8 Easy Steps to reducing E-commerce Subscription Churn

May 11, 2021
Emmanuel Umukoro

The subscription e-commerce industry continues to at an alarming rate, with McKinsey's figures suggesting it now totals between $12billion and $15billion in the US alone. It’s important to note that their numbers reflect subscription e-commerce revenue for some retailers only because when you look at StitchFix alone, they projected over $1B in revenue as at 2020

With the rising popularity of new brands and continuous revenue growth in the subscription market, subscription businesses often experience high churn as they struggle to retain customers over time. So, how can subscription companies avoid and reduce churn?

Churn refers to the rate at which a subscription company loses its subscribers due to cancellation or elapses. According to McKinsey, 40% of people who sign up for a subscription service or product cancel. Furthermore, more than a third of those who cancel do so within three months or less. This leads to a loss of revenue. Churn rates really matter for subscription businesses because they are an important indicator of long-term success, but there are a few easy things you can do to reduce churn.

How to Reduce Churn

To keep customers paying consistently, subscription businesses must maintain a constant connection and provide value – something that can be accomplished with the appropriate techniques and the use of big data and AI-driven technologies. For a start, here are a few easy things you can do to reduce churn:

1. Reward subscribers for their loyalty

The more loyal a consumer is, the more they value what you have to offer and are less inclined to defect. As a result, rewarding and incentivizing your greatest customers, as well as new consumers, is essential.

Birchbox, a subscription service that sends its subscribers a box of four to five selected samples of makeup and other beauty-related products rewards members 50 points for each referral. Hello Fresh, a food subscription box provider follows suit by giving clients discounts and a free box in exchange for referrals. Other actions, such as social media engagement or video viewing, exclusive access to new products, or more could also be rewarded.

2. Create a form or platform that allows customers to give you a candid reason for churning

It's critical to understand why customers desire to cancel their subscriptions. It assists you in developing a strategy to avoid similar losses in the future. If individuals are leaving because your service is too pricey or they aren't using your items, for example, you may want to change your costs or reconsider your offering.

This information can be gathered by a simple online survey, email, or over the phone at the time of cancellation. Make it simple by providing a few multiple-choice alternatives and allowing people to provide candid feedback. At the same time, address such issues by advising that they downgrade to a lesser tier or temporarily halt their subscription.

3. Recover lost customers based on their lifetime value

Even if a consumer cancels their subscription, it is never too late to reactivate it. You may notice better results and boost your ROI by targeting the consumers who are most likely to re-subscribe with engaging messaging and relevant offers.

To identify these high-value segments, you can use deep learning tools to define specific segments based on the audience’s massive behaviors and interests.  You can then use predictive deep learning models to combine the best segments based on predefined rules and rank the segment combinations based on their value or likelihood of re-subscribe.

4. Recognize potential churners to help re-establish a connection

Any consumer who has subscribed to service can cancel at any moment, but certain customers are more inclined to do so than others. You can work harder to keep these customers if you can discover out who they are.

Use predictive machine learning models to evaluate usage and contextual data from your customers. Use predictive machine learning models to evaluate usage and contextual data from your customers. Usage data offers extra insight into usage statistics by showing how much a customer utilized your product or service before leaving. Based on their actions, machine learning can strategically identify which consumers are high-risk. People who have lately lowered their subscription or have been inactive, for instance.

5. Engage customers through the right channels

Churn prevention is all about keeping your subscribers loyal, and the best way to do so is to stay visible, engaged, and give exceptional experiences on a regular basis.

You can better identify your subscribers' preferred channels of communication be it through SMS, messengers, in-app messaging, email, app push and so o, and what types of creative formats they respond to with AI-based marketing automation. You can then send personalized, interest-based offers to re-engage.

6. Use partnerships to provide additional value

Similar to all other industries, collaboration with another brand can benefit your brand while also allowing you to offer subscribers something new and appealing, improving re-engagement and lowering churn.

For instance, an ice cream subscription box might collaborate with a movie streaming service or cinema. A clothes subscription service might collaborate with a beauty brand. Rather than guessing which collaborations would be beneficial to your subscription business, use AI-powered consumer insights to find out which ones could provide value to your subscribers.

7. To stay relevant, create real-time client profiles.

Customers cancel subscriptions for a variety of reasons, one of which is that they no longer require or are interested in the product or service. Adopting a data-driven approach can help you prevent this.

You can utilize AI techniques to generate more accurate consumer profiles in real-time by accessing legally compliant third-party data on customer behavior and interests outside of your controlled channels. This will provide you a greater knowledge of your clients' evolving requirements and preferences, allowing you to take steps to keep your products and services relevant and valuable.

8. Use a subscription app that has inbuilt churn bursting algorithms

The subscription app you use plays the most important role in your subscription business. This is why I encourage subscription business owners to use a subscription app with an in-built churn bursting algorithm like Chargezen. 

Chargezen is the most comprehensive yet advanced vertically integrated cloud-based platform for managing subscriptions. Now even better with dedicated Kubernetes server clusters that handle unexpected load spikes without ruffling a feather! This is why Chargezen customers typically see a 45% decrease in churn, thanks to their churn bursting algorithm. With their deep-dive analytics and customer self-service portal, you can get free access to customer behavior that will help you plan personalized offers and build customer loyalty.


You can significantly reduce churn if you have the why and use the right subscription management solution. If you follow the steps above and try out the Chargezen subscription management app, this will be your first step in the right direction towards reducing churn.

You can reach out to the Chargezen support team to get started or write me at success@trychargezen.com for assistance.

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