How to Maximize Revenue Through Customer Renewals
Acquiring new customers sounds great. But do you know what’s greater? Making these customers stay. Customer renewals are a major driving force behind subscription businesses. They are deeply intertwined with your revenue stream, and customer lifetime value (CLV).
Losing customers after their initial payment cycle makes a significant portion of revenue slip right through your fingers. That is because in the subscription industry, customers are not seen as sources of one-time revenue only. The longer they stay with you; the more revenue you generate overtime.
Research shows that customer acquisition proves much more costly than customer retention. That is exactly why businesses need to level up their retention strategies, so they can establish healthy cash flows without constantly worrying about new leads.
In this article, we’ll tell you the top strategies you can use to boost customer renewals, and why your subscription management software is pivotal to those.
What are Customer Renewals?
A customer renewal refers to the extension of a customer’s subscription service beyond its current term. It basically means extending the usage period of a certain service. This extension is necessary to ensure that the subscription proceeds continuously, without any interruptions.
The renewal process is relevant to the concept of subscriptions or memberships because they are timed, and come with expiration dates. Users need to renew their subscriptions before they expire to continue using the service smoothly.
Let’s take Netflix as an example. It offers monthly subscriptions to its customers. In order to keep their subscriptions active, users pay for their renewals each month. Customers can extend their subscriptions for as long as they want by continuously paying for renewals at set intervals.
Some businesses choose to offer automated renewals where they do not have to remind their customers to pay. Instead, their subscription management system automatically deducts customers’ payments at predefined intervals. This keeps the subscriptions running smoothly until customers decide to cancel them on their own.
Common Challenges in Customer Renewals
Friction in the renewal process occurs when customers either don’t want to renew, or their renewals fail involuntarily. These are some common reasons behind that friction:
- Confusion in Perceived Value
This factor is linked directly to your subscription service or product. If the service is not of the highest quality, or causes occasional hitches, the obvious drawback would be customer dissatisfaction. That is why monitoring service performance, and continuously optimizing it is important.
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Sometimes, your service or software might be a little too complicated to follow, or one that doesn’t provide immediate value. In that case customers can get confused about your product’s value, and might not follow exactly how it’s a good return on their investment.
In this case, you need to clearly highlight all the benefits associated with your service, and guide customers thoroughly whenever complications arise. It’s also a good practice to give periodical reminders to customers that rationalize how their investment in your business is a smart choice.
- Low Customer Engagement
Inconsistent customer engagement can make customers feel like they have been forgotten. Maintaining active communication with customers after their initial subscription payment is crucial for renewals.
Customers need smooth onboarding, user-friendly service tutorials, active customer support, and personalized interactions to feel valuable. It definitely boosts their service experience, and gives them solid reasons to commit.
- Unclear Pricing
Communicating prices clearly is the key to building trust with customers. Overly complicated pricing structures can overwhelm customers. The same goes for when you charge customers for something that they are unaware of. For instance, tax deductions or other hidden charges.
In order to avoid this, make sure all your subscription plans and add-on services are priced transparently. Make the customers aware of any charges that are expected, so that they don’t surprise them later.
Robust subscription management software can help you implement precise and clear pricing, and accurate billing.
- Payment Failures
The above three issues we highlighted lead to voluntary churn if not resolved. That means that your customers willingly decide to cancel subscription due to dissatisfaction. However, failed payments are a problem that can cause involuntary churn: customers get dropped from the service without realizing.
These failures occur when your billing system’s payment attempts go unsuccessful. Among other reasons for this are expired customer cards, or payment methods with insufficient funds.
If a customer is not informed about this, or not reminded often enough, there are chances their payment keeps on failing until their plan automatically expires.
Intelligent dunning management is the top solution to eliminate involuntary churn.
Smart Strategies to Boost Customer Renewals
Nothing can handle customer renewals like adept subscription management software. Following are some customer renewal strategies that you can implement with the help of your software:
1. Make Onboarding Smooth
The onboarding process that comes directly after customers’ initial payment needs to be seamless. As the saying goes, first impressions matter. That is why you have to ensure that during onboarding, every interaction the customer has with your product is frictionless.
If customers need to set up an app or a portal, or have to utilize certain services, ensure they get guided and user-friendly tutorials. Subscription management software lets clients set up their own customer portals and customize them.
They can monitor and make changes to their subscription plans conveniently from there. Additionally, this software allows you personalize and automate customer communication. For instance, you can set up workflows to send customers personalized welcome emails as soon as their onboarding starts.
Furthermore, subscription management software enables you to categorize your customers into different segments. These can be based on various factors such as subscription tiers, customer preferences, membership levels, and so on.
You can then customize your messages, emails, and even invoices according to these segments for more impactful communication.
2. Offer Flexible Plans
Make sure your customers don’t feel like they are locked into rigid subscription plans. Such plans don’t allow customers to switch subscription tiers or cancel without friction. When customers don’t feel any control over their subscription, the only way out that remains for them is cancellation.
