The digital subscription market is thriving–this shouldn’t come as a surprise. While established leaders are cementing their dominance, new players continuously emerge, vying for their share of the pie. For broadcasters, e-commerce platforms, and other subscription-based businesses, the challenge to stand out in this crowded space is growing more intense by the day.
With fierce competition, ever-improving deals, and personalized offers from industry giants, succeeding in the digital subscription world has never been trickier. In order to thrive and retain subscribers, you need innovative strategies that minimize cancellations, enhance customer retention, and maximize lifetime value.
But here’s the catch: one of the most common reasons for subscription cancellations is cost. Customers are always on the hunt for better deals and ways to save money. For many, hitting the “Cancel” button feels like the easiest way to cut expenses. So how do you address these price-driven cancellations without compromising your bottom line?
That’s where offer downgrades come in. By providing customers with the option to adjust their subscription plans instead of canceling outright, you can maintain engagement, reduce churn, and more importantly, retain your subscribers. In this blog post, we’ll explore how offer downgrades work and why they’re a game-changing strategy for keeping your subscribers happy. Let’s dive in!
Understanding subscription cancellations
The pandemic era brought a significant surge in all types of digital subscriptions across various industries, including OTT platforms, and fitness and health apps. However, as the world returned to normalcy, many subscribers chose to cancel their subscriptions, creating uncertainty and chaos for many subscription-based businesses. A notable example is Netflix, which in 2022 sparked widespread industry discussion after losing 200,000 and 970,000 subscribers in two consecutive quarters. Despite this setback, the streaming giant demonstrated resilience, recovering from the loss and steadily increasing its subscriber base ever since.
Netflix subscribers, data from 2011 to 2024. Source: Business of Apps
1. Subscription cancellations due to cost concerns
As seen in the example above, subscription cancellations are an inevitable part of the digital subscription business. The key to addressing this challenge lies in understanding the reasons behind these cancellations.
Cost concerns are often at the forefront, particularly as consumers juggle multiple subscriptions. According to Yahoo Finance, the average American customer has 4.5 subscriptions, spending an average of $924 per year. Unsurprisingly, streaming services account for a significant portion of this expense. Statista further reveals that the two primary reasons for canceling video streaming subscriptions are the need to save money and finding subscription prices as too high.
This data highlights a critical challenge for subscription-based businesses: how to address customers’ price sensitivity without losing them. Solutions like offer downgrades allow businesses to meet customers where they are, maintaining a relationship while accommodating tighter budgets.
2. Ever-changing needs of customers
While cost is a major factor, shifting customer needs is another common reason for subscription cancellations. A subscription that perfectly fits a customer’s lifestyle today may become less relevant as their preferences, habits, or circumstances evolve.
For instance, a fitness app subscriber might initially sign up to achieve specific health goals but later pivot to outdoor activities or other exercise methods. Similarly, an OTT platform subscriber might lose interest if their favorite shows conclude or the platform’s content no longer aligns with their tastes.
Adapting to these changing needs requires a proactive approach. Businesses must monitor customer behavior, identify shifts early, and offer personalized options—such as flexible plans or content recommendations—to keep subscribers engaged.
3. Subscription cancellations due to perceived value
Perceived value plays a pivotal role in a subscriber’s decision to stay or leave. If customers feel they’re not getting enough value from their subscription relative to its cost, they’re more likely to hit the “Cancel” button.
This can happen when a service doesn’t meet expectations, whether due to poor quality, lack of updates, or insufficient features. For example, a subscriber might cancel a software subscription if they don’t use all the tools offered or feel that competitor products offer better value at a similar price.
Businesses must continually reinforce the value they provide by improving features, communicating benefits clearly, and demonstrating why their service is worth the cost. Offering flexibility can be an effective way to bridge the gap, allowing customers to retain access at a level that feels worthwhile to them.
What are offer downgrades?
Subscription-based businesses typically provide a range of plans at different price points, each offering varying levels of access to content or features. For example, a fitness app might offer plans tailored to diverse user needs:
- Basic Plan - $6.99 per month, includes advertisements and access to workouts only.
- Advanced Plan - $9.99 per month, includes advertisements, access to workouts, and meal plans.
- Premium Plan - $12.99 per month, ad-free, with access to both workouts and meal plans.
Now, imagine a customer subscribed to the Premium Plan decides they no longer need meal plans. Instead of canceling their subscription altogether, they could opt to switch to the Basic Plan, which better aligns with their current needs and budget. This switch from a higher-priced plan to a more affordable one is what we call an offer downgrade.
Offer downgrades are an effective and straightforward strategy for retaining subscribers who become price-conscious. By providing the flexibility to adjust their plans rather than canceling outright, subscription-based businesses can:
- Retain revenue: Even at a lower price point, revenue from downgraded subscribers contributes to the bottom line.
- Reduce churn: Prevent customer loss by offering alternatives that meet subscribers’ evolving needs.
- Build brand loyalty and trust: Demonstrate a customer-first approach, showing that you prioritize their satisfaction and budgetary concerns.
In essence, offer downgrades provide a win-win solution: customers gain the flexibility they seek while businesses maintain engagement and revenue continuity.
