Paypal subscriptions -- HIGHER CANCELS than with non-Paypal sign-ups!! Here's why....

[MarkB]

We've been running paid membership sites (related to business training) since 2001, accepting Visa/MC/Discover/etc via CCBILL. We moved our backend software to aMember, and at the same time changed system to process thru Paypal. (using regular Paypal with IPN; not using Paypal Pro)

 

1. Used CCBILL (Visa/MC/Discover/etc) for 7 years

2. CCBILL's fraud scrubbing "too tight" therefore many signup non-completions

3. Now using Paypal with IPN, for 3 months now

4. Paypal easier & more flexible for customers

5. More signup completions with Paypal

6. More un-subscribes with Paypal !!! <----- My Issue is this

 

 

Customer Loyalty Offers

 

CCBILL had some cool features to "save" the member who was thinking of canceling their membership. For example we could setup Customer Loyalty Discounts, which are automatically offered to members after they hit the CANCEL button. It gives them a chance to continue on their subscription at 30% off, or 50% off, or whatever discount we setup. Stats:Almost half of all who attempt to cancel, accept the Customer Loyalty offer.

 

 

Why More CANCELS with Paypal

 

Now that we're using Paypal, it is extremely easy for our members to cancel--they just log into their Paypal account, go to their Subscriptions list, then click. That's too damn easy! And we don't have the opportunity to present them with a Customer Loyalty offer before we lose them.

 

Another thing (which btw I don't lose sleep over)... Many customers are aware that some membership sites do not use IPN to update the membership site's member "active/non-active" status after the cancel... therefore the member can be not paying, and still have access to the membership site. Customers know they can * many membership sites this way, similar to how they might buy an ebook, then do an immediate refund request,and they still have the ebook on their PC.

 

Mark

[MarkB]

ps --

 

So now we're moving from aMember to WHMCS,

and am considering using a merchant account (thru CDG Commerce).

 

Hopefully, that will reduce the number of un-subs via Paypal's "Easy Button"

 

 

***I welcome your comments

***Especially from anyone experienced with attrition reduction

[lostinspace]

You may find this harsh but...

 

Happy customers don't tend to want to leave. And sometimes, it's just business.

[MarkB]

You may find this harsh but...

 

Happy customers don't tend to want to leave. And sometimes, it's just business.

 

lostinpace,

 

With all due respect, your comment is based on ignorance of

not being experienced in running a medium or high volume membership site.

 

 

.. > Happy customers don't tend to want to leave.

 

Happy customers or not, attrition always exists.

Member "hold time" can be 2 months, 4 months, one year, whatever.

(in our own experience, we have much higher than average hold times)

 

Case in point, CBS Marketwatch. Like other mega membership sites,

they bring in hoards of new members. Their advertising and branding

crosses over to print and tv (often advertising in their own

owned properties) which results in a constant flow of mega signups.

Gaining new customers is not the challenge. It's all about attrition reduction.

 

These large membership sites hire the big-gun marketing firms,

but not to bring in new customers. They hire them to work on

reducing their membership attrition.

 

Mark

 

ps --

 

lostinspace, predicting that your next posting would be something

like "but if you keep your customers happy, there won't be attrition!",

I will head that off with a few comments here. First, there will always

be attrition, period. There are several ways to reduce attrition,

including but not limited to: (1) Advertising "Limited memberships."

If they cancel, they may never be able to re-signup. (sorta like

limited memberships to an elite country club--with some you must

wait for an existing countryclub member to die before you can get in);

and (2) Keep adding new content like crazy. And stay in your members'

faces, reminding them... Next month, 7 new ebooks on stock trading;

Next month exclusive interview with Dr. Phil; next month free weight loss

reduction software, that normally sells for $295 here: http://www.blahblah.com.

(3) Pain of Disconnect. If they cancel,they lose something. (e.g. their email

autoresponder account, their hosted audio, their toll-free testimonial recording

line) And there are other methods to reduce attrition / increase hold time.

[uberhost]

Happy customers don't tend to want to leave.

 

MarkB has his act together, knows his stats, and sounds like a totally professional entrepreneur, whereas your comment makes you sound just a bit "lostinspace".

 

Customers often click "cancel" because they want to save themselves the recurring costs, so it makes sense to offer them a discount to entice them to stay. If they were "unhappy" customers, they probably wouldn't stay at any level of discount.

[MarkB]

MarkB has his act together, knows his stats, and sounds like a totally professional entrepreneur

 

thanks man, that's just how I told you to say it.

I'll Paypal over your $1 shortly...

[MarkB]

So now we're moving from aMember to WHMCS,

and am considering using a merchant account (thru CDG Commerce).

 

Hopefully, that will reduce the number of un-subs via Paypal's "Easy Button"

 

 

***I welcome your comments

***Especially from anyone experienced with attrition reduction

 

 

Anyone using their own merchant account now,

who formerly used Paypal....

or anyone who's running a membership site...

