Why You Should Focus on Renewals from Day 1
For organisations with a recurring revenue offering, the importance of retention cannot be overstated. Yet many organisations wait until 1-2 months before the expiry date to to kick-off their renewal process. This usually involves a barrage of emails escalating in shrillness and frequency as the deadline approaches. We've all been there, tweaking messages, running A/B tests, and hoping to convert as many renewals as possible. But what if you've been approaching renewals all wrong? What if starting efforts earlier could yield far better results?
The Problem with Last-Minute Renewals
The truth is that by the time you start pushing renewal messages, many of your customers have already made up their minds whether to stay or leave. No matter how talented your wordsmiths or compelling your renewal messages, converting those who have decided to cancel becomes an almost impossible task.
So when’s the best time to start? How about as soon as customers sign up? In his book "Retention Strategies for Publishers", Julian Thorne argues that such a proactive approach can significantly improve retention rates.
Understanding Your Customers from Day 1
Thorne suggests that customers generally fall into three categories when they first subscribe:
Committed: These are the customers who, from the start, love what you offer. They’re very likely to stick with you, unless something goes drastically wrong.
One and done: These customers know that your product or service isn't for them. They might have signed up for a specific reason, like a freebie or a short-term need.
Fence-Sitters: This is the largest group. These customers are undecided and can sway either way.
Your goal should be to focus on the fence-sitters, shifting them from indecisiveness to full commitment.
How to Proactively Boost Renewals
1. Identify Early
The first step is to identify as soon as possible who falls into which category. Surveys and feedback forms early in the customer journey can help flag those who are not yet convinced of the value you bring. Monitoring engagement metrics can also help you categorising. The “committed” will love you anyway, and the clear “one and dones” will be impervious to even your most persuasive wooing, so you should concentrate on delivering the best experience to those who can be swayed.
2. Personalise Your Approach
Customers today expect personalised experiences: generic messaging won't cut it. Tailor your communication to address their specific needs and pain points. Show them how your product or service can solve their unique problems.
3. Engage Continuously
Develop an engagement plan that spans the entire customer lifecycle. Highlight small successes early on to encourage continued use and satisfaction.
4. Deliver Early Wins
Show your customers quick wins. Small successes build confidence and increase the likelihood of long-term engagement. Whether it's a tutorial that helps them master a task, or a personalised tip that improves their experience with you, early wins can make a significant difference.
Above all, renewal efforts shouldn't be a last-minute scramble. By focusing on customer retention from day one, you can better understand your customers and provide them with a more personalised, satisfying experience. It also means you will be able to predict renewal rates much more accurately.
This newsletter is brought to you by www.customer-ization.com. We work with B2C brands to activate and empower customer communities to deliver growth, retention and satisfaction. To find out more why not book a call to explore how we can help you harness your customers’ enthusiasm and achieve a step change in your business outcomes.