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
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
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
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
Automation: It’s much easier to add automation
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!
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
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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."