WARNING: How You Might Be Driving Away Your Customers

There have been two eras in my business: Before Numbers and After Numbers. As you can imagine, things happened – or didn’t happen – very differently in these two eras.

Before Numbers was all about instincts: I would have an idea for driving more traffic or increasing sales, and I would try it. Often it would work, and I would continue, pumped up by the great results I was seeing!

What I wasn’t doing, however, was paying attention to the details. My business grew, but more because of the lead generation work I loved doing, and not because of any real focus on conversions or retention.

Eventually I couldn’t ignore it anymore: I was missing serious opportunities. There was a mountain of data that I had barely considered as I let my instincts guide me. I had to change if I wanted my business to move into the multiple 7-figures, and that’s where I wanted to take it.

Photo Credit: Chris Khamken

Photo Credit: Chris Khamken

One of the metrics that seriously needed my attention was retention inside Social Media Marketer. Social Media Marketer is a subscription-based service, which means that our customers pay to use it every month. I started noticing that people were canceling long before completing even half of the courses, yet there was no clear indicator as to why.

So I started to dig deeper into the numbers, and suddenly there were pieces of data I had never thought about before. The more I considered this retention issue, the more ridiculous I felt for not having tracked more from the beginning, and I wondered what difference it might have made. Had I been making some colossal mistake for a long time and hadn’t even noticed it?

Recently I thought I had found that big mistake. It occurred to me that one of my favorite marketing practices may actually be causing my customers to cancel their subscriptions. Talk about the opposite desired effect! Was I driving away my own customers?

Emails as a Retention Strategy

We send out 2 weekly emails as part of our online learning product, Social Media Marketer. A major element of our retention efforts is do things that really allow us to build a relationship with our clients over time. The end goal is to increase lifetime value and to generate more referrals. So these two emails we send are informational: a bi-weekly digest filled with the most important updates in social media plus news about the company, and a weekly Founder Friday email in which I share my own thoughts about building and running a small business.

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Doubt Creeps In

While looking at retention rates, it occurred to me that maybe my emails were actually reminding people to cancel their account. Our business model is a spin on the traditional SaaS: we never expect people to pay for a subscription for years and years, but rather stick around for 6-12 months while they learn and implement everything they can, putting into practice strategies that really change their business. Everyone graduates from college eventually, right? Our goal is to educate and graduate stellar small business owners with profitable, easy-to-run businesses.

So that means that people are eventually going to cancel. But what’s the exact trigger? Do people react to our monthly email reminding them that we’re going to be charging their card again? Or is it possible that the very act of reminding our users that they are users – in other words, our subscription emails – causing them to cancel?

As soon as that thought popped into my head, I was sure I had the answer. I was two seconds away from scrapping our entire communication strategy and starting over.

Numbers Don’t Lie

Before I started drafting a whole new plan, we checked out the numbers for the past three months. Emails go out bi-weekly on Mondays and every Friday, so we looked to see if there was a big difference in number of cancellations on those two days versus the other five days of the week.

It turns out there is very little difference between number of cancellations across different days of the week, especially among weekdays. You can see that Monday and Friday don’t even lead the list of days with the most cancellations:

chart_2 (1)

Furthermore, when we measured the number of cancellations on Mondays and Fridays together, their combined value did not even reach the typical 40% expected if there were an even split:

chart_2 (2)

The Takeaway

One of my big goals for this year is to be more data-driven – it’s why I signed up for KISSMetrics to complement the data I get from Google Analytics and Infusionsoft. I cringe to admit that in the past I’ve made some big decisions without the help of any data at all, and in retrospect I wonder what I could have done differently.

If you are less naturally data-inclined like me, it’s important to pause and ask yourself if there’s more information that you haven’t considered. What big issue are you considering now? What data do you already have that could answer that question for you? There was no reason for me to guess if emails were triggering cancellations when I had the answer right in front of me!

 

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About Laura Roeder

Laura Roeder is a social media marketing expert who gives businesses of all sizes the tools they need to make their mark on the web. She is the creator of the social media scheduling software Edgar, as well as social media marketing web courses like Creating Fame and Social Brilliant.

Comments

  1. Lee Carey says:

    Am I missing something here? I understand you used data to show you what wasn’t causing your subscribers to cancel (the emails). What was causing your subscribers to cancel mid-stream?

    • Hi Lee,

      I can’t speak for Laura here, but I think the burning question was less “are these emails causing our customers to cancel?” and more “are these emails reminding our customers to cancel rather than reminding them to interact with the site?” Their purpose is to be informational and drive engagement with the member site, and they seem to do just that. The Founder Friday emails are particularly loved by our members!

      As to what actually causes our customers to cancel, we gather a lot of qualitative data on this. We pose a short survey to them after they cancel, and we often followup via email. The top reasons given are exactly what you would expect: not enough money, not enough time, and they’ve finished all the material they are interested in and are ready to move on. That’s where the data from KissMetrics will become useful, answering questions such as “what do our members who stay 8 months do differently that those who only stay for 2 months?” If the latter are having trouble interacting with the site that’s something we’d like to fix.

      Thanks for the feedback, happy to answer any more questions I can!