer retention.

Customer service teams that catch potential subscription cancellations before they happen, thereby retaining a subscriber for an extra month or more, stand to improve both lifetime value (LTV) and churn metrics.

That said, when analyzing churn rates, it’s important to distinguish between voluntary and involuntary churn.

  • Voluntary churn is a customer service issue. These are customers who are canceling subscriptions voluntarily. Improving voluntary churn requires analyzing the customer journey, and all touch-points post transaction, in addition to what you’re doing at the customer service level to keep that customer on board.
  • Involuntary churn is a credit card decline issue. These are customers who may not intend to cancel but are no longer active because their credit card has been declined. Improving involuntary churn requires an analysis of your credit card decline rates across card types and the implementation of failed payment tools/technology.