Why customers cancel subscriptions—8 reasons your churn rate may be increasing.

Kenzie Kirchoff
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Customers cancel subscription payments for various reasons. Understanding why is crucial for businesses to address underlying issues in order to minimize churn. Churn is a natural part of business, but a high churn rate can be detrimental if the balance of incoming customers is off. The lower your churn rate is, the more likely you can rest easy. But with a high churn rate, you’ll need to take action to improve before it impacts your business negatively.

Common factors that contribute to subscription cancellations:

  1. Cost and Value Perception: Customers may cancel subscriptions if they perceive the cost of the service to outweigh its value. If they believe they are not getting sufficient value or are not using the service as anticipated, they may opt to discontinue the subscription to save money. \ \ Solution: Find ways to communicate the value they are receiving. Are they getting faster results, better insights, or more certainty services that they are getting from you? If so, a gentle reminder can cement your relationship.
  2. Changing Needs or Circumstances: Customers' needs and circumstances can change over time, leading them to cancel subscriptions. For example, they may switch to a different product or service that better aligns with their current requirements or financial situation.
  3. Solution: What flexibility does your business have for its customers? Just like every person doesn’t fit the same mold, a cookie-cutter approach to billing your customers may not suit them when they are growing or changing how they function. At ChargeOver, we provide a flat-rate pricing scale that additionally allows for certain features and onboarding services to be added. We recognized that our customers needed more flexibility than most other subscription billing software can provide.
  4. Poor User Experience: A subpar user experience can be a significant reason for subscription cancellations. If customers encounter technical issues, difficulties navigating the platform, or a lack of responsiveness from customer support, they may become frustrated and choose to cancel their subscriptions.
  5. Solution: Invest in knowing how customers use your product and how they want to interact when they need help. Customer support can come in a variety of ways—and often testing in your market will let you know the best approach. The same goes for customers using your products. Although you may have created your product, getting a daily user’s feedback frequently will only help you to build something better.
  6. Lack of Engagement or Relevance: If customers do not find the content, features, or updates of a subscription service engaging or relevant to their needs, they may lose interest and cancel their subscriptions. Businesses need to continually provide value and stay aligned with their customers' evolving preferences to retain their subscriptions.
  7. Solution: This goes along with creating a good user experience. Your customer’s needs change and their loyalty to products can be less consistent than in the past. Find ways to connect with your customers. Friendly and informative newsletters, active social media accounts, and surprises no-and-then can delight them and reignite their love for your business and brand.
  8. Competitive Alternatives: The presence of competitive alternatives offering similar or superior value can prompt customers to cancel their subscriptions. If a competitor offers better pricing, features, or customer experience, customers may choose to switch to the alternative service.
  9. Solution: Make sure your customer’s intent aligns with the values that you showcase about your products and services. If your customer, for example, needs a service that can help them keep their certifications, make sure you are making those features a priority. Competitors can often swoop in when we aren’t connecting the value of our business with the needs of the customer.
  10. Financial Constraints: Financial constraints or changes in a customer's financial situation can lead to subscription cancellations. In times of economic uncertainty or personal financial challenges, customers may prioritize essential expenses and cut discretionary spending, including subscription services.
  11. Solution: Make a comfortable exiting process. In times when nothing can keep a customer from canceling—the worst we can do is burn the bridge between you and the customer. In the future, that customer may make a return, especially if they had a positive exiting process.
  12. Lack of Perceived Progress or Results: If customers do not see tangible progress or desired outcomes from a subscription service, they may question its effectiveness and cancel their subscriptions.
  13. Solution: Businesses should clearly communicate and demonstrate the value and benefits customers can expect to achieve through their service.
  14. Overwhelming Subscription Fatigue: With the proliferation of subscription services across various industries, customers can experience subscription fatigue. The accumulation of multiple subscriptions can become overwhelming, leading them to reassess and cancel some subscriptions to streamline their expenses.
  15. Solution: Look at how you’re billing your customer. How often do you contact them about their bill, when it’s due, and when they will have money withdrawn? In some industries with auto payments, billing communication is kept to the basic need-to-know emails—whereas others that require customers to manually pay may need to communicate more for on-time billing.

Understanding the reasons behind subscription cancellations allows businesses to identify areas of improvement and implement strategies to reduce churn. By continuously evaluating customer feedback, enhancing the user experience, providing personalized value, and adapting to changing customer needs, businesses can increase customer satisfaction and retention rates.

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