hosted by: AskPat 219 Episode Transcript
Pat Flynn: What's up, everybody? Pat Flynn here, and welcome to Episode 219 of AskPat. Thank you so much for joining me today.
Before we get to today's question from Mike, I do want to thank today's sponsor, which is AWeber.com, the email service provider that I've been using for almost six years now to help me collect email addresses, and send broadcast emails and auto-responder emails to people who subscribe. This is how I stay connected with my audience, and promote things down the road. So if you'd like to get a free trial, actually, a 30-day free trial of AWeber. Check them out at AWeber.com/askpat and you can see a video from me there talking more about I use the service. Again, AWeber.com/askpat.
Sweet. Now let's get to today's question from Mike.
Mike: Hi Pat. This is Mike from AceOrganicChem.com. We offer online help for college organic chemistry students, and recently started a subscription site. We offer a money-back guarantee on the site, and it's going really well, but I just had my first cancellation the other day. So my question is about cancellation rates and what percentage is acceptable for people who are asking for their money back? I have no problem refunding it, and I got great feedback on what we can do to improve, but I'd still love to hear your thoughts on the topic. Also, anything you can throw in about money-back guarantees on products and free trials for subscriptions sites would be greatly appreciated.
Thanks for everything you do. You're such an inspiration to the “little guy” out here. I can honestly say you're the only podcast that's appointment listening for me. Thanks again.
Pat: Mike, thank you for your question and seriously for all of your support. I really appreciate that and I'll do what I can to best provide value to you here today on the show.
Cancellation, attrition rates, retention, it's all super important stuff. And if you have any sort of product that allows people to continually pay month after month, or year after year, it's really important to pay attention to what's going on when people leave. And I'm really excited . . . obviously not excited that people are canceling, but excited to know how you're handling this already. The fact that you are asking this person or these people what you could do better next time, or perhaps why people are canceling, you know it's really important to understand that information because that's going to help direct the actions that you take afterwards to obviously decrease how many people will cancel.
But there's a lot of interesting things that go along with this. And I don't have a recurring subscription product of my own, but I've been a part of many and I have spoken to a lot of people who have them and who have talked about tips and strategies for decreasing cancellation rates, and guarantees, and all that stuff. So I'll do what I can to talk about those things today.
The first thing I want to point out is that you have to understand when people are canceling and pay attention to that and start to notice patterns over time. So, Mike, you may have just your first cancellation, but over time you're going to get more. And that is just something you have to accept. People cancel. We want to do what we can to stop that from happening, but it's going to happen and we need to dissect why that's happening. Not just by asking them why they left, but also understanding when that happens. Over time when you get more, you'll begin to see patterns. Like, for example, I know a person who has a membership site, who says that he noticed that people started to drop off and cancel after the three month mark. So after three months after purchasing, a lot of people would drop off. And so he implemented a few strategies to make sure that didn't happen.
And in asking his audience why that was happening, he decided to—at the two and a half month mark, so a couple weeks before that three month mark when people sort of begin to think about “okay, should I continue paying for this? Is it still providing value for me?”—provide them with a ton of value bombs right before that typical cancellation point. So he surprises them. He gives them more content and makes it so that when they start to think, “wow, should I continue to pay for this?” It's a no-brainer. So understanding when people cancel and then doing something right before that happens to make them understand they should continue to pay with what you have to provide for them, that's really important.
Another common reason why people cancel paying is because their credit card expires. This is very common and a number of people I know . . . I don't know how they do this, exactly, I think it has to do with their payment processor, or perhaps their email service provider, whatever the case may be . . . they send an email out to people two months, or one month before their credit card expires and gives them a really quick and easy reminder to update their credit card information. This makes it so much easier for you down the road, because it's difficult to track people down after their credit card has expired, and getting them to decide whether or not they want to enter their new number in. And so making it extremely easy for them by reminding them and actually providing value to them by saying, “Hey, a couple of months are left until your credit card expires, you've been a part of this program for X number of months and we love having you. We want to continue having you on, so to make it easy for you, here's a link to update your billing information.” And that's it. So that's something you can do as well and you're probably not at that point yet, Mike, since you just started, but that's just something to keep in mind and perhaps plan for.
Another thing you have to understand is maybe there's a specific time of year that people cancel. And then you have to understand and dissect well, why is this happening? Maybe it is because people aren't interested in the topic at that time of year. It might be summer for you, since you're doing some college course work and things about chemistry and things like that. So maybe there are certain things you can do during the summer when people would cancel to help increase the likelihood that they would continue to stay on. So I'm sure you might be able to think of some creative things you could do during the summer months when people might not likely continue to pay monthly, you know, to keep them on. So what could you do then?
