Dose #99: Improve Conversions By Understanding Churn

Matt here with your weekly Subscription Prescription 💊

This week’s dose dives into why you should think about acquisition strategy differently when it comes to subscriptions. Aside from the typically higher costs, subscriptions can be better for LTV when you understand what is happening over the life of the subscription.

In an effort to provide more content and expertise for the subscription community, I’ve launched this workshop series. The first one was a big hit, and the next one is going to be even better with the CMO of Obvi, Ash Melwani, joining us to talk creative and ads.

There are eight more sessions over the next several months. Free to join, and you can review content after the fact. I’ll be joined by some real pros on topics like:

• Subscription PDP design & CRO tips -

• Post-purchase experiences - Jeremiah Prummer, the CEO of KnoCommerce

• Retention tricks - Jai Dolwani, Founder of the Starters and former CMO of WINC

• Subscription Inventory planning - Pauline Shiu, VP Marketing, Finale Inventory

• Understanding LTV - Matt Putra, fractional CFO, EightX

All are geared towards helping you grow subscriptions. Each session will start with training and end with a group discussion. Come armed with questions or just be ready to learn.

Join live or access past workshops on-demand. Access the workshop here:

This week’s dose is also a full podcast episode! Listen to me ramble on and on about improving subscriptions by understanding psychology and consumer behavior.

This week’s dose is for all of my Growth and CRO friends because subscription acquisition cannot be conducted the same way as one-time purchases.

The typical ecommerce approach of building the right offer to result in the best conversion rate and contribution margin can lead to disasters for subscriptions.

Why is this the case? Let’s dive in!

Typical Ecommerce Growth

The most common approach to finding growth for ecommerce brands comes down to paid ads and email. Paid ads bring you traffic, newsletter subscribers, and purchases.

You then use email to get people who haven’t bought to buy and people who have bought to buy again.

Conversion-rate optimization (CRO) is the art of running tests to improve conversions - to get more emails and purchases.

This is critical to be successful in subscriptions as well, but can lead to disaster if you don’t consider what subscribers want.

For example, typical tests to improve conversion include lowering the price or selling a larger quantity of product.

However, low prices for subscribers often result in month one churn. Larger products might be at the wrong frequency or not get used enough to justify a renewal.

How Subscriptions Complicate Acquisition

Subscriptions feel more complex because their conversion rates are typically lower than those of one-time purchases. People are less likely to try a subscription than to buy it once, which makes sense.

So, the cost of acquiring a subscriber is typically higher, putting more pressure on our CRO efforts to drive conversions effectively.

How Subscriptions Simplify Acquisition

The opportunity in subscriptions is to get deeper insights into what our customers want and do with our products than we would with one-time purchases. The trick is leveraging these insights to improve acquisitions.

Cancelation reasons are a great starting point. People might tell you they canceled because of price, or because they have too much product, but you need to dig deeper into the why behind those reasons.

The price might be they are value seekers and not a good fit. Or they might not see enough value in the purchase. Or they may want more variety and just bought it to try it. You can build subscription experiences around these reasons to suit them better and keep them longer.

Too much product might be the wrong cadence on renewals. It may also be they aren’t using the product. Or don’t know how much to buy. Each of these reasons can be addressed during acquisition as well.

An Example of How This All Works

All that sounds good, I’m sure, but here are some examples of how you can take subscription information to improve acquisitions.

Imagine you sell pet food, and the #1 cancelation reason is too much product. You dig deeper and find out dogs of different sizes mean people don’t know what to order. You make the product page different so people select the dog's size and get a quantity of product that aligns with the dog’s size. Conversions go up 30%, and retention goes up 40%.

Imagine you sell a wine subscription, and the #1 reason people cancel is that they are tired of the subscription. You do a little more digging, however, and find out they’ve tried all the available SKUs they would like and don’t have any reason to continue. You add more SKUs, which normally is a massive headache, and retention improves.

Wrapping Up

The point of any subscription is profitability. You acquire someone and get repeat purchases for a fraction (or none) of the cost. Great CRO does the same thing, driving conversions and revenue per site visitor. The complexity of subscriptions may feel overwhelming, but when you try to understand what subscribers want, you can craft a better offer and experience.

That should be the point of any subscription program: profitability by building what subscribers want the most (that also works for your business). Let me know if you need another set of eyes on what’s going on—I’d be happy to take a look.

That’s it for this week’s dose! Be sure to join our workshop on subscriptions. Dose #100 is out next Tuesday. (ONE HUNDRED I CAN’T BELIEVE IT!!)

 - Matt Holman 🩺

The Subscription Doc