That is why flexible plans that let customers upgrade, downgrade, and even cancel with ease are preferred. If customers know that they can modify their plan easily anytime in the future, they can renew subscription with peace of mind.
Creating customized plans is also one solution to keep subscribers retained. Suppose you have some subscribers that aren’t satisfied with your existing offerings, but want to stay with you. You can create custom plans for them according to their preferences, while maintaining profitability.
3. Communicate Proactively
It is important to send customers renewal reminders before their renewal dates actually arrive. It helps them be prepared and budget in advance. If they have any ongoing card issues, they can resolve them by that time too.
An email reminder can be sent in case of automated renewals as well, so that customers don’t find payment deduction unexpected. It is a great practice to populate these reminders with each customer’s personal name and payment details that are saved in your system.
Personalized and friendly messages are important to break the ice between you and your customers. Another important thing that needs to be communicated in a timely manner is the service or price upgrades.
In case of service modifications, customers must know exactly what changes are coming, or what new features are being added. Similarly, if you raise subscription fees, they have the right to know about that ahead of time as well.
With timely updates, they can utilize the days before their renewal period to budget for the newer costs. Moreover, they can also proactively raise any concerns regarding the price change, so you can address them effectively.
4. Offer Incentives for Renewals
This can be a great way to make subscription renewals appealing for customers. Offering them some sort of incentive for renewal can encourage them to actually proceed with it. These incentives can include discounted prices, loyalty points and rewards, special features, and more.
Businesses can also offer these incentives for early renewals only, so that customers renew without any delay. It is effective in strengthening customer relationships even before the arrival of the actual renewal period. It also facilitates faster payments.
5. Boost Engagement with At-Risk Customers
Subscription management system allows you to monitor customer activity in real-time. With that you can also identify those customers that are at a high churn-risk. They might remain inactive, barely interact with your services, or frequently experience payment failures.
You can reach out to these customers timely to understand their issues, and resolve them. You can also customize special offers for them to win them back.
6. Automating Customer Renewals
Smart subscription management software powers automated customer renewals. These have a higher success rate compared to customer-initiated renewals. The reason is that the system proactively tracks the renewal dates of each customer and auto-renews timely.
It does not require customers to keep a schedule of their own billing dates. It also saves businesses from manually emailing each customer to pay on time. This makes the renewal process a lot smoother and hassle-free.
It also facilitates consistent revenue generation, as the risk of delayed payments is minimized. This improves cash flow predictability, while reducing administrative overhead.
7. Intelligent Payment Recovery
Advanced subscription management software is equipped with dunning management. Dunning is a process businesses use to recover failed payments. Payments fail for reasons that are outside a business’s control.
These failures cannot be fixed until the customers themselves take action. That is why sending personalized payment reminders is an important part of dunning. These reminders are scheduled, and keep customers in the loop.
Customers are reminded again and again until they pay, or upgrade their payment information. If they fail to do that, then after a certain grace period, their service access is restricted. However, this restriction doesn’t mean that revenue recovery becomes hopeless.
Instead, the software retries payment attempts frequently so that service charges can be fetched as soon as sufficient funds land in the customer’s account.
The software also supports a variety of payment methods, so that if one method fails, customers can always switch to another one to pay.
SubscriptionFlow: Your Solution for Maximizing Customer Renewals
SubscriptionFlow is a powerful subscription management platform that lets you implement all the above-mentioned renewal strategies. We support both automated and one-click renewals.
Our pro-retention features include:
- Automated Payment Processing
SubscriptionFlow excels in automating your payment processes, reducing manual workload and costs. Our system securely stores your customer information to smoothly process future transactions.
Customers are given the option for one click renewals via their self-service portals. We also enable you to send out customer invoices with an embedded “Pay Now” button to spur renewal into action.
- Seamless Subscription Activation
Once the renewal is successful, we ensure that your customers get an uninterrupted service experience. Their subscriptions get activated without delay, increasing customer satisfaction.
- Retry Mechanisms
Say goodbye to stubborn payment failures with SubscriptionFlow. Failed payments do not only cause friction in your revenue stream, but also negatively impact the subscriber experience.
Our smart dunning system addresses these failures, and retries payments at set intervals, while keeping your customers in the know. Your customer retention is our top priority. We make sure you don’t lose subscribers just because of payment issues.
- Personalized Customer Portals
We elevate your customer engagement by allowing them access to their own service portals which can be fully personalized. Let users manage their own subscriptions, and reduce your workload.
Subscribers can use their portals to upgrade and downgrade their plans, change payment details, view their current and past invoices, update personal information, and more. SubscriptionFlow adjusts all subscription changes, and prorates customer charges accurately.
SubscriptionFlow offers your customers the smoothest subscription experiences. If you’re looking to enhance your renewal rate and cash flow, give us a try today.