You might also consider that they might have already reached the end of all the content they needed, so what happens after that? So to get people to continue to become a customer, maybe you have to also think about, “Okay, what's next? What happens when people pass Organic Chemistry? What happens after that?” You know, things like that will help continue to get people on and things like that.
So now let me shift over to the guarantee. The guarantee does help with getting people who are on the fence to purchase. You know, it makes them feel a little bit safer. The fact that if they try it out and they don't like it, they can get their money back. And that's really important. I think it's smart to offer that. There are many different ways to offer a guarantee. There is the typical 30-day money-back guarantee: “if you aren't happy, we'll refund your payment, no hassle, no questions asked.” That type of thing typically works pretty well.
Now I have heard a number of people who have implemented longer money-back guarantees. For example, 60 days, 90 days, even up to a year, actually. The strategy being that when people understand that they have 30 days to try something, at the end of 30 days, that moment of purchase is still fresh in their mind and they are more likely to come to a crossroads, whether or not they're going to continue paying or not. So after 30 days they might say, for example, “Wow, okay, did I get a lot of use out of this? No I didn't really actually use it as much as I thought I was going to. I'm going to stop.” Whereas if you were to have a longer guarantee—90 days, for example—people might, within those 90 days, finally have a chance to use it the way they needed to. Maybe they need a little bit longer to get the value out of what you're providing for them. And at that point they would make a decision to continue working with you.
Or, some people say, well when you lengthen the guarantee, people begin to forget that's there's a guarantee. So by a certain amount of time, it's not fresh in their mind that they have this thing that they're paying for every month. I have mixed feelings about that particular reason, but I think the reason that I had said earlier, with people getting the value that they paid for through your course, maybe not in the first month, but in the months after that to finally see results, that's going to help them stay on longer.
Now there are other options you can do with the guarantee, for example, saying things like, “Hey, if you don't like it, we will not only give you your money back but we'll give you something else in return.” Maybe double the money or you get to keep something for free. Something like that typically works really well. We see this used in infomercials and things like that. “If you don't like it, send it back and you get to keep this little gift for free, on the house.” Things like that work, and that's why they say it. And you can implement those strategies in your online business and subscriptions as well.
Test. That's the biggest thing I want to share with you. And split test. Try different guarantees, see if any of them work better than others to drive sales, but also with attrition rates as well. So keeping track, if possible, for people who have expressed interest in cancellation, what their guarantees are like, what their experience of the course is like.
I would also make sure that, if possible—and I know a lot of software can do this, a lot of membership site software can do this—they can keep track of how people use your service and are able to understand how much of the course people have gone through, where they're at, where they might be stuck. And that would allow you, based on certain actions or inactivity, to send emails out to keep people going through the course and be likely to continue to want to pay you monthly to get through the course and through your material. So keeping track of where people are at is very important as well, and that will also help you when you start to dive into the cancellations. Why things are happening, so you can address those accordingly.
So, Mike, I hope that answers your question. I know I can't give you an exact industry standard. I think it varies between industry and you're in education, and specifically chemistry. That's going to have something different than people who are selling information in the online marketing space. So I can't give you an exact percentage. Obviously, use your common sense. If fifty percent of the people cancel within a week, there's obviously something wrong. And it sounds like you don't have quite that much of a problem and not even a problem at all. But you know, I would say in the single digits is good. I know some people who have membership sites who have quite a high churn. And I always recommend to those people to see what they can do to understand why people are leaving, but what they can do to keep people in.
Mike, thank you so much for your question. I wish you the best of luck. An AskPat t-shirt is headed your way. For those of you who have a question you'd like potentially featured here on the show, all you have to do is head on over to AskPat.com and you can ask right there on that page.
I also want to thank today's sponsor again, which is AWeber.com, the email service provider I've been using since day one when I finally got my head on straight and decided to collect emails. I didn't do that at first and it was a big mistake and I always tell people the biggest mistake I made was not starting an email list. Because many people say that's where the money is. And though I don't particularly sell on my email list, I do use it to drive traffic back to my site. I also use it to build relationships. I also use it to survey and have a direct conversation with my audience as well, and it does lead to sales indirectly down the road for me. I know a lot of people who directly sell on their email lists too. But the fact of the matter is, you got to start collecting emails, and if you're not using an email service provider, I'd recommend using AWeber. You can go to AWeber.com/askpat and you can get a 30-day trial of AWeber for $1. So check it out. Again, AWeber.com/askpat.
Thank you so much, I hope you have an amazing weekend and, as always, I like to end with a quote. And today's quote is from Anthony Volodkin, and he says, “Be undeniably good. No marketing effort or social media buzzword can be a substitute for that.” Love it. Just be undeniably good. Cheers, take care, and I'll see you in the next episode of AskPat.