How to quickly execute customer retention strategies using a subscriber lifecycle model

Damien Organ | Tue May 19 2020 | Industry insights

subscriber retention strategy

In this article we explain what your bench press and your churn rate have in common, and why the subscriber lifecycle is the ideal model for building practical subscriber retention strategies.
Here are the 3 most important characteristics of a data driven subscriber retention strategy: 
  1. It’s simple enough to maintain long term
  2. It captures multiple aspects of the problem
  3. It presents clear action points

At Cleeng, we created the Retention Journey (and its retention metrics) to provide exactly this type of framework to the subscription services we work with.

 

subscriber retention journey

 

It does provide analytics from different dimensions of a subscription service (eg. product engagement, payment processing etc.), but that wasn’t our primary goal.

More important to us was that all of your customer data could be presented in a very straightforward, actionable way. So that the customer retention metrics and analytics provided in ChurnIQ™ could be as actionable as possible for your business.

subscriber lifecycle journey

The best way to do this is to adopt a framework that supports retention strategy building on a very practical level, while also allowing you to progress towards longer term strategic goals. 

Why it’s easy to feel overwhelmed by subscriber churn

Everyone in a subscription business knows that if you do a good job of retaining your current customers, you have a winning strategy in place. A churn management tool that can drop your churn rate by just 1% will net you a 10% increase in your revenue in a single year. By itself. 

The difficulty is that churn can have many different causes. So attempting to tackle churn can pull you in many different directions, each with their own sub-set of problems to tackle.

Customers can churn due to content reasons, feature limitations, platform performance, price, or bad user experience. 

Building a coherent strategy from such a diverse set of issues quickly becomes very difficult. Where to start, and how to tie everything into one united approach is a full-time job in itself. 

In this article we want to show how building a manageable churn strategy doesn’t have to be so complicated. The key is to approach your churn problem with a different and simpler framing - the subscriber lifecycle. 

Why do lifecycle strategies work better for retaining paying subscribers?

Working with hundreds of subscription services over the past decade, it became clear to us at Cleeng that those who used this lifecycle model to think about churn were much more likely to have success in dealing with it. 

Their strategies were more focused. They were more capable of putting their strategies into action. And they were much more agile, meaning that they could quickly switch from one part of the problem to another. 
subscriber retention metrics

Why did this approach work so well when a multitude of others did not? To understand that, let’s look at an entirely different context. Somewhere the demand for consistent progress is just as intense as the world of subscription business. 

Getting Bigger and Stronger with a Lifecycle Strategies

In the 1960s and 1970s, a new training method emerged from Eastern Europe that revolutionized the world of athletics. This method is known today as ‘periodization’. Developed by a Russian physiologist (Leo Matveyev) and a Romanian sports scientist (Tudor Bompa), periodization was a training method built entirely on training ‘cycles’. 

These cycles (macro, meso, and micro) allowed Olympic training programmes to be developed that were easy to build and follow. Not only that, but they were also highly adaptable to the diverse needs of different athletes. And most importantly, they were incredibly successful at producing gold medal athletes. 

deadlift-1Each level of training ‘cycle’ had a different purpose and a different set of goals to pursue. And while the macro cycle goal (eg. deadlift 500lbs in competition) might not change, the short-term micro cycle goals would be constantly adapted to ensure continuous improvement in the athlete. 

Training cycles remain a core element of global training philosophies today. This is not because the methods themselves are unchanged since the 1960s. They persist because the model itself proved to be a perfect structure for reducing the highly complex needs of different athletes in different sports to a simple, reproducible model. 

Simplifying The Subscription Lifecycle

Subscription services are also much more complex to operate than they look from the outside. Each market and customer base has its own unique dynamics. 

This makes it hard to simply imitate ‘winning strategies’ from a different space. Just like athletics is a lot more complex than simply replicating a successful strategy from team to team, or from athlete to athlete.

The only way to manage this complexity is to use a model that is both simple enough to support clear minded strategizing, and adaptable enough to support continuous refinement.

What we have learned in tracking the behaviour of winners over the past 10 years at Cleeng, is that nothing fits this purpose as well as the subscriber lifecycle. 

