Understanding and Combating Subscription Video Churn
Subscription video churn is a constant battle in the OTT industry. In fact, according to research done by Cleeng, “churn is unequivocally the number one problem for most SVoD publishers.” Facing this challenge begins with understanding the reasons subscribers churn, from genuine dissatisfaction to unintended credit card declines. Combating it requires individual strategies that are based on subscriber and engagement data and tailored to the different types of churn.
What is Subscription Video Churn?
The rate at which subscribers leave your subscription video service is called the churn rate. This is the number of subscribers that have canceled in the last 30 days divided by the number of total paid subscribers.
Number of total paid subscribers
The churn rate is a primary indicator of the health of your business and how successful you are at retaining your existing customer base. Most businesses spend a lot of money and effort recruiting new customers, so retaining them with a low churn rate is essential to running a successful subscription service.
Types of Subscription Video Churn
To better manage your churn rate, it’s important to understand how customers leave a service. Typically there are two types of churn:
- Voluntary. Customers who choose to cancel the service.
- Involuntary. Customers whose service is canceled due to failed payment methods or natural expirations that are not renewed.
Understanding the reason cancellations happen will help you focus retention efforts in the most productive areas. Furthermore, it may also help you avoid payment vehicles or gateways that are less effective at processing payments or retaining customers.
Below is a graph from Brightcove Audience Insights that allows you to view the impact of voluntary and involuntary churn and identify trends or anomalies that lead to spikes:
Fig. 1 – The Lost Customers Per Day Insight shows voluntary and involuntary churn modeled over a period of time.
How to Combat Voluntary Churn
High voluntary churn usually reflects a higher dissatisfaction with the service. Gathering feedback from both active customers and those choosing to leave can help determine the cause of their dissatisfaction:
- Is it the price of the service?
- The quality or quantity of the content being offered?
- Other factors?
Understanding the reasons will allow you to be more targeted in how you message and promote content to your subscribers, ensuring they are receiving maximum value for their subscription fees. It also enables you to be more effective with your save and win-back campaigns.
For example, knowing the videos they watched and their favorite genres allows you to educate them about a new season, a show in the same genre, or a similar class. However, when building campaigns, be sure to look beyond video views per title for opportunities. Dig into how the audience is engaging with the title before including it in your campaign, otherwise there’s a risk of promoting a video that isn’t holding the audience’s attention.
Coupling churn numbers with engagement metrics allows you to be more predictive and take action to save customers. Brightcove Audience Insights allows you to look at data through many dimensions.
For example, you can look at heartbeat metrics (video views per day, audience size per day, etc.) over time and get a view into the engagement of your subscriber base which will help find indicators of churn. Another way to look at that data is to view the engagement over the lifetime of your subscribers. You can use this metric to monitor the percentage of users coming back on a monthly basis over the history of their subscription. If those percentages go down, you could be headed for a problem and will need to take action to re-engage your base.
Fig. 2 – Keeping track of weekly and monthly engagement of your subscribers over time is helpful to find indicators of churn.
How to Combat Involuntary Churn
While it may seem that involuntary churn is more difficult to combat, there are tactics to reduce the number of people leaving the service in this manner. For example, there are two categories of payment decline: hard and soft declines. The type of response should inform your method for retrying a card or re-engaging the customer.
- Soft decline. This usually means the credit card is expired, over the limit, late in paying the bill, etc. Developing retry mechanisms that wait a day or so to reprocess the card may resolve the situation. Furthermore, it allows you to retain those customers with minimal financial risk and without interrupting the customer’s experience.
- Hard decline. This usually means the credit card is lost or canceled, and they have very little to no chance of being successfully retried. You are better off employing a dunning process, where you immediately and directly communicate with the customer to let them know of the problem and have them take action to maintain their service.
How to Prevent Churn
One of the best ways to combat subscriber churn is to identify “at risk” users and stop churn before it starts. Every subscriber type, even those who have been active for a long time, can swing from “safe” to “at risk” if engagement levels drop. But two particular groups pose a greater risk than others: users who are either idle or inactive.
It goes without saying that these users are already disengaged from your offering. This could be for a number of reasons, and truly understanding subscriber engagement is half the battle when it comes to mitigating the risk of losing them. But knowing what action to take also means knowing what makes these user groups different from the rest.
Identifying Idle and Inactive Users
Idle and inactive are two of six subscriber categories based on their engagement status that you can find in Brightcove Audience Insights. This means we identify at-risk subscribers based on their account activity rather than relying on metrics such as total number of streaming hours or total views which don’t tell the full story.
- Idle users. Those with no views in the last four weeks but at least one in the prior eight weeks.
- Inactive users. Subscribers with no views in the last 12 weeks but at least one in the last year.
It may be tempting to immediately re-engage both user types and remind them of the value your service brings, but idle users need to be approached very differently to inactive users. Otherwise, you’ll run the risk of triggering the churn event you’re trying to avoid. Instead, you can use data-driven insights to personalize the re-engagement experience and increase the likelihood of winning them over.
Re-engaging Idle Users
Idle users have the greatest risk of voluntary churn. One of the most common reasons why they’ve fallen idle is that they’re not seeing enough value from your service. In other words, they may have finished watching the blockbuster content that lured them in but haven’t explored the rest of your content library after that. Or they’ve watched the vast majority of your lead assets and now mistakenly feel they’ve seen everything your service has to offer.
You’ll want to take action fast, so knowing what content will have the desired effect is key. This means polling your content consumption data to understand what other users like them, who have watched the same blockbuster content they have, gravitated to next and what assets held their attention most.
This is easy to do with Brightcove Audience Insights. Using insights from Attention Index and Content Explorer, you can accurately identify assets that would help lure idle users back into the fold based on what they’ve watched from your service so far. Also, consider identifying the hidden gems that idle users haven’t seen but would be interested in. This is a powerful way to demonstrate the broader value of your platform.
This data-driven analysis should inform your targeted outbound marketing efforts. From there, approach idle users just like any other marketing campaign. Curate a tailored re-engagement funnel spanning push notifications and email outreach and guide them to content personalized to their interests, pulling them back to the re-engaged category.
It’s also worth considering how frequently you reach out to these users. In our experience, the lifetime value for idle subscribers is 30-50% lower than engaged users. If your standard outreach cadence is every three or four weeks, try increasing your messaging to idle viewers to once a week until they’ve re-engaged fully.
Re-Engaging Inactive Users
Inactive users are different. Often, they were drawn to your service for something specific. This may have been an exclusive show or the sports season you had rights to. Either way, the outcome is the same: these users have become inactive but have seemingly forgotten to cancel their subscription.
Inactive users tend to have a higher lifetime value than idle users, reflecting their longer tenure with the service. But putting them into a high frequency re-engagement funnel could just as easily remind them about a subscription they didn’t know they still had.
A better way is to treat inactive users as if they’ve already unsubscribed. Don’t just add them to your existing marketing efforts. Instead, run a win-back campaign when new content they’re interested in becomes available (i.e. during the run-up to new episodes of the TV show they binged on or the start of the next sports season).
There are other tactics you can use to combat and prevent subscription video churn, but the most effective ones require a harmonized dataset combining subscription and revenue events with video views and metadata. The story your data tells should be presented clearly where your key actions are evident and easy.