With a second lockdown upon us, businesses are likely to look even more closely at their active, voluntary churn rates, formulate further strategies to improve customer satisfaction and engagement to reduce cancellations in their service.
However, it’s also important not to forget about involuntary churn during this time. Subscription businesses face a complex process, as each renewal presents a chance for the payment to be declined. This can present a risk as the longer the time period extends since the initial payment, the greater the chance for payments failure.
With that in mind, we’ve pulled out 3 reasons why involuntary churn should be a focus:
1. Stalling your revenue:
When using subscription model, there can be a natural focus on acquiring new customers and managing voluntary churn. Mainly this is because it’s easier to manage prospects and customers, in order to drive further revenue. However, involuntary churn, if not monitored closely can damage any revenue gains made through acquiring new customers.
If a customer fails to update their credit card details once it’s expired, the business will lose all current and future revenue, as well as experiencing an increase in overall churn rate. However, it’s not just expired cards, but max credit limits, lack of funds in the account or even fraud checks which can affect involuntary churn rates.
2. Customer experience
While your revenue and profit margins are undoubtedly impacted by involuntary churn, it’s also worth thinking about the customer experience. If you’re frequently chasing customers to update their details, there is a risk that this annoyance or inconvenience can deter customers from purchasing from you in the long run.
A customer experience or one that appears convenient and quick will always be seen positively and likely to lead to greater engagement in the future.
3. Smaller improvements can make a big difference
Involuntary churn shouldn’t be dismissed as just a cost of doing business. It’s an important metric when looking at how to maximise your profit margins, and with a few small changes you may see over time how it can translate into large scale improvements.
While we know that the main reasons for voluntary churn is around customer satisfaction and value for money of products and services, however involuntary churn can often be put down to technology and communication failures.
Using the right prevention tool, such as a personalised notification or a retry attempt to process payments, can be effective and simple techniques to reduce your involuntary churn rates.
Equally, making sure you’re using your customer and payments data in tandem, you’ll benefit from valuable insights and better communication to deliver the right message, at the right time, in the right way.
As a Bacs bureau, our Direct Debit service enables you to collect recurring payments, accurately and on-time. We provide clients with visibility over their Direct Debit, including successful and failed payments. Get in touch today to learn how we can help you reduce involuntary churn.