When a customer breaks up with you, it’s hard not to take it personally.
You worked so hard to woo them.
You spent the CAC.
You even answered that support ticket on Saturday night when you were supposed to be with your friends.
Then – CLICK.
Without explanation. They’re gone.
We’ve all lost customers.
We’ve all probably lost a lot of customers. Yet, what if I told you that not all who cancel are lost? What if I showed you that you could woo back 4 out of every 10 customers who hit that horrific cancel button?
You’d probably act like most jilted lovers going through a breakup and scream cry that, “they’re never coming back!”
But fret not, there’s hope.
Let’s show you what the best subscription companies in the world are doing by:
- Going through why this is even possible
- Who to target to recover
- How to actually recover these lost customers
- And how to re-onboard them so they stick around into the long term
Listen now 🎧
But first, why is it even possible to save customers who’ve already left you?
The subscription business model is the first commerce model in history to bake the relationship with the customer into how you make money. It’s truly remarkable and we don’t give enough credit to the innovation.
Prior to the subscription model, you either had only one option as a consumer, which was the corner store of the 1800s, or you had all the options, and businesses had to compete for you post WWII mass consumerism and the internet era,
Businesses still have to compete for you with subscriptions, but value is much more equalized. Each month the company provides value for a set price. Assuming you agree that value is worth that price, you stick around, continuing to use the product. In return, businesses get the benefit of knowing that each month they aren’t starting at $0, but have a nice crop of subscribers. It’s a beautiful equilibrium, albeit one that’s still slightly favoring the customers.
So what does this have to do with customers who churn?
Value in a relationship changes over time. You add more features, the value formula goes up and the customer is happier. You had massive AWS outages, the value formula goes down and the customer is less happy.
We can reflect this phenomena on a spectrum like the one below. On the furthest right section we have customers who feel like they’re getting so much value they’re telling all their friends about your product. On the furthest left, these people have churned long ago and feel they had such a bad experience they’re talking crap about you to everyone. In the middle we have the point where someone chooses to cancel.
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We’re pretty good at measuring value. We do customer research. We create personas. Our most valued personas use the right integrations, fit a certain business profile, and love our product. Our anti-personas need features you’re not going to develop, are in verticals you don’t support, and probably won’t even try your product.
Here’s the problem though. Personas aren’t individual people. Don’t get me wrong, they’re incredibly useful and you should have them. Yet, when it comes to churn there’s a myriad of reasons why someone churns out even if they fit your perfect persona.
A customer could churn because they’re going on vacation (and intend to come back). They could be dealing with budget issues on their end. Office politics may mean they need to try your competitor for a few months.
Value is calculated through a myriad of factors. Many of which you can’t control. To give you some data on this notion, since I know I tend to attract a skeptical audience, here’s a breakdown of churn reasons across a spectrum of B2B and consumer products that we categorized as in the company’s control: features, support problems, etc. And those that weren’t: budget, timing, etc.
Four out of 10 cancellations have nothing to do with you. That’s a sobering data point.
What do we do with this data? What’s the point?
Glad you asked. The answer is that your churn recovery strategy needs to fight at the individual level, not the persona level. When you fight at the persona level, you tend not to do anything, because you say things like, “Well if the product was valuable enough, they would have stuck around,” while at the same time rationalize through, “that customer just wasn’t for us.” While both of these statements can be true, they’re woefully incomplete.
Ok. So how do we fight at the individual level?
Let’s walk through how to implement proper customer reactivation campaigns that can recover anywhere between 10%-30% of those that’ve churned.
Win-back campaigns: How they get back customers who cancelled
A quick note on offboarding/cancellation flows:
A good mental model to use around reactivations is to think of this like a marketing campaign to people who already know you exist. You did the hardest part there, but now you have to win them back through messaging and offers. There are three big stages here: identification, win-back campaign, and re-onboarding.
Who do we actually target?
If you’re running a clunky version of reactivations, feel free to just “spray and pray” offers. It’s better than nothing and much better than most companies are doing. Yet, we want to be a bit more sophisticated (probably a lot more). The reason you want to do some basic segmentation is the same reason you want to do this on the acquisition side of the house—you’ll get better results if you align the right offer and messaging to the right type of buyer.
How do we know this works? Admittedly, we have a product—ProfitWell Retain—that now automatically does reactivation and win-back campaigns. We’ve found definitively that mapping your users for segmentation increases yield by 2-3x.
Retain does this (and you can do this) by identifying two main axes:
- Customer health scores: We built health scores based on engagement, financial history, firmagraphics, and a dozen other factors to categorize how likely a customer is to come back at the time the offer is about to be sent.
- Cancellation flow insights: Retain has a feature that collects data on why someone is cancelling. Retain then tries to save them, but if unsuccessful, the data gleaned gets factored into the win-back campaign.
To bring this to life a bit, a power user who loves the product, but needs a break would get a small offer. A customer who was already at-risk of churning who indicated they had a bad support experience would get a larger offer.
The point here is to align the right offer with the right messaging at the right time to the right customer.
Run the win-back campaign
After segmentation is completed (and in reality this should be running in realtime), you obviously need to message folks. We’ve found with ProfitWell Retain that a drip of two emails with one SMS text works really well. Here’s what should go into those emails:
- Plain text—always: Across a few million emails at this point, we’ve seen that plain text gets over 50% better engagement than highly designed marketing emails. Apologies to your design department. 🙂
- Whole number based offers: Don’t use percentages. Humans grasp whole numbers—$10 off, one month free, etc.—much better than something like 10% off. You’ll typically see 10%-20% higher take rates from whole number offers.
- Aligned copy: Remember, these are your former customers. You have a relationship with them. Bring in why they left and what they loved. Remind them of those new features.
- Offer size: Your margins will determine your limits, but folks who didn’t love your product typically require a larger offer to come back. Those who used you a long time normally just need a nudge.
- Frequency: One campaign every 45 days works well.
Here’s an example of a ProfitWell Retain email that hits up all these important aspects.
One other piece that’s incredibly important: do not make people log back in to then have to re-sign up to become a customer again. This increases the friction considerably.
Instead, make it one-click opt-in experience. With ProfitWell Retain, the user simply goes to a landing page where they opt back in and automatically picks up where they left off before they churned. If you can’t use ProfitWell Retain or build your own version of this feature, then simply have them reply to the email and handle through support. Making them go to the billing settings page will drop your win-back rate likely by half.
The concept of not treating them as a brand new user, brings us to the important point of making sure the customer goes through re-onboarding. Too many brands treat customers coming back as brand new, asking them the same questions, treating them as if they know nothing about the product, etc.
I’m not saying you need to do anything complicated, but set up an onboarding flow that recognizes where they left off before. Some of the best brands have a whole different email drip that not only reorientates the customer with the product, but collects information as to why they came back. The very best brands will get on the phone with as many of these customers as possible to learn more about why they left and why they came back.
Technically, not treating these customers as new can get tough, because it’s easier to just delete their information and then have them create a new account. To help here we created something in ProfitWell Retain called “Lockout” that basically locks out anyone who’s churned or hasn’t updated their credit card. You can create your own setup similarly.
Not all who churn are lost
One of the hardest aspects of growth is getting your target buyer to know you exist. There’s so much noise in our markets and buyers are entrenching themselves more and more. While customers who cancel and churn are obviously painful, the silver lining is they at least know you exist.
Make sure you’re taking advantage of that silver lining by at least having basic win-back and reactivation campaigns. Combined with other areas of tactical churn, there’s little that can stop your momentum as the cohorts stack up.
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This is a ProfitWell Recur production—the first media network dedicated entirely to the SaaS and subscription space.
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