Roadmap to higher retention rates: 8 strategies to reduce subscriber churn and grow LTV

You’ve optimized your subscription offer. You’ve enrolled more subscribers than ever before by communicating its convenience and value. Now, you’re ready to focus on retention so you can tap into the 250% higher average customer lifetime value (LTV) that a loyal subscriber base is known to provide.

Without retention tactics to complement your acquisition efforts, the new subscribers you enroll today might become former subscribers tomorrow. And that not only costs you ROI, but leaves precious recurring revenue on the table.

Retaining a critical mass of loyal subscribers means a steady stream of repeat purchases, resulting in greater LTV to offset rising customer acquisition costs (CAC) — and improved unit economics to generate more profit down the line.

That’s why we put together this guide covering Ordergroove’s proven retention strategies for preventing up to 19% of subscription cancellations and doubling subscriber LTV with tactics like:

• Making it easy to skip, pause, or delay order dates
• Letting subscribers swap products to avoid overstock
• Innovating beyond a Subscribe & Save experience
• Offering retention rewards and gifts with purchase
• Growing LTV with prepaid subscriptions
• Combining subscriptions with a loyalty program to reward your best customers
• Boosting subscriber satisfaction by preventing stockouts
• Minimizing churn and understanding why subscribers cancel with a persuasive cancellation flow
• And reactivating disengaged subscribers with targeted emails

Do you know how retention impacts the overall profitability of your subscription offer? Learn how to calculate subscriber unit economics in this lesson from Ordergroove Academy before we dive in. 

1. Make it easy to skip, pause, or delay order dates

When it comes to subscription management, many brands and retailers worry that making it easy to pause or cancel recurring orders will encourage subscribers to take their business elsewhere, costing them revenue and LTV.

The reality is that easy cancellation makes for happier customers who tend to stick around 135% longer. But the ability to skip or pause matters just as much, with consumer research from McKinsey revealing that 14-19% of subscription cancellations can be attributed to a lack of flexibility and control over orders.

Every subscriber is unique, and their needs are far from static. Whether they’re out of town more often for work or not using as much product as they thought they’d need, changes in subscriber routines can affect when they’ll need their next order. The easier it is for subscribers to skip, pause, or delay orders based on their individual circumstances, the greater the likelihood they’ll stay loyal subscribers.

An easy-to-use order dashboard offering frictionless subscription management is the best way to give subscribers the flexibility they need to have a positive experience with your brand — and continue buying from you over time.

Learn how Furtuna Skin reduced subscriber churn by 50% after upgrading to Ordergroove for frictionless subscription management. 

2. Let subscribers swap products to avoid variant fatigue and overstock

Unlike general subscription fatigue where consumers lose interest in maintaining multiple subscriptions across several brands, variant fatigue is when subscribers get tired of a particular flavor, scent, or variant of a subscription product after extended use. This happens most often in consumable categories like food and beverage, beauty, and personal care, but it’s something almost any subscriber can experience if they stay loyal over time — and it’s among the most common subscription cancellation reasons after overstock.

The antidote to these common cancellation reasons is to allow subscribers to easily swap products.

Ordergroove’s SKU Swap is a must-have subscription management feature that allows customers to seamlessly switch up the flavors, sizes, and other variations of their products without canceling their subscription to the original product.

At the end of the day, subscribers stick around for product diversity. Beyond preventing churn due to variant fatigue and overstock, allowing subscribers to easily swap products can expose them to other items they’ll love — and give them more reasons to keep buying from you in the future.

3. Innovate beyond a Subscribe & Save experience

As Subscribe & Save offers continue to become table stakes for eCommerce and brick-and-mortar retailers alike, the brands with the most impressive retention rates are the ones dialing up the novelty and customization factors to deliver a more bespoke subscriber experience.

That’s where rotating subscription clubs come in. According to a recent analysis of 205 subscription-first merchants, they are one of the defining subscription experiences shaping retail’s recurring revenue revolution.

Compared to other market-leading subscriber experiences like fixed kits and build-your-own bundles, rotating clubs offer the most novelty to subscribers by delivering a new merchant-selected rotation of items in each shipment.

For brands, those memorable experiences pay off with stronger retention. Subscribers are less likely to churn when they receive different products each month, so innovative experiences like rotating clubs can help offset CAC by growing subscriber LTV over time.