How to implement offer downgrades for subscriptions
Making significant changes to content libraries or redesigning user experiences on a streaming platform often requires long-term planning and investment. However, experimenting with pricing packages can be a faster and more effective way to reduce voluntary churn and improve how subscribers perceive the value of your service. That’s why one of the most strategic moments to implement offer downgrades is during a subscriber’s cancellation journey,
The first step in rolling out subscription offer downgrades is identifying which customers are most at risk of canceling. Predictive tools, like Cleeng’s Churn Prediction, can help uncover the key drivers of churn by analyzing customer behavior and engagement patterns. With this valuable insight, you can proactively design targeted retention campaigns and set up automated triggers to engage these customers before they reach the cancellation stage.
If proactive engagement efforts don’t succeed, the cancellation process itself becomes your final opportunity to retain the subscriber. Offering a well-timed and attractive downgrade option during this stage can make the difference between losing a customer entirely and retaining them at a lower price point.
By focusing on both pre-cancellation re-engagement and providing an appealing downgrade option at the point of cancellation, you can significantly reduce churn while maintaining revenue streams and fostering customer loyalty.
Offer downgrades at the subscription cancellation stage
We will now take a look at implementing offer downgrades and other customer retention strategies and the subscription cancellation stage.
1. Encourage subscribers to downgrade instead of canceling
When subscribers evaluate whether to stay with a subscription, their decision often hinges on perceived value. If they feel the service no longer justifies its cost–either because it’s too expensive or fails to meet their expectations–they’re more likely to cancel. For many, especially in the streaming industry, subscriptions are tied to specific needs, such as watching the latest season of a favorite show. Once those needs are met, they may see little reason to continue paying for a subscription they’re not using on a regular basis.
To retain such subscribers, offering flexible pricing plans with seamless upgrade and downgrade options is essential. Downgrade offers can particularly appeal to price-sensitive customers, allowing them to maintain access at a reduced cost while scaling back on certain features. For example, a streaming platform might let a premium subscriber downgrade to a basic plan with limited features but at a more affordable price, ensuring the customer stays engaged rather than leaving entirely.
With Cleeng’s Subscription Upgrade & Downgrade feature, you can implement these strategies effectively. A well-timed popup, triggered when a customer clicks “unsubscribe,” can present a tailored downgrade option that fits their needs and budget. These retention offers can be configured for individual plans, providing subscription-based businesses with the flexibility to adapt to diverse customer preferences.
Here’s an example of how to present an offer downgrade proposal with Cleeng.
With this personalized feature, you can transform the cancellation process into a subscriber-friendly experience while creating an opportunity to re-engage customers on the verge of leaving. Rescue subscribers from the cancellation funnel by presenting them with tailored alternatives that meet their needs and preferences.
2. Offer discount coupons to retain more subscribers
For customers who are still inclined to cancel despite the option of downgrading, it’s worth making one last effort to win them back before they leave.
This is where you can get creative with promotional incentives. Offering discount coupons for subscriptions or a limited period of free usage can give subscribers a compelling reason to stay. For example, providing a 30-day free trial on a lower-tier plan or a temporary discount on their current subscription may encourage them to reconsider.
These gestures not only demonstrate your willingness to meet their needs but also create an opportunity to re-engage customers during the free or discounted period. By the end of the offer, you might find that some subscribers choose to stay—realizing the value your service provides after all.
3. Make the most of churn with a detailed subscription cancellation survey
If a customer chooses to cancel despite your best efforts, the journey doesn’t have to end there. A detailed cancellation survey can provide valuable insights into their decision, helping you identify areas for improvement and optimize your platform.
With Cleeng’s Subscriber Management System, Core, you can design customizable cancellation surveys tailored to your specific needs. By asking the right questions, you can uncover trends behind cancellations—whether it’s pricing, content relevance, or user experience—and take actionable steps to address these issues.
The benefits don’t stop there. The data collected can power targeted win-back campaigns, allowing you to reconnect with churned customers and highlight improvements that might encourage them to return.
4. Launch targeted win-back campaigns after cancellation
Cancellation doesn’t have to mean the end of the relationship. Once a customer leaves, win-back campaigns can be a powerful tool to re-engage them and reignite their interest in your service.
Using insights from cancellation surveys and behavior analytics, you can craft personalized campaigns that address the specific reasons behind their departure. For example, you could highlight newly added features, improved content, or special return offers, such as a discounted subscription or a free trial.
Timing and personalization are key—reach out when the customer is most likely to reconsider and tailor the message to their preferences and pain points. By showing that you’ve listened to their concerns and made meaningful changes, you can turn a lost subscriber into a returning customer.
Retain subscribers with flexible pricing and offer downgrades
The subscription landscape is rapidly evolving, with customers becoming more price-conscious while enjoying a growing array of choices. In this environment, a compelling and flexible pricing strategy is essential to retaining a loyal subscriber base.
Rather than relying on flat, one-size-fits-all pricing, offering personalized options like easy downgrades or upgrades can make a significant difference in keeping your subscribers engaged and satisfied.
Do you have questions about setting up offer downgrades with Cleeng?
Contact us or check out our guide to effectively navigate SVOD price changes for maximum subscriber retention.
