Track, Act, and Prevent approach reduces churn for media companies

By Paula Felps


Nashville, Tennessee, United States


Most news media companies today face the challenge of reducing churn and improving retention. This week’s INMA Webinar, sponsored by Chargebee, a revenue growth management platform that helps companies grow their subscription businesses, examined some of the strategies news companies can use.

During Unlocking loyalty: data-driven tactics to keep your audience engaged, INMA members heard from Rabie Laib, senior solutions expert at Chargebee, and Bram Steijns, growth product for digital subscription service Cafeyn, which has worked with Chargebee for several years.

Media companies should begin focusing on retention as soon as they reach a certain revenue level, which Laib said is usually around US$1 million. At that point, they need to know what strategy they’ll use to retain customers, but they also want revenue stability and predictability.

“Retention versus churn, this is like the yin and the yan,” Laib explained. “We are talking about the same thing because improved retentions mean reducing churn. And the key here is to avoid controllable churn, which means try to understand why customers are churning, what is the reason behind it, and act on it.”

All churn is not created equal

Churn comes in different forms, and fall into one of two categories: voluntary or involuntary churn.

Involuntary churn comes from things like payment failures, poor authorisation rates, and outstanding payments and can be caused by things like a credit card not being updated, not having the funds available, or the payment processing authorisation fails. 

Identifying the type of churn in a company is the first step in solving the problem.
Identifying the type of churn in a company is the first step in solving the problem.

Voluntary churn encompasses things like subscription cancellations and bad debt — and the latter is a bigger problem than many people may realise: “A lot of companies will write off 1.5% of their revenue as bad debt because they are not able to recover it,” Laid said. “This is really important, especially if you are doing more than a million dollars.”

Companies experience an average 4% voluntary churn rate, Laid said. To reduce cancellations, he proposed a three-pronged approach called Track, Act, and Prevent.

“Tracking is about asking yourself the right question: Is the churn related to sales problem? Am I selling the right product or the value or value related to the product? What is the actual reason [for the churn]?”

It also means looking at how the current pricing strategy affects business: Are customers leaving because the price is increasing? Or are they not getting value from the subscription?

And finally, he advised learning to identify customers at risk for churn.

How (and when) to act

Acting — the second part of the approach — means taking action when a customer tries to cancel.

“You need to put together a comprehensive cancellation experience that will push the customer to the right cancellation experience,” Laib said, adding that data collected will help inform when behaviours indicate they are going to cancel as well as what the right personalised cancellation experience will be.

Automation can allow for the right action at the right time.
Automation can allow for the right action at the right time.

Moving away from generic cancellation pages and offering a personalised experience can help, as can targeting audiences with special offers. It’s essential to have this process fully automated to take action at the right time.

For the third prong of Chargebee’s approach, companies will take steps to prevent churn. One way to prevent churn is to learn to read customers’ cues, including such things as when they last logged on, complaints registered with the customer care team, a reduction in subscription usage, etc.

Tackling involuntary churn

Involuntary churn comes with its own challenges, and Laib said 20% to 40% of churn is because of payment failures. Most often, that means someone’s credit card expired and the user didn’t update their account with the new card number.

Payment failures account for a significant amount of churn.
Payment failures account for a significant amount of churn.

“One of the tips to reduce the payment failures is building an automated revenue recovery workflow to act whenever a payment fails,” Laib said. “Whenever a card is coming to its expiration date, make sure you have a workflow that will come in and make sure that the customer will update.”

Asking the customer for a backup payment method so that if one fails, another is available can also be effective, as is offering to pause — not cancel — the subscription in case of insufficient funds: “That way, you still have the chance to interact with him so you can win him back and get him to be a paying customer down the line. Because if we talk about the metrics, acquiring a customer will cost five times more than retaining an existing customer.”

Cafeyn’s story

Bram Steijns joined Laib to share his experiences with how Chargebee has helped prevent churn at Cafeyn. The digital subscription service offers access to hundreds of magazines and newspapers worldwide, and Steijns said tracking user behaviour from the start has been key.

Rabie Laib and Bram Steijns share how Cafeyn has benefitted from using Chargebee.
Rabie Laib and Bram Steijns share how Cafeyn has benefitted from using Chargebee.

“We get lots of new users coming in [and they] get this 30-day trial, so they can use Cafeyn for free for 30 days,” he said. In addition to letting users get to know the product, it lets Cafeyn learn the user’s likings and preferences and learn signals that could provide cues on how to reengage the user if their engagement drops.

“For us, the biggest lever is always prevention. It’s always making sure that the user will not churn in the first place because [a churned customer] is much more difficult to get back than a user that is still in your subscription.”

About Paula Felps

By continuing to browse or by clicking “ACCEPT,” you agree to the storing of cookies on your device to enhance your site experience. To learn more about how we use cookies, please see our privacy policy.