How to use a Lifecycle Model for Subscriber Retention Strategies

So let’s get down to how lifecycles can be used to build great subscriber retention strategies. First off let’s start with a key distinction, your Macro and Micro retention cycles. Each cycle concerns a different level of action: 

 

Subscriber lifecycle

 

The macro cycle is the subscriber lifecycle as a whole, and the micro cycles are the individual renewal periods within that larger lifecycle.

In this article we are going to focus on the macro retention cycle, as this should be the backbone of your retention strategy as a whole.  

What is the Macro Subscriber Retention Cycle?

The macro cycle contains 6 main building blocks for you to focus your retention efforts on. Each of these steps will have at least one key outcome, which should be tracked with an appropriate retention metric. Upgrade and downgrade can be included if you like, but let’s keep it simple for now and focus on the 6 core stages. 

Let’s create a simple retention strategy using these building blocks right now. To start with we will focus on the ‘Registered’ stage. Here we will think of churn not in terms of subscriptions, but in terms of inactivity. We will also assume that you generate some advertising revenue from free users and you want to keep a high number engaged. 

To build our strategy we need 3 components, outcome, action, and measurement. 

Lifecycle Stage

Target Outcome

Action

Measurement

Register

Reactivate users who have been dormant for 14 days.

Trigger ‘we miss you’ workflow for eligible users.

Percentage of total free users active within past 7 days.


While your churn rate or retention rate is a critical performance metric to track, it is better to select more narrowly focused metrics for each step. 

Now we will change some of our assumptions and approach this stage as if you have a business solely driven by subscription revenue. We no longer want to simply re-engage free users. Instead we want them to access the free trial offer.


Lifecycle Stage

Target Outcome

Action

Measurement

Register

Have more free users sign up to our free trial.

Trigger premium content awareness workflow for recently active users.

No. of free trials started

 

Now we have our basic retention strategy framework in place, let’s build this out for your full macro lifecycle in this simple worksheet.

 

A Retention Strategy Builder

Lifecycle Stage

Target Outcome

Action

Measurement

Register

Have more free users sign up to our free trial.

Trigger premium content awareness workflow for recently active users.

No. of free trials started

Trial

Increase the number of free trial customers who become paid customers.

Create a pre-expiry notification flow for final 5 days of trial period.

Free trial conversion rate

Active (Paid)

Have more monthly subscribers switch to annual subscriptions to ensure longer retention period.

Offer 10% discount for subscribers switching to annual offer. 

No. of Upgrades

Stopped

Recover cancelled subscribers whose subscriptions have not yet expired.

Add ‘stopped’ subscribers to coupon campaign associated with their cancellation reason.

Recovered subscribers

Churned

Reactivate churned subscribers back more quickly.

Create winback campaign to incentivise winback within 14 days of churn.

Winback period

Reactivated

Upgrade reactivated subscribers to longer term plans.

Trigger discount campaign to incentivise monthly-to-annual plan switching.

Subscriber Lifecycle 

Length or Retention Period

 

Voila! You now have an end-to-end retention strategy in place. Complete with retention metrics to measure your outcomes at each step. Not so difficult right?

Elaborating your retention model

Each building block of the macro lifecycle can be elaborated on for more sophistication. You can add more actions or more complex workflows, or focus on a variety of different subscriber groups.  

This is entirely dependent on the dynamics of your customer base. And no one knows more about that than you. 

At the trial stage, for example, you may wish to target any one, or even all, of the following:

  • Just started trial
  • In middle of trial period
  • Renews in 3 days
  • Inactive recently
  • Did not convert

Which, or how many, of these to target depends on your unique circumstances and the retention metrics that matter to you. And naturally, you will refine and expand on your activity over time. 

The important thing to remember is that it’s foundation first, elaboration second. Your subscriber lifecycle retention framework is that foundation. 

Key Takeaways For Building A Subscriber Retention Strategy

We have written before about the danger of overly complex segmentation strategies in trying to combat subscriber churn. 

The tendency to underestimate the effort required to generate these strategies is accompanied by a similar lack of appreciation of how difficult they are to maintain in the longer term. 

The primary value of a lifecycle approach to retention strategizing is first in its simplicity, but second in its flexibility.

Any model that cannot adapt to new information is harmful. Any model that requires too many inputs to function is not maintainable. The sweet spot is always somewhere in-between.


If you are interested in learning more about data-driven Subscriber Retention Management, grab our recent eBook. 

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