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💎 Growth Gems #94 - Retention: Improving Annual Renewals
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The strike is over!
I made myself chuckle, and more importantly, I got some feedback. While I’m still processing it, I will try a few tweaks moving forward.
This week I’m sharing gems on retention, from Robert Skrob, on improving annual renewals.
🥇 TOP GEM OF THE WEEK
Retention: improving annual renewals
Pushing customers to choose longer subscriptions, like yearly, is common in many verticals because they tend to have higher retention rates.
An essential step after that?
Getting the renewals!
Robert has a YouTube channel, with short videos on improving subscription businesses and retention. It’s not specific to mobile apps (hence the suit?), which I like because it can help get new ideas or perspectives.
Today, I’m sharing gems from his video 5 Ways to Improve Annual Subscription Renewals.
💎 Don’t let your customers be surprised by a renewal. Communicate clearly about the upcoming charge. It’s the right thing to do for customers and prevents you from getting penalized by Visa or Mastercard.
⛏️ Going Deeper: if you sell subscriptions on the web, you’re most likely already familiar with chargebacks.
Beyond the fact that chargebacks mean lost revenue, you absolutely need to avoid going past the chargeback ratio: the number of chargebacks a merchant receives divided by the number of total transactions.
There are financial penalties for each chargeback/dispute when you pass the first ratio, and things only get worse from there.
Not surprising customers is prevention, and you can also:
Make it easy to contact your support
Have a flexible refund policy or a money-back guarantee
💎 Don’t let Stripe write your renewal emails. Renewal emails are not just about compliance; you need to optimize them for your customers.
⛏️ Going Deeper: while you can’t rewrite emails from Apple and Google, you should send your own in addition to the app stores’ communications (and make sure they arrive before).
Here is a renewal email from Headspace, with a few highlights (it follows some of the recommendations you’ll find further below):
💎 Renewal emails should be very different from promo emails. A year later, the relationship is very different, so your story must be different. Analogy: first date vs. first wedding anniversary.
💎 Customers’ choice to renew is always about what’s coming up in the future, not the past:
Talk about features/developments coming up in the following months or year
Gift something along with the renewal
My 2 cents: I love the gift idea. I haven’t seen anybody use that yet, though…Hit me up if you have examples!
💎 Don’t wait 12 months to renew an annual subscription. Within a few weeks, you can offer an early renewal by giving the option to add years. This is often done in the publishing industry.
⛏️ Going Deeper: I rarely see it just after a few weeks, like what is mentioned above, but here is an example from NordVPN with an early offer to switch to a longer plan.
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Some more insights you might find helpful on the topic!
💎 Working on retention means different things depending on the growth stage:
Early days (pre product-market fit): focus on having a solid product (good design, gut feel) and set analytics to measure retention. You won’t be able to run A/B tests because you don’t have enough volume, but you can get a qualitative understanding of how people use your product (even with wireframes, in alpha, in beta).
Later on (post product-market fit and at scale): CRM with push notifications, emails, and in-app messages can be great boosters on top of the foundation. They typically require large cohorts to play with.
💎 When designing lifecycle communications, you need someone who understands users’ behavior and can translate that into initiatives to drive growth. It can not be “just” an analytical person who might be missing an understanding of user psychology.
And before I leave, here is a quote on the importance of retention from a Mobile Growth Summit talk:
“A 10% difference in subscription retention changes your business” - Brennan Clark (Director of Product at Sago Mini)
See you next time. Stay curious!