As a business owner providing services in the digital age, one of the biggest mistakes you can make is not paying attention to your renewal rate

Regardless of the type of service you provide, a low or reducing renewal rate is a strong indication that customers do not believe they are getting enough value from your service to justify the cost of continuing the relationship. 

When you find yourself in this situation you essentially have only 2 options. You will either have to (1) reduce the price of your service to match its perceived “value”, or you will have to (2) increase its value by providing your customers with more of what they want.

In this article, I will be outlining some of the most effective strategies you can employ to significantly improve your renewal rate. 

Of course, as a software consultant, I will be angling these strategies towards software-based products and services. However, you will find that a lot of these concepts are transferable to physical and intangible services provided you have systems in place to track your customer behaviour.


Find out Why Customers Are Not Renewing


The first step to improving your renewal rate is to figure out why your perception of the value being provided does not align with the customers who choose to discontinue their subscription. 

This step is especially important in cases where your renewal rate was once high and is now on the decline without any obvious explanation (i.e., a price increase, new bugs etc.,). This reducing renewal rate is a strong indication that something external to your service has now changed your customer’s appetite, souring the taste of your current offering.


baby does not like your service


In the tech space, when faced with a problem like this, the modus operandi is to perform a series of AB tests to slowly determine which course of action will result in the optimum outcome for your renewals. This is a time-consuming exercise. One that will inevitably force you to sacrifice a segment of your customers in order to draw the data from which to act.

If maintaining a steady and reliable subscription rate is core to your businesses’ bottom line then you simply do not have time to play the guessing game. The easiest and fastest way to find out for sure is to go directly to your customers and ask them. 

Whether by survey, phone call, email or in person meetings, you need to find out what is required in order to regain and maintain their business long term. Only after you have determined this will you be able to implement a strategy to improve your subscription rate.



Leverage Customer Data to Offer Targeted Features


In order to effectively take advantage of your customer data, you will first need to have (or establish) software that is able to “segment” your customers. The ability to observe your customers in segments will highlight behaviours that are specific only to a subset of your patrons, and allow you to focus on meeting the needs of the ones that have been shown have a higher renewal rate. 

Once you have found this group, the idea is to cater your services specifically to this subset of customers. Doing so will allow you to keep and attract more members to the group of customers who already see value in the services you are providing.

Over time, this will significantly improve your renewal rate … but again, this is a long-term strategy. One that you should only pursue after you have already taken the direct approach with your customers. 


Add New Subscription Terms


If you find yourself in a position where customers perceive your service/app as too expensive, sometimes a simple change of perspective is all it takes to push them over the edge (i.e., figuratively speaking 😉). 

Yearly subscriptions, though beneficial for your business as they unlock an immediate “large” pay-out, may dissuade a lot of your customers from taking the plunge. Depending on the type of service being offered, a large segment of your customers may not necessarily be comfortable paying … let’s say $600 right now for access to your software for a year. On the other hand, this same person may be totally fine with paying $50 per month (i.e., 50 * 12 = $600 per year). 

Alternately, there is another segment of consumers who strongly dislike the concept of monthly payments and would much prefer to pay once and get it over with. 

Instead of attempting to psychoanalyse your customers, it is best to instead offer both options. 


Empower your customers with the flexibility to pick a subscription plan that suits their needs.


Automation: Send Renewal Reminders Early and Often


One of the most effective ways to improve your renewal rate is by (automatically) sending reminder notifications to your customers before the actual date of renewal. This is particularly effective for businesses in one of the following circumstances:

  1. Your software requires “offline” or “manual” payments to renew a subscription.
  2. You are unable to automatically pull funds from the customer’s card (reliably) on the date of renewal. This tends to be the case for “high priced” subscription plans (i.e., $5,000 USD or more)

If you find yourself in one of these two situations, it is best practice to send your customers 3 notifications.  


The first should be between 3 and 7 days before the renewal date. 

The second should be on the actual date when the payment is due. 

And the final notification should be sent the moment your customer’s subscription payment is overdue. 


After you have sent the final notification, there is an understandable temptation to simply discontinue your customer’s subscription. I get it. You have kindly reminded them multiple times, yet they ignore your messages and still refuse to pay what they owe. Why cry over spilt milk?


business man crying over spilt milk


Actually, this is one of those situations where it is ok to cry. In fact, it is the logical action to take.

You see, the mere fact that you require customers to manually transfer money to your account means that your service is heavily reliant on maintaining a close and personal relationships with these customers. 

Simply put, it is much more difficult to get someone to manually re-start a subscription when the funds are not automatically pulled from their account.

If possible, a better option would be to reach out to this customer using an alternate method of communication (i.e., phone call, text, secondary email address). You may come to find out that your customer was actually “unaware” that their subscription is due to be renewed. In other cases, you can consider a payment plan for this specific customer that is more in line with their current cashflow situation.

You are in a satiation where you should be doing everything in your power to maintain this relationship. No matter how difficult or unappealing it may seem, it is likely a much easier option than winning the business of a new customer who is willing to manually transfer money to your account on an on-going basis.




Essentially, if you are offering a service that is paid for through subscription it is absolutely critical that you make it a priority to hold on to as many of these subscriptions as possible

If you have not already done so, employing any of these tactics is sure to a have a positive effect on your subscription renewal rate. 

Of course, if you have a service and would like to integrate an automated subscription payment system; one that charges your clients bank account on a monthly/weekly/yearly basis, get in touch with me by using the form at the bottom of this page.

This will not only eliminate the burden of “chasing down” clients for payments, but will also provide you with an automated means of data collection; allowing you to observe trends in your renewal rate and spot opportunities to improve it by adjusting your service offering.