For reasons to believe this strategy works, look no further than Compass Coffee. Their average revenue per subscriber is 21% higher for their rotating clubs experience, and their order retention rate for rotating club subscriptions is a whopping 49% better than non-club subscriptions.

Looking to revamp your subscription offering? Read our full guide to learn how to enter the next era of rotating club experiences.

4. Offering retention rewards and gifts with purchase

Just as initial discounts and incentives can work wonders for boosting subscription enrollment, recurring incentives on subscription orders are a great way to drive up retention and reward subscribers for their loyalty — especially if they compound over time.

Retention rewards should be just as valuable — if not more so — than your other offers to keep subscribers engaged order after order. For example, imagine that you give subscribers 10% off on every order. Over time, you might find that your own sitewide promotions can entice subscribers to shop in other ways with deeper incentives.

The best way to avoid that is by giving subscribers a special incentive for reaching a certain number of orders. In practice, that can look like Nth Order Promotions that give subscribers a deeper discount on a specific order — like 15% off every third order instead of the standard 10% off, or even making every fourth order free.

Offering a gift with purchase to celebrate order milestones is another great way to reward subscribers for sticking around. Whether you choose to gift a popular item like branded totes with every third order, an item exclusively available to long-term subscribers — or stick to Nth Order Promotions — highlighting retention rewards across your marketing efforts can do double duty to pique the interest of future subscribers, and remind your current ones of the benefits of staying enrolled.

5. Grow LTV with prepaid subscriptions

If you’ve ever signed up for an annual digital subscription to receive a better price, you understand that prepaid subscriptions benefit both brands and customers.

But what you might not know is that prepaid subscriptions can supercharge LTV by 100% by engaging subscribers for longer periods of time.

For brands, prepaid options guarantee month-over-month retention in a way that normal transactions (and even standard pay-as-you-go subscriptions) can’t. The best part is that those higher order retention rates bring with them an automatic lift to subscriber LTV, covering any discount you offer to prepaid subscribers — and deliver more ROI than if you offered no discount at all.

Because prepaid subscriptions ask for a bigger commitment from your customers, the offer should deliver bigger benefits than they’d get from a monthly subscription plan. The most effective positioning for prepaid subscriptions varies by vertical and target audience, but the first step to finding a mutually beneficial prepaid discount is calculating potential ROI based on the actual unit economics of your business.

Learn how to launch a profitable prepaid subscription offer in this lesson from Ordergroove Academy.   

6. Combine subscriptions with a loyalty program to reward your best customers

When it comes to keeping customers engaged, subscriber experiences and loyalty programs are two of the most effective ways to encourage repeat customers to spend more and save more — and they work even better when they’re used together to maximize retention.

In practice, combining subscriptions with a loyalty program can look like:

• Referral rewards programs to incentivize word-of-mouth recommendations among subscribers’ friends and family
• Points-based loyalty programs giving subscribers extra points to redeem on each recurring order
• Tiered and gamified loyalty programs based on number of purchases, so subscribers can easily ascend the ranks
• Paid membership programs to give subscribers special benefits like limited product releases, exclusive pricing, and first dibs on premium or rare items
• Or value-based loyalty programs where each recurring order gives back to a charitable cause likely to resonate with subscribers

When these kinds of programs are seamlessly integrated into one holistic offer and experience, it sweetens the deal for subscribers with even more perks and benefits. For brands, that adds up to more recurring revenue and LTV.

A strong cross-promotional strategy for your subscriptions and loyalty program will increase awareness, educate shoppers about each experience, and convince repeat buyers to take advantage of the offers available to them.

In addition to answering frequently asked questions, using a graphic or visual to outline the benefits of the loyalty program, subscriptions, or both is an effective way to convey your value proposition. This approach ensures that customers have all the information they need to take full advantage of both experiences and unlock rewards for their ongoing loyalty.

7. Boost subscriber satisfaction by preventing stockouts 

Stockouts are a problem that businesses of all shapes and sizes can struggle with, but the repercussions often come with more ripple effects for subscription brands — especially when it comes to subscriber satisfaction and retention.

Besides lost sales and revenue, stockouts on beloved subscription products are disappointing to your most valuable customers. If the problem is ongoing, they’re likely to cancel their subscription and take their business elsewhere.

External supply chain factors can be unpredictable, but brands should focus on the internal factors they can control to not only optimize demand forecasting and inventory management — but avoid subscriber churn due to stockouts.

