What is churn and why is it important?

Churn is the number of customers you lose each month divided by the number of customers you have. It's a simple calculation, if you have 100 subscribers and you lose 5, your churn is 5%. For reasons we won't get into here, churn never includes the customers you gain in a month.

Now, why is reducing churn so important? Well, it's less money in your pocket from the lost subscriber alone but it also costs 5x more to acquire new customers than it does to keep current ones. And according to Insightsquared, reducing your churn by just 5% can increase your profits by 25-125% depending on your industry, company age and business model. And when we talk about the cost to acquire new customers, we're also talking about your time and effort.

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So one of the best ways to increase your revenue and grow your business is to retain the business you already have.

This is a highly-effective marketing tactic called churn reduction (think customer retention), and it is especially effective for SVOD businesses.

Why? Because every customer you successfully retain will bring in months of revenue until they cancel. And if they never cancel, the revenue never stops!

In Uscreen, reducing churn is an automation which means, you set it up once, and it works automatically for all cancellations.

There are three main parts in our Reduce Churn tool.

Step 1

First, right before the cancellation is confirmed in your store, your users will be asked why they want to cancel their subscription:

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The reason collected here is key to understanding how you can better improve your business to prevent users in similar circumstances from cancelling in the future. If the vast majority of your customers are cancelling because it's too expensive, well, you've got a decision to make: If I lower my subscription cost, will I retain and attract more customers to offset that reduction in revenue?

You can use their selected reasons to determine other changes in your business you need to make to reduce churn.

Step 2

Next, immediately after completing the cancellation, a win-back email will go out offering a one-time discount on their next payment to continue with their subscription. Remember, the cancellation isn't finalized until the last day of their subscription, but as far as your user is concerned they have completed the cancellation.

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This email is your first chance to win them back. We give you a template to work off and you choose the discount. For monthly subscriptions we recommend a discount of 75% off the next month and for a yearly subscription, 15% is best.

Step 3

Lastly, on the final day that their subscription is active a second email will go out. This is the "Last Chance" email.

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The discount still stands from the first email so if they choose to accept it, then great! You've just reduced your churn rate.

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