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Latest 07 Nov 2018 | Social Messaging

Top Tips: How Subscription Businesses Can Reduce Cancellations by Investing into Social Messaging

New subscription-based businesses have launched across all kinds of categories—including fashion, meal kits, pet food, razors, alcohol, and more—and are especially popular among younger, wealthy urbanites (coincidentally, the same people who are the heaviest users of social messaging apps)!

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With the aid of the internet, the ability to subscribe easily for a service has become one of today’s most powerful new business models. Subscriptions have become the dominant way for people to consume media (music and TV content), and are the fastest growing part of the ecommerce market for physical goods—the ecommerce subscription market has grown at over 100% a year for the past five years! 

Some of these subscription businesses, like Amazon Prime Pantry, are focused more on driving cost and convenience, while others, like FabFitFun, are focused more on personalization. Regardless of the consumer’s reason for signing up, all subscription businesses share one major business driver: retention. While people are relatively quick to try out new subscriptions, they are just as quick to cancel. According to McKinsey, who conducted a major survey of the subscription economy earlier this year, subscription businesses have an average cancellation rate of 40%. If a subscription business were to improve this number, they would be sure to see a huge impact on their overall business trajectory and profitability.

How can subscription businesses use customer service to increase retention?

“Our biggest save tactic is just in educating the customer. We offer a huge amount of value that customers may not be aware of, and so just speaking to customer service agents about all the benefits they can receive makes a massive difference in cancellation rates.”

—Caitlin Logan, Director, Customer Experience at FabFitFun

Customer care plays an incredibly essential role in minimizing cancellations for subscription boxes by keeping customers happy should they encounter any problems, and persuading them to stay if they’re thinking of leaving.

Research shows that the biggest determinant of whether a customer service interaction impacts loyalty or not is how much effort the customer has to put into it. No matter how great the agent is, if the customer had difficulty getting through to them, had to repeat information, or undergo a channel switch, then a service interaction will have a big negative impact on customer loyalty. One study by BT (a UK telco), found that customers who had a difficult service interaction were 40% more likely to churn than if they had experienced an easy one! If the key driver for a customer signing up to a subscription business is convenience, it’s even more essential that customer service is easy—nothing ruins the concept of ‘convenience’ more than struggling to get a simple problem fixed. FabFitFun embraces this philosophy. As Caitlin Logan, Director of Customer Experience, says, “Our philosophy is to give amazing service to customers, even if they’re looking to cancel. We want to give a level of service that surprises the customer because it’s so easy and positive, making them more likely to come back.”

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So to increase retention, it’s essential to decrease the effort involved in contacting customer service—which can sometimes be easier said than done. Luckily, over the past couple of years a powerful new channel has emerged that is low effort for customers and more efficient for businesses to deliver: social messaging. Research has shown that using social messaging channels such as Facebook Messenger, WhatsApp, WeChat etc., for a customer service interaction is easier than phone by 4:1, and easier than email and self-service by 2:1. There are a number of reasons for this. The first is convenience: messaging a business is just like texting your friends. You just pull out your phone and send a message, then can put the phone away and respond again when it’s most convenient for you. No waiting on hold like with phone calls or being restricted to a laptop like with web chat. The second reason is speed: messaging is an in-the-moment experience. Agents don’t need to respond within seconds, but ideally should be responding within 5-15 minutes. This means that messaging can be used for urgent issue resolution instead of the phone.

As smartphones have come to dominate our screen time, messaging has become the dominant paradigm for communication—whether we’re speaking with our friends (Facebook Messenger), with colleagues (Slack), or with people in our industry (LinkedIn). The numbers are staggering—the volume of messages sent through just WhatsApp alone is over three times greater than peak global SMS volume. It’s no surprise then that over the past year, social messaging has become a powerful channel for business messaging—there are now over 10 billion messages sent every month between businesses and customers over Facebook Messenger (up 5x in the last 18 months), mainly for customer service. Given the strong crossover in demographics between subscription businesses and social messaging platforms, it’s likely that the vast majority of any subscription customers are active social messaging users.

Using automation to increase scale and decrease effort  

One objection to making it *easier* to contact customer care is that overall care volumes could increase. While this can be true, and something any business should be prepared for, it is countered by the increased capacity for high volume conversations: because of both workflow and the ability to add in automation, messaging is more efficient to manage than any other service channel.

Workflow: As opposed to traditional web chat, which is fully synchronous (requiring an agent to be responding within seconds for the whole conversation), messaging is asynchronous (just like texting your friends). This means an agent’s response should be quick, but doesn’t have to be instantaneous; they can move straight to the next conversation as soon as they send a reply, instead of waiting for a customer to respond. One of our own customers A/B tested Messenger against their traditional web chat, and found that their agents were able to handle five times as many customers!

Automation: It’s much easier to add automation into messaging compared to traditional customer service channels. Trying to implement chatbots in traditional web chat is difficult—we’re still a long way from bots being able to handle the majority of service interactions, and the inevitable handover to a human agent is always painful. In messaging however, the asynchronous nature means that a bot can handle part of a conversation, then hand it over seamlessly in the background to an agent. The agent can respond ten minutes later, and it’s still a completely seamless experience for the consumer.

The key when implementing automation and bots into messaging is to ensure that they are designed to speed up the experience for customers and reduce effort, and not to just sit in the way of getting to a human agent. Otherwise, it will lead to frustrated customers who end up trying to phone—and will be even more likely to cancel!

At Conversocial, we help our customers deploy Navigator, a simple bot that sits at the beginning of a messaging conversation to find out the issue and collect basic information before routing the customer to an agent, or that can resolve very simple queries (such as checking on order status) without needing to route to an agent at all. The results have been impressive, with the bot handling up to 25% of all messages for some customers, with no drop in customer satisfaction.

Key steps to use messaging to increase retention at a subscription business:

  • Make decreasing effort the key principle in your customer journey

  • Promote messaging as a service channel to your customers when they’re looking for help or to cancel

  • Resource your agents so that they can respond ‘in-the-moment’ (within 5-15 minutes) on messaging channels

  • Consider Messenger Chat to allow real-time conversations on your website (important if you’re engaging with a customer who’s thinking about cancelling)

  • Invest into automation that can help triage and handle basic requests before handing over to human agents

Interested in learning more about how Conversocial can help your brand invest into messaging as a service channel? Reach out now!

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With over 4 billion consumers already using social messaging apps, ask yourself what you as a business need to be able to manage these conversations at scale. With our help, you too can join the social messaging revolution.
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Ido Bornstein-HaCohen - Chief Operating Officer, Conversocial

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