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Existing Customers Are Often Your Best Customers

1 min read · 64 views Bong-Geun Choi Jan 11, 2023

A business’s best customers are often its existing customers.  Therefore, retaining existing customers is vital, particularly during tough economic times.  What are some ways that subscription economy companies may retain customers?


As the World Churns

Churn is the rate at which customers stop doing business with a company.  It is calculated by comparing the number of lost customers to the total number of customers at the start of the period.


According to payments and commerce consulting company PYMNTS, 62% of subscribers plan to review their subscriptions in the next six months due to the economic crisis.  Some 38% have already canceled a subscription to cut costs.[1]


What strategies may companies employ to reduce churn?


Improved Customer Experience

PYMNTS noted that 54% of customers said that one bad experience would cause them to cancel a subscription, and 67% said they would switch brands if they had a better experience with a new provider.  Therefore, it is important to focus on the consumer experience.


Focus on Billing and Cancellation Policies

According to PYMNTS, consumers are frustrated with the difficulty of managing their subscriptions.  They found 45% of consumers say that subscriptions are too difficult to cancel and that 51% would keep subscriptions if they were easier to cancel and manage.


Payments and Billing

We have highlighted that customizing the payment options for consumers is potentially a key differentiator for subscription economy companies.[2]  Allowing consumers to decide the payment method they find most convenient and when to pay for the subscription may be key to reducing churn.


Better billing systems can also reduce churn.  For example, churn may be caused by subscription cancellation due to credit card expirations. 


Cancelation Policies

More transparent and flexible cancelation policies might also help to retain subscribers.  For example, allowing a subscriber to temporarily pause their subscription if they encounter financial difficulties could improve the consumer experience and reduce involuntary churn.


Unhiding Hidden Fees

PYMNTS found that 51% of subscribers have incurred unwanted or hidden charges. These may include an accidental sign-up, forgetting to cancel a free trial, or unwittingly joining memberships that renew automatically.  Getting hit with these unwanted charges can make consumers more hesitant to sign up for the company’s products or services in the future.


The Customer Experience is Key

While there are factors outside of a company’s control, such as the economy, much can be done to retain customers.  Improving the consumer experience would likely go a long way in reducing subscription churn.


Subscription economy companies that can deliver a positive consumer experience may be poised to outperform those who don’t and to better weather difficult economic conditions.


The Fount Subscription Economy ETF (SUBS)

The Fount Subscription Economy ETF (SUBS) seeks to provide investment results that, before fees and expenses, generally correspond to the total return performance of the Fount Subscription Economy Index.  The Index was designed to measure the performance of companies engaged in the business of providing subscription services, i.e., companies that sell products or services for recurring subscription revenue.


SUBS may present an attractive vehicle for individuals to gain exposure to companies offering subscription-based pricing models.


[1] All data sourced from: Minimizing Subscription Churn Through Improved Customer Experiences, PYMNTS Subscription Commerce Tracker Series, November 2022

[2] Please see our blogs “Are Payments the Key to Subscription Success” and “How Subscription Companies May Navigate Economic Uncertainty


Bong-Geun Choi

Chief Economist


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