Thanks to advanced technology, organizations have access to all kinds of data like consumers’ demographic, purchase history, and lifetime value that serves to help them personalize their customers’ experiences. And with AI and machine learning informing that data even further, we’re now also able to predict which subscription customers are at risk of churning and find out why, in order to markedly improve their subscription experience and increase merchant revenue.

So why do we care about churn so much in the first place? When subscribers churn, it’s clear that something’s not working and they’re unhappy with your working relationship. We’ve found that overstock is by far the most common reason people cancel subscriptions — Over 32% of all subscription cancellations are due to customers being overstocked. You might be familiar with the frustrating feeling when your next order of facial cleanser arrives way before you’ve used up the supply you already have. Bottles everywhere! Instead of delaying the order, consumers are likely to cancel the subscription in order to prevent further product excess.

As a retailer, this is the last thing you want! Churn prediction is also an increasingly important personalization factor, as it drives a customer’s lifetime value. Retaining customers unlocks additional revenue and allows for higher subscriber acquisition costs, which is increasingly necessary to earn back what was spent to acquire the subscriber. According to HubSpot research the cost of customer acquisition increased by over 50% over the past five years. If customers who were overstocked were convinced to receive even one more order it would on average increase merchants’ annual gross merchandise value by 5-15%. 

Companies are in much better shape if they work to better understand their consumers and their journeys, keeping their engagement up and fortifying the customer relationship along the way. Consumers are happier, feeling seen and understood by their retailer instead of pressured to buy more, and organizations spend less in new customer acquisition costs. Everybody wins!

In too many cases, canceling a subscription is easier than just delaying an order to arrive later, when you do need the facial cleanser. There’s quite a bit of friction involved in adjusting order cadence — 47% of customers interviewed after leaving a subscription due to overstock said if they had an easy way to pause or skip an order they would have stayed in the program. So we set out to remove that friction. 

Consumers can delay an order with one click, or seamlessly change the cadence to deliver less frequently rather than automatically cancel their subscription.

Our Anticipate AI engine was created to calculate the probability of a customer churning and sends them a retention-focused email, reminding them that their next shipment is coming up or asking if they’re overstocked to make postponing an order easier than canceling their subscription.

But why get AI and machine learning involved in the first place? Why not just send all customers a reminder email when their next order is about to ship? 

We’ve found that if retailers target people who weren’t planning on churning with churn prediction emails, their likelihood of cancelling actually goes up. As with most aspects of retail, a one-size-fits-all approach for targeting customers with churn prevention emails just won’t cut it. Relying on AI identifies the folks who are actually at risk of churning ensures that your churn prevention efforts do what they’re supposed to do instead of backfiring and losing you business.

As more folks are at home and conscious of their spending these days, it’s also as important as ever to prioritize Relationship Commerce in order to provide helpful, personalized customer experiences that don’t overwhelm consumers or lead to an excess of product. Anticipate AI is paving the way for brands and retailers of all kinds, ensuring that they’re equipped to best serve their customers and save themselves plenty of churn headaches.