Vindicia - Reducing Subscription Cancellations

1. Reducing Subscription Cancellations Eight Insights and Preventive Strategies to Reduce Customer Churn The Subscription People

2. Table of Contents 03 Is It Possible for a Cancellation to Be a Positive Lesson? 04 Four Insights to Draw from Subscription Cancellations 05 Insight #1: Simplify the Cancellation Process 06 07 Insight #2: Ask Why Your Customer Canceled Insight #3: Do a Better Job of Personalizing Services and Offers Insight #4: Enrich Your Product or Service to Give Users a Reason to Stay Longer 08 09 Four Strategies to Prevent Subscription Cancellations 10 Strategy #1: As They Are Canceling, Entice Customers to Stay Strategy #2: Use Data to Predict and Prevent Cancellations 11 12 13 Strategy #3: Address Seasonal Churn Strategy #4: Offer the Right Carrot (and Not the Most Expensive One) 14 Prevent Cancellations through Data, Experimentation and Analytics 2

3. Is It Possible for a Cancellation to Be a Positive Lesson? Unfortunately, customer churn is inevitable. No matter how great your product or service, some subscribers will choose to cancel their subscription. Is there anything you can do about this fact of life? Fortunately, there is. You can learn from your mistakes. Or more accurately, you can learn from experimentation and from your data. Or in simple terms, find out why your subscribers are churning and what prevents them from churning. Then use that knowledge to improve your product or service, pricing and packaging, and reduce cancellations in the future. Here are four very simple ways to learn from subscriber cancellations and four strategies to prevent cancellations and extend customer lifetime value. 3

4. Four Insights to Draw from Subscription Cancellations 4

5. FOUR INSIGHTS TO DRAW FROM SUBSCRIPTION CANCELLATIONS Insight #1 Simplify the Cancellation Process At first it may seem counterintuitive to make it easy for your customer to cancel but, in fact, simplifying the process works to your benefit. Why? Because companies that make it difficult to cancel their service are perceived as incompetent or even dishonest – and that doesn’t improve your net promoter score (NPS) or recommendations in social media. Remember that former customers who used and enjoyed your service in the past are quite likely to sign up again in the future. Others leaving may just want to put your service on hold for a short period. Giving these customers the runaround will leave them dissatisfied, disgruntled and unlikely to return in the future. To simplify cancellation, remove unwieldy steps from the cancellation process. For example, instead of requiring a call to customer service, allow customers to cancel online, or provide a “cancel subscription” button. CANCEL 5

6. FOUR INSIGHTS TO DRAW FROM SUBSCRIPTION CANCELLATIONS Insight #2 Ask Why Your Customer Canceled A lesson for life. Whenever anyone says “no,” someone may ask “why not?” At the moment of cancellation, it is perfectly acceptable to ask customers what went wrong. (If you had been smart enough to ask a few months earlier “what’s wrong?” or even “how is it going?” you might have averted the cancellation in the first place.) At this “moment of truth,” you may hear some unpleasant feedback, but it may be the most honest and valuable information that you’ll get from customers. How should you handle this communication? There are lots of options. It could be an in-app communication, an email, a text or even a phone call. Build a very short questionnaire or a survey. ? Ask one to three simple questions and leave room for an open-ended comment. Monitor the responses and comments to identify trends and improve your service. 1. 2. 3. 6

7. FOUR INSIGHTS TO DRAW FROM SUBSCRIPTION CANCELLATIONS Insight #3 Do a Better Job of Personalizing Services and Offers Consumers today expect personalization. They want to feel that you know who they are, what they like and, and more importantly, what they don’t like. Perhaps you are bombarding your customer with cross-sell and upsell offers, recommendations and ads that are irrelevant to them. That will not be tolerated. Personalize your services from the get-go. If you don’t, someone else will and snatch your customer. That’s more potential revenue walking out the door. 7

8. FOUR INSIGHTS TO DRAW FROM SUBSCRIPTION CANCELLATIONS Insight #4 Enrich Your Product or Service to Give Users a Reason to Stay Longer You might find that your churn rates peak at a certain point, say after 24 months of a subscription. Perhaps your product or service lacks the magnetism to retain users any longer than that. What should you do? Consider a gaming platform or an online video store. At some point in time your users will exhaust all the content that is of interest to them. Rather than investing in retention programs, it would be wiser for you to let these customers go and invest in acquiring new customers. However, a healthier strategy would be to enhance and enrich your product catalog so that its attraction does not wane, and thereby extend customer lifetimes and lifetime value. + Enhance and enrich your product catalog so that its attraction does not wane. + + 8

