Membership churn rate is an important KPI, but it is not always tracked or accounted for. People often look at more obvious metrics such as:
- Total number of subscribers
- Number of new subscribers in a month
- Which demographics do those subscribers belong to
- Where people come from (ads, organic search, affiliate links etc.)
- Number of premium plans sold
Membership churn rate, however, can be a clear indicator of a business’s health. If it is low, it signals steady growth and stability. If it is high, it could indicate a leak in your boat that needs to be plugged in as soon as possible.
While you can never bring it down to 0, you definitely want to keep it as low as possible. The upside of its reduction is obvious. Those who are leaving are paying customers who are taking their money elsewhere. With members being the lifeblood of this type of website, the desire to keep as many as possible is absolutely understandable.
So let’s try and understand subscription churn a little better by looking at how it’s calculated its possible causes, and a few solutions to bring it as low as it can go. Let’s jump right into it!
Calculating Membership Churn Rate
To calculate the membership churn rate all you have to do is apply this formula:
(number of subscribers that have left in a month) / (Number of total subscribers at the beginning of the month) x 100.
So, following this formula, if you had 5000 subscribers last month and 300 of them canceled their subscriptions, you would get a membership churn rate of 6%, which is the average churn rate for subscription services.
The opposite metric is the subscription retention rate. If we are using the same example, a membership churn rate of 6% would mean a subscription retention rate of 94%.
Possible Causes Of High Membership Churn Rate
- If churn happens right at the start, maybe you are not meeting their expectations (this could indicate a dissonance between reality and the image created in your customer’s mind through your marketing campaign). In that situation, you should restructure the messaging in your sales funnel to better align with what you are actually offering and temper expectations.
- If it happens later, perhaps you are not offering enough long-term value for them to stick around, or they aren’t seeing the expected results. If that is the case, you should look into how a “drip content” approach can keep members engaged long-term.
In some situations, churn is unavoidable. Perhaps you have a course jam-packed with content and value that spans a couple of months, with no other content to offer after that.
That is a viable business strategy. There are many types of membership websites out there, and as long as you know your unique characteristics of yours and how to market it, you shouldn’t ALWAYS let the high churn rate concern you too much.
A Stellar Onboarding Sequence Will Stop The First Wave Of People From Leaving
Good, intuitive UX design should cover this already, but it never hurts to have a great onboarding sequence to show everybody where all the tools and ingredients are in your kitchen.
Be it straight in the user interface, through an email sequence, or in tutorials on your blog, an onboarding sequence serves to ease people into the intricacies of your product/service and show its true potential.
It reassures them that they made a good purchase by giving them quick access to the features they were promised throughout the customer journey. You can also showcase more out-of-the-box use cases that provide users with new ideas for their own set-ups, adding value to their purchase and increasing their overall satisfaction with the product.
Be Available For Your Members
Members could run into a whole host of issues with your product/service:
- They can’t find a feature they had read about
- Their payment got processed, but the website didn’t update with their upgraded plan
- The site isn’t loading
- They want to know if the platform supports integration with their favorite online tools
- They want to change their payment method and don’t know how
Any one of these issues, if left unresolved, will lead to frustration and, eventually, cancellation of their subscription.
A support email or feedback form should always be available to users to report a problem or get a question answered as soon as possible.
In time, you should take the issues that come up the most in these conversations and take measures to mitigate them in the future. For example, you could advertise an integration with a specific tool that you are constantly asked about.
Don’t Let Cancellation Be Their Only Answer
Sometimes a person isn’t dissatisfied with your platform or content. Sometimes they wish to maintain their membership but are simply unable to do so due to circumstances outside of their control.
If they don’t have an alternative to outright cancellation, they will just go away, and it’s a lose-lose situation for everybody.
Instead, you could provide other options:
- Down-sell – Taking away access to certain features, pieces of content, or services while maintaining the initial core value proposition of your website
- Membership pause – Freezing their progress until they are able to return
- Discounts – You could keep the member as an active part of the community by lowering the price of their subscription for a specific period of time
Final Words On Membership Churn Rate Reduction
If you plan on getting below the average churn rate for membership sites and need a helping hand along the way, don’t hesitate to contact us right here.
We have spent over a decade leveraging the best technology in the industry to improve the businesses of our clients time and time again.
So reach out to us and we will schedule a call right away to discuss how we can help you reduce that bothersome membership churn rate and scale your business in the process!
