Share Article

Copy
Metrics

Delay Retention Rate: The Subscription Metric You Didn’t Know You Needed

Retention is critical in subscription ecommerce. Discover a new metric that measures the success of offering delays.
July 7, 2022

This might sound counterintuitive:

One proven way to boost retention is to make it easy for your customers to not get your product.

Not a permanent end. That would be counterintuitive! Just a pause or delay in the cadence of deliveries.

Customers sometimes need a break from the product. They might be going out of town and won't need the shipment to arrive while away. Sometimes they have unexpected expenses that mean they need to cut back on spending for a bit. And, this is a common one: sometimes they have more of your product than they need and don’t want more until they’re done.

Whatever the reason, allowing customers to delay a subscription helps you save a potential cancellation and retain the customer. It gives them the flexibility they need to stick around.

This article addresses how delays can help you boost retention and increase LTV. We'll also introduce a new metric the ARPU team*, which spends excessive time obsessing over the value of flexible subscriptions, has created to measure the impact offering delays has on retention: the delay retention rate.

*If you’re not familiar with ARPU, we replace Recharge’s upcoming charge notification with custom emails offering 2-click upsells and delays. 

First, Here’s Why Retention Matters for Your Brand's Profitability

Retention is critical in subscription ecommerce.

Churn Buster co-founder Joelle Goldman says that a focus on retention is the biggest trend she's seeing in the subscription ecommerce industry right now (June 2022, in case you’re reading this much later and times have changed).

Why is that?

Part of it comes down to the rising cost of acquisition. The competition for winning over new customers–while still a worthy endeavor–will only continue to rise.

"Look at these numbers, and then tell me that you're not going to prioritize getting your subscriber emails in place," Nikki says. "These emails are super critical to succeed at subscriptions."

Many brands have responded to this by dedicating their attention to the customers they already have. Nikki Elbaz, the copywriting expert behind brands like Shopify Plus, Resident Home, Four Sigmatic, and more, explained some positive outcomes that occur when merchants focus on retention:

  • Save on acquisition. It’s 5X more expensive to acquire new customers than retaining them.
  • More bang for your buck. A 5% increase in retention can turn into a 25-95% profit increase.
  • Better chance of success. You have a 60-70% success rate selling to existing customers versus 5-20% to new customers.

Focusing on retention produces a ripple effect that extends into your average orders and customer lifetime values. You end up with more people sticking around for longer, and willing to spend more money.

Email plays a big role here because it allows you to foster customer relationships and keep them engaged with your brand. "Look at these numbers, and then tell me that you're not going to prioritize getting your subscriber emails in place," Nikki says. "These emails are super critical to succeed at subscriptions."

What Causes Churn?

Joelle (Churn Buster) says, "You kind of have to attack retention from the ground up." She means that you have to know what's causing people to leave your brand in order to fix it.

Sometimes, the customer doesn't mean to cancel. This "involuntary" or "inactive" churn happens when payments fail because the card expires or another unaddressed error.

Other times, the customer actively chooses to cancel their subscription. Recharge has identified 9 common reasons this happens:

  • Lack of rewards for customer loyalty
  • A dip in quality (perceived or real)
  • Price increases
  • Product fatigue
  • Change in financial situations or spending habits
  • Found cheaper competitors
  • Switched to a competitor with a better product or service
  • Poor customer experience
  • An inability to change or edit subscriptions

At ARPU, we've discovered that addressing the last point affects many of the others positively and leads to greater retention across the board.

Flexible subscriptions offer better experiences, keep customers engaged with your product, and help you stand out amongst competitors. Delays also reduce the churn that comes when customers have too much product.

We've come up with a metric to quantify that success: delay retention rate.

Now, What is Delay Retention Rate, and How Can I Use it to Measure Churn Reduction?

Delay retention rate measures the percentage of customers who resume subscriptions after delaying them. You can consider it an indicator of how many customers were saved by offering subscriptions since they would have likely canceled if the delay option was not there.

Here's how you calculate it:

Take the number of successful orders after a delay, divide it by the total number of delays, and then multiply that number by 100.

Delay retention rate measures the percentage of customers who resume subscriptions after delaying them. You can consider it an indicator of how many customers were saved by offering subscriptions since they would have likely canceled if the delay option was not there.

We dove into the data of ARPU users in 2021 and found that our merchants averaged over 60% delay retention rate. Top performers reached up to 80%.

An Example of Delay Retention Rate in Action: Jimmy Joy’s Delay Option Helped Cut “Too Much Product” Churn in Half

Jimmy Joy is a meal replacement company that focuses on delivering food that's good for the customer and good for the planet while maintaining convenience and affordability. They use Shopify with Recharge to offer subscriptions.

Before offering delays in their upcoming charge notification, their churn reports indicated that 45% of total churn was from subscribers who had too much of the product and weren’t ready for more.

When they began using ARPU to offer easy delays (it takes a subscriber 3 clicks), they cut that number in half, to 15-20%.

A majority of Jimmy Joy's customers who chose to delay stayed subscribed. The brand has a delay retention rate of 58%.

The delay option gave subscribers an overall better experience with the brand. They could keep getting the product they loved without being overwhelmed.

What Jimmy Joy Did to Get These Numbers (and the Bonus Affects that Followed)

Getting these results didn't require a fundamental change in the business model or an overly complex strategy. They just added a simple call to action to their most read emails: the shipping soon (aka upcoming charge) email.

The Jimmy Joy team capitalized on the 70% open rate they were getting on these emails with ARPU. They knew their customer base well enough to know that having too much already was causing a large portion of their churn, so they included a big, clear message in the copy:

"Need to Delay? That's okay."

Beneath that headline, they use a CTA button (Delay) that takes subscribers to an ARPU page with new delivery date options and then to a final CTA to confirm the delay. The process requires only 3 clicks. 

Start Measuring the Success of Offering Delays

The Jimmy Joy story isn't an anomaly. The brand didn't have a magic formula. They had a strategy for using their most widely read emails to reduce churn.

ARPU turns your shipping soon emails into opportunities to improve retention, AOV, and LTV through 2-click delays and upsells.

We’re in the process of making each merchant’s delay retention rate visible in an analytics dashboard, so you can see the impact they have on your business. Additionally, we’re going to surface most delayed products, so you can consider the subscription cadences you recommend.

Merchants profit when they make it easier for subscribers to adjust their orders. Subscribers appreciate the flexibility and the improved brand experience, which leads to higher retention rates from happy customers that spend more money.

We’re in the process of making each merchant’s delay retention rate visible in an analytics dashboard, so you can see the impact they have on your business. Additionally, we’re going to surface most delayed products, so you can consider the subscription cadences you recommend. Expect these changes in Summer 2022. 

Interested in seeing how easy delays could increase customer LTV? Test the benefits of delayed orders and easy upsells with our free 14-day trial, or visit our proof page to hear more stories about brands like yours.

Download Guide