9. Four Strategies to Prevent Subscription Cancellations 9

10. FOUR STRATEGIES TO PREVENT SUBSCRIPTION CANCELLATIONS Strategy #1 As They Are Canceling, Entice Customers to Stay Reinforce the value of your product or service: You can prevent a cancellation in real-time even after the user has started the cancellation process. Whether the cancellation is digital or by phone, try these strategies. For example, share info like how much the customer has used the service, benefits derived, money saved, etc. You can also do the opposite – demonstrate parts of the service that your customer has not explored, like content not viewed and services not accessed. Inform your customer of what’s coming in future releases. And so on. Offer a financial incentive: This could be a temporary upgrade or three-month extension of entitlement at no cost, or a substantial discount on a 12-month service extension. These incentives can retain your customer at a much lower cost than acquiring a new one. The downside of this approach is smart users who may threaten to leave in order to benefit from such preferential terms. 10

11. FOUR STRATEGIES TO PREVENT SUBSCRIPTION CANCELLATIONS Strategy #2 Use Data to Predict and Prevent Cancellations Data is the lifeblood of strategic decision-making, so be sure to listen to and act on whatever your cancellation data is telling you. Analytics may turn up patterns or triggers that can point out where improvement is needed most. For instance, tracking usage history can help you identify cancellations before they occur. Decreased usage is famously one of the clearest indicators of churn risk. For example, a user who accessed your service 12 times a month for a year, and then gradually drops down to just twice a month. 12x Indicators of growing disinterest include less frequent access, cart abandonment, reduction in click-throughs and shorter visits to your website. 2x Identifying such changes in usage patterns should trigger an outreach program that employs strategies such as save offers, satisfaction surveys, loyalty programs and other tools to reignite engagement and prevent cancellation. 11

12. FOUR STRATEGIES TO PREVENT SUBSCRIPTION CANCELLATIONS Strategy #3 Address Seasonal Churn If you experience a sudden surge in cancellations, seasonality could be the culprit. Preparing for these seasonal changes, and aligning your business model to seasonality, is important for your business success. Consider a streaming sports service. Once the playoffs start, supporters of teams that did not make the cut are more likely to cancel en masse. Or when a popular drama series ends, avid followers of the program may disconnect. A similar phenomenon is felt in the summer. Six months after the holiday season, subscriptions given as holiday presents that come up for renewal are often canceled. Preventing these seasonal cancellations is an uphill battle. Plan to reach out to those customers before the time of expected cancellation with extension offers. Offer new content to keep subscribers engaged after the prime reason for their subscription has passed and try to convert them to annual plans that keep them connected to your service throughout the year at minimal additional cost. 12

13. FOUR STRATEGIES TO PREVENT SUBSCRIPTION CANCELLATIONS Strategy #4 Offer the Right Carrot (and Not the Most Expensive One) All data is informative. Both the success and failure of retention strategies contribute to your understanding of “what works,” that is, what can successfully prevent churn. Your data may show, for example, that a 20% discount is ten times as effective as 5% discount in retaining a customer, but a 40% discount is only 10% more effective than a 20% discount. With this type of insight, you can maximize retention while minimizing costs. But it requires you to experiment and to track your data. Another example. Data shows that subscribers are most likely to churn within the first three months of service, after which churn rates stabilize. Analyze your data to construct offers that get customers to stay through those first 90 days and reap rewards down the line. 90 days Predictive data will help you identify when to time that offer, while customer input will aid in building an enticing package that gives you your best shot at retention. 13

14. Prevent Cancellations through Data, Experimentation and Analytics Every cancellation prevented is a battle won — and those wins can pile up. There are many lessons to be learned from cancellations and prevented cancellations. These eight are a good starting point to driving subscription service performance and growth. The key is to experiment, iterate, track your data and analyze it. By doing so, you will uncover insights that will enable you to construct your cancellation prevention strategy. We’re the Subscription People, and we can help you optimize your personal cancellation strategy. 14

15. Vindicia, an Amdocs company, offers comprehensive subscription management solutions that help businesses acquire and retain more customers. Providing much more than just a billing and payments system, the company’s SaaS- based subscription management platform combines big data analysis, strategic consulting and proprietary retention technology. Vindicia provides its clients with more recurring revenue, more customer data, better insights, and greater value throughout the entire subscriber lifecycle. That’s why they call us the Subscription People. To learn more visit www.vindicia.com. About Vindicia Copyright © 2019 Vindicia, Inc. All rights reserved. Vindicia, the Vindicia logo, Vindicia CashBox, Vindicia Select, and the designated trademarks herein are trademarks of Vindicia, Inc. in the U.S. and/or other countries. All other brands or product names are the trademarks or registered trademarks of their respective holders. 0919 15