Increasing subscription renewals is an important strategic goal for revenue and sales operations leadership, for several reasons. Subscriptions provide reliable revenue, which increases the accuracy of revenue forecasting. Generating revenue from existing customers is much cheaper than the cost to acquire new ones. And existing customers also evangelize products to your market, providing free marketing and powerful social proof.
Leaders who can’t maximize the number of customers who renew their contract miss out on their best opportunity to grow revenue. Every subscription customer that churns (meaning a customer that falls to renew their subscription) represents a loss of current opportunity — and provides an opportunity to a competitor. This is why subscription management is so important to get right.
This article shares best practices for how to increase subscription renewals:
Customers may delay renewing subscriptions, even if they enjoy and benefit from the service. They may want to remain as subscribers but they could forget about the deadline, which can pass without a renewed subscription.
Alternatively, the looming date may cause customers to rethink their subscription. Giving customers the chance to change their mind about a subscription may mean that they will unsubscribe or let the deadline pass without a renewal.
If subscribers are given a change to let subscriptions lag or be phased out, there may be a steep decline in subscriptions. This leads to lost revenue and decreased customer retention and brand awareness.
The best way to retain subscribers is to implement an automatic subscription renewal process with DealHub CPQ. DealHub CPQ offers automatic subscription management that makes renewals more convenient and will reduce the number of subscribers lost through manual renewal.
Optimize Upsells Cross-sells and Bundles
It is a fact that most of the average company’s revenue comes from repeat rather than new customers. That is why the strategy of upselling, cross-selling, and bundles are popular because it is the best way to increase revenue through subscriptions.
Some useful tips include:
- Understanding Your Audience
- Consider the Customer Journey
- Match Products to Segments
Getting to know an audience through reviews, social media comments, behavior on websites, and past purchases is an essential step to maintaining a high level of subscriptions. Think about what it is like for customers at every stage of their journey, from the moment they land on a company website to making a purchase and leaving a review. Customer experience is a significant priority for consumers, and getting a glimpse into their experience is valuable.
Information about customers will lead to noticing patterns with certain types of customers. Are some customers interested in specific items? Are these customers also located in certain areas or fit a demographic?
DealHub CPQ maximizes the revenue opportunity from bundling by taking data from your entire customer ecosystem and using it to constantly reevaluate your bundling practices in order to find the exact combinations that produce the most revenue.
Offer Incremental Promotions
It isn’t unusual for companies to provide incentives for customers to renew subscriptions. However, it isn’t enough to reinforce this once but to use incremental promotions to regain customers even if they have allowed their subscriptions to expire.
One example is to provide a 10% discount to those whose subscriptions will expire in ten days. If the subscription has expired, offer a 20% subscription 20 days later and in another ten days, a 30% discount. Alternatively, incremental promotions can be carried out twice before expiration and once after.
Provide Excellent Customer Support
Some churn is unavoidable, but some steps can decrease churn and increase subscription renewals. One way to keep the renewal rate high is to value this metric as an indicator of the business’s health. The rate at which customers renew subscriptions demonstrates how happy they are with a product or service.
The subscription renewal period is an excellent time to ask customers for feedback about a brand. Ask them what caused them to renew their subscription (even if it was automated), what they like about the brand, and what they can improve. Additionally, surveying people who have canceled their subscriptions provides valuable information about what things can be fixed.
Ongoing interaction can prevent churn. Optimizing touchpoints to connect with customers and encourage them to communicate their brand experience is essential. Surveys can be given to email subscribers, on company websites, and by text. Provide opportunities for feedback throughout the customer journey, from chatbots on homepages, product suggestions, and short surveys at checkout points.
Proactively Encourage Renewals
Customers who feel uncertain of whether they should have renewed their subscription are likely to cancel it eventually. To prevent churn either immediately or down the line, it is best to eliminate the causes of this doubt and remind customers of why the service is valuable.
Proactively encouraging renewals reinforces the notion that they choose to be subscribed and can reinforce that they find this subscription useful. The following are ways to encourage renewals and reduce churn:
- Automate renewals
- Offer various options for renewals
- Institute flexible pricing
- Notify them of the renewal deadline
- Provide a grace period
One idea is to send subscription customers reminders that payments are coming soon or renewals. Thank them for their payments and request feedback. This will help them feel in the loop and can reinforce the positive aspects of the service before the renewal occurs.
Another way to encourage renewals is to offer flexible pricing. Perhaps the subscriber wants to pay quarterly rather than monthly or bi-weekly? Many subscriptions work this way, with deeper discounts the more of the product or service they purchase at a given time. However, don’t just offer this once, but remind them before the renewal period that they can choose different payment plans.
Informing subscribers well in advance of the renewal deadline is a way to earn their trust. In that case, they will not complain about unexpected charges. Offering incentives for agreeing to renew their subscription promotes customer loyalty.
If the subscriber does decide to cancel, provide a grace period during which they can still enjoy the product or service. Those who have chosen to unsubscribe may change their minds, and those who have forgotten may be reminded why they subscribed in the first place.
Identify Churn Candidates
In addition to doing everything you can to encourage renewals, you should also proactively diagnose the problem and identify which subscribers are the most likely to leave. Churn candidates are usually those who don’t interact with a brand. They may stop making purchases, no longer click on links, stop opening emails and finally unsubscribe.
The most apparent churn candidates are those who complain and openly threaten to cancel their subscription, but the people who express criticism are often those who expect to be won over. Many critical customers feel there is something to gain by complaining or else they wouldn’t bother. Providing them with attention, a discount, and a listening ear may be enough to keep them on board.
However, the most severe churn candidates are those who silently become less engaged. It is essential to identify these churn candidates and interact with them. Ask them to provide feedback on the business. Target them with a promotion in return for filling out a survey. If these customers feel that their feedback will be listened to, they may be more likely to renew a subscription.
Increase Revenue from Subscription Renewals with DealHub CPQ
DealHub CPQ is advanced technology today’s visionary leaders use to increase revenue from subscription renewals.
DealHub CPQ has been selected as a Top-50 Sales Product by G2 and recognized as a leader in the CPQ Momentum Grid. We have innovated the next generation of CPQ to empower teams to connect their tech and their teams to send their revenue to new heights today and in the future.