Customer lifetime value might be the most important metric for subscription companies to track in 2023. Those companies that can extend subscribers’ commitments by even a few months can accelerate ongoing revenue streams. A report noted that maximizing customer lifetime value will be one of nine key trends for eCommerce companies this year.
Customer retention is the key to maximizing customer lifetime value, a crucial component of which is addressing failed payments.
Tackling failed payments is integral to customer retention strategies.
Savvy businesses know that the cost of retaining a customer is a fraction of the cost of acquiring a new one, so they regularly invest in customer retention from the instant of conversion. These strategies must work to battle both deliberate cancellations and accidental ones due to failed payments.
Traditionally, retry, account updating and dunning are the only methods for dealing with failed payments, but artificial intelligence and machine learning offer a new solution. These technologies can be used to evaluate the reasons for payment failures and work to “mend” the transactions and process payments successfully. This results in a substantial reduction in failed payments and a dramatic boost to both revenue and customer lifetime value.
Reducing subscription cancellations can help brands weather economic difficulties.
Customer retention will be a major strategy for companies navigating difficult economic times this year, and with good reason. Acquiring a new customer can cost up to seven times more than keeping an existing one, according to a report. The benefits of retention, moreover, go beyond acquisition cost savings to include the cultivation of deep loyalty, as engaged customers buy 90% more frequently, spend 60% more on each purchase and create 23% more revenue and profit than the average consumer. With so much to gain from a single solution, reducing subscription cancellations should be brands’ first step in developing a winning customer retention game plan.