Beyond following best practices like keeping a manageable SKU count and having backup inventory on-hand, subscriptions can be a powerful forecasting tool in their own right. Brands can use built-in subscription order analytics to track their active subscriptions and upcoming order dates to prioritize their inventory based on attached revenue, number of orders, and other business needs.

Even with the inventory predictability that subscriptions unlock, supply chain disruptions can still leave brands with subscription orders they can’t fulfill. In these situations, offering subscribers meaningful communication and flexibility is key.

Your subscribers should be treated like your highest-priority customers, and transparency about what’s happening behind the scenes is a way to show them they’re valued and respected. So, be honest about why their product is out of stock, convey your dedication to resolving the issue, and provide an accurate sense of what they can expect in the near future.

Learn more about how to prevent and handle subscription stockouts in this lesson from Ordergroove Academy.   

8. Minimize churn and understand why subscribers cancel with a persuasive cancellation flow

Subscription cancellations can happen no matter what retention tactics a brand employs.

According to McKinsey research, 40% of eCommerce subscribers have canceled a subscription for reasons ranging from value for money, overall product satisfaction, and flexibility within the subscriber experience.

Believe it or not, a positive cancellation experience can enhance subscriber sentiment about your brand, and make it more likely they’ll buy from you in the future even if they do decide to churn.

The key is making it easy, but unappealing, to cancel. One way to do this is by reminding subscribers that they can skip or delay an order — or even switch to a different product — rather than canceling altogether.

An effective cancellation flow should also reinforce the value of your subscriber benefits and remind them of the perks they’ve already enjoyed with you — like discounts, free shipping, or exclusive experiences. But they’re also an opportunity to gather data on cancellation reasons to inform your reengagement strategy down the line.

Of course, the primary goal of a cancellation flow is to retain more subscribers, but leaving them with a positive impression of your brand can be just as valuable in the long run. The good news is that in the months following a cancellation, there are plenty of opportunities to win back subscribers — especially if you capture the cancellation reason in your flow.

Are you treating subscription cancellations as a chance to reunite? Learn how to recoup recurring revenue with a subscriber win back campaign in this lesson from Ordergroove Academy.   

9. Reactivate disengaged subscribers with targeted emails

We’ve covered some tactics to keep subscribers from actively canceling. But what’s the best way for brands to handle subscribers who passively churn due to things like expired payment info or missing address details?

Disengaged subscribers who experience three or more order rejections in a row are normal. But if they go unchecked, they can throw off your subscription analytics and make it hard to get an accurate read on the health of your business — and increase the risk of even bigger headaches like chargebacks.

That’s why passive churn features like Ordergroove’s Disengaged Subscription Concierge and Recovery Optimizer. While the Disengaged Subscription Concierge automatically cancels disengaged subscriptions, the Recovery Optimizer automatically retries failed orders within a span of two weeks of the initial order placement to recover revenue from common order failure reasons, like credit card issues and insufficient funds. Using both features together is how merchants can achieve a good balance between avoiding chargebacks while still optimizing for as much recovered revenue as possible.

But in a perfect world, it’s best to reactivate subscribers before they become disengaged by using transactional emails to give them a heads-up about upcoming payment expiration dates.

This kind of email should include instructions for how to update their payment method, a reminder about your subscriber benefits, along with any other key details about their upcoming order.

Similar transactional emails should be sent after their first and second consecutive failed orders — but it’s also a best practice to inform subscribers when canceling their disengaged subscriptions.

After that, disengaged subscribers should be funneled into a winback flow so you can stay in touch and try to reactivate them in the future.

Better subscriber experiences unlock stronger retention — and deliver more ROI 

Think of retention as one of the most important levers in the bigger financial picture of your subscription offer. If you can optimize your subscriber experience for retention, it will increase your revenue, decrease your marketing costs, and increase the profitability of your subscriptions.

Subscription leaders like Whisker and Furtuna Skin — who have partnered with Ordergroove to reduce their churn rates by 36% and 50%, respectively — prove that the virtuous cycle begins with a stellar subscriber experience.

Subscribers spend more as their experience with a brand continues to get better, making it possible for merchants to invest even more in their subscriber experiences — setting a new bar for consumers, and giving the most innovative brands a leg up on the competition.

Ordergroove is here to help you not just get new subscribers, but keep them loyal for life with innovative retention tools and strategies . Ready to join the leading brands using Ordergroove to double down on retention with an exceptional subscriber experience? Let’s chat.