How to fight churn with subscriber segments

Damien Organ | Fri Jan 03 2020 | Industry insights

Subscriber segmentation - tips

In 2019, consumer consumption patterns and identities are more intertwined than ever: Scorsese vs Marvel, Apple vs Android...the list goes on.

As such, personalization matters - it’s paramount to any content provider and requires nuanced messaging. You have to offer your customers personal value or they will migrate into the arms of your competitors. And, this is especially true with subscribers as naturally, they have a continuous relationship with you.

But, this trend is nothing to fear, it’s actually an opportunity - and a few simple segmentation strategies can transform your retention performance, exponentially.

These concepts extend beyond messaging alone, allowing you to build practical, sustainable, and robust models of customer behaviour.

Now, you don’t need 100 segments to win on the subscriptions battlefield, the most effective retention strategies are usually built around four customer attributes that really count.

ChurnIQ grapghic - KPIs tracker

Based on hundreds of millions of historical interactions on Cleeng, we have seen that any one of these segmentation approaches will significantly improve your retention performance.

Let’s explore.

#1 - Lifecycle Segments

How much do you know about your current subscriber lifecycle? 

Perhaps you know how long the average subscriber sticks around for, but do you know how many mature subscribers you have right now? How many evaluators? Or how many of your subscribers are about to enter a high churn-risk period?

The subscriber lifecycle model is the foundation of your retention strategy - and one of the most critical bases of segmentation you have at your disposal.

An evaluator (with you for less than 50% of the typical lifecycle) is asking very different questions to a mature or loyal subscriber (with you for 150% of the typical lifecycle). For example, an evaluator is still wondering if they made a good purchase while a loyal subscriber has enough information already, and might appreciate a discounted upgrade or a recommendation scheme.

Your lifecycle structure is unique to your business, so only you can judge what is the right timing. 

To learn more about the subscriber lifecycle, read our practical support guide.

#2 - Usage Segments

How often is your subscriber actually gets value from your product?

It’s easy to get lost in persona demographics and forget about the basic questions. But, what is the real level of engagement your users are showing? What is the real daily price your subscriber is paying if you consider their real use?  And, over the past 30 days, how often did they use your product? This information will prove essential to your ongoing success.

For instance, on a $10 monthly subscription, a subscriber with 10 days of use pays $1 for every day they got genuine value from your product. 

These different levels of usage describe the different levels of fit between your product and a particular segment. Your highly-engaged users are your potential social media advocates and upgrade candidates.

Your most poorly engaged users are your likely churners. But, knowing who they are is the first step in shifting them to a higher use level (and lower risk category). Sometimes the difference is a single extra day of use a month - but only by using these segments can you make this happen.

To learn more about subscriber engagement segments, visit our experience dashboard guide.

# 3 - Seasonal Segments

Why did this subscriber sign up? A good question, indeed.

One of the key questions every business wants to know is, ‘why us’? Knowing what attracts one customer will help you engage more customers like them.

Sometimes this crucial piece of information is forgotten - but it’s vital to understanding why and when churn occurs.

That said, there are three steps to running an effective seasonal segmentation strategy:

  • Firstly, using cohort analysis to track when a subscriber signed up.
  • Secondly, tagging this time period with your strongest explanation for new sign-ups (new campaign, new series, special events, known seasonal change, etc. In this case, winter programming makes a good example).
  • Thirdly, using these tags to (1) anticipate churn risk for that cohort & (2) tailor retention messaging.

In video content, for example, waiting for a series or a sports tournament to end before you act is too late. Anticipating this spike in churn risk will allow you to provide your subscriber with targeted reasons to stay with your service, long before they’ve even thought about leaving.

To learn more about retaining seasonal cohorts, read our guide to reading cohort analysis.

#4 Winback segments

The subscriber has churned - what do I do to get them back?

You cannot expect to stop every instance of churn. But, you can expect that a churned customer is five to five times more likely to sign up again than any other potential customer out there.

Churned subscribers have qualified themselves as being in your target market, and with the right message, winback success rates are far higher than most businesses realise.

Segmented winback campaigns make an extremely powerful way to add several points to your growth every month - at a much lower cost than equivalent growth through new sign-ups. 

But you must be able to answer the question,  why did this subscriber leave?

For starters, up to half your churn is because to a payment failure. This is passive churn, an instance where your subscriber has not even made a choice to unsubscribe. 

The key to winning back passive churners is to act fast: do not just wait for the subscriber to realise what’s happened themselves. A prompt message highlighting that ‘something went wrong’ is likely to motivate your subscriber to correct the error with pace.

Now you need to think about your active churn segments - where the subscriber decided to cancel their subscription. Here you can take several approaches:  Were they highly engaged? Did they join during a seasonal spike? Were they a long-time customer? Each of these factors should help to shape your messaging.

But, understanding why they churned is of equal importance. The intimate details matter less than the broader point - were they bored (disengaged)? Was it due to the subscription cost? Did they have a bad customer support experience?

For consumers used to de-personalised mass messaging - precisely addressing the cause of their churn is extremely powerful - especially if you do this straight after the churn occurs.

But, how do you do it? Easy. Group your churned subscribers by the five biggest reasons for churn: cost, content, support, performance, and UX and prepare a single winback message for each group. It’s that simple. 

To learn more about segmenting churned subscribers, examine our dedicated guide.

Subscriber management can be a messy business, and there is a lot to think about. Adding hundreds of customer attributes will only serve to further complicate your efforts.

Practical approaches that are easy to set up and implement will provide far more business value - and are far more likely to be implemented effectively. Explore these ideas, take action, and you will accelerate the success of your service. Best of luck.

If you want to know more about Subscriber Retention Management™, 

Download eBook

Cleeng SRM Product