 

PM me if you'd like to form a mastermind group.

 

Mark

[lostinspace]

lostinpace,

 

With all due respect, your comment is based on ignorance of

not being experienced in running a medium or high volume membership site.

 

 

.. > Happy customers don't tend to want to leave.

 

Happy customers or not, attrition always exists.

Member "hold time" can be 2 months, 4 months, one year, whatever.

(in our own experience, we have much higher than average hold times)

 

Case in point, CBS Marketwatch. Like other mega membership sites,

they bring in hoards of new members. Their advertising and branding

crosses over to print and tv (often advertising in their own

owned properties) which results in a constant flow of mega signups.

Gaining new customers is not the challenge. It's all about attrition reduction.

 

These large membership sites hire the big-gun marketing firms,

but not to bring in new customers. They hire them to work on

reducing their membership attrition.

 

Mark

 

ps --

 

lostinspace, predicting that your next posting would be something

like "but if you keep your customers happy, there won't be attrition!",

I will head that off with a few comments here. First, there will always

be attrition, period. There are several ways to reduce attrition,

including but not limited to: (1) Advertising "Limited memberships."

If they cancel, they may never be able to re-signup. (sorta like

limited memberships to an elite country club--with some you must

wait for an existing countryclub member to die before you can get in);

and (2) Keep adding new content like crazy. And stay in your members'

faces, reminding them... Next month, 7 new ebooks on stock trading;

Next month exclusive interview with Dr. Phil; next month free weight loss

reduction software, that normally sells for $295 here: http://www.blahblah.com.

(3) Pain of Disconnect. If they cancel,they lose something. (e.g. their email

autoresponder account, their hosted audio, their toll-free testimonial recording

line) And there are other methods to reduce attrition / increase hold time.

Well worth my 2 cent reply *confused*.

[lostinspace]

MarkB has his act together, knows his stats, and sounds like a totally professional entrepreneur, whereas your comment makes you sound just a bit "lostinspace".

Thank you for pointing out the obvious about MarkB and troll bating the thread. You DEFINITELY added 1 cent more than my post.

[mysmallbizu]

I use both cc and paypal and yes there are instances where it might be easier for someone to discontinue a membership becuase they can just cancel a paypal subscriptions...

 

but... a couple of ways to reduce your churn rate is to build a "continuity program" or "forced continuity" program into your membership site or hosting business.

 

**** Might be an good thread to start and discuss different ways we are all building continuity programs into our businesses****.

 

My example is simple... I also started out with amember.com for billing.

 

It was great from my membership site that started by selling information only, average membership was 7 months. (http://www.mysmallbizu.com ). In order to help keep clients longer I offered hosting to a select group of existing members.

 

That was a couple of years agon and now very few members leave. In fact my churn rate has been dramatcially reduced.

 

Today all of my monthly "Membership Levels" include hosting and the billing is done thru http://www.whmcs.com not amember. We use hosting as a form of contintuity.

 

Most information marketers that I've seen use "new info" as their continuity program. This can be difficult as you are always responsible for coming up with something new each week or having some kind of teleclass or event to promote to existing members.

 

A way around this is using software that includes community features into your membership site, ( we use joomla and community builder which you can see in action at http://www.mysmallbizcommunity.com ) to generate "UCG" - User Generated Content - that helps to keep the members active and interested in what other members have to say.

 

Just my 2 cents but from what I've learned from the hosting business is that "service, space and bandwidth and a support forum" are NEVER a great continuity builder, yet that's what most hosts offer!

 

At the end of the day the same rules apply to any business wheter it be information marketers or your business as web host. Make the cost of leaving higher than any percieved cost of staying!

 

Expect The Best!

[ChrisGooding]

Just to add my tuppence (Yes I'm English )

 

I fully agree with your comments regarding customer retention, after all anyone who thinks keeping customers is any less important than getting new ones is a fool.

 

Now.....

 

We were using Protx, however found that the accepted cards were too restrictive, plus we needed the option of Paypal for our customers, so we added paypal, and eventually faded out using protx.

 

We initially steered away from paypal subscriptions, as it seemed the better option as you outlined, however, we were plagued with people forgetting to pay their invoices. Unfortunately, this is down to people presuming all would be fully automated each month.

 

As such, we have moved back to paypal subscriptions method.

 

I must say, I haven't noticed a difference between the 2 regards to customer retention, although as I wasn't looking for it in particular any conclusion I gave would be in part speculation anyway.

 

Although, I will be looking out for it now

[uberhost]

Thank you for pointing out the obvious about MarkB...

 

You're welcome. Sometimes things that should be intuitively obvious to the most casual of observers are simply missed, and I am glad to help you out in this case.

[MarkB]

Update:

 

Last week week, Paypal's financial security/risk V.P. appeared on the Donny Deustch show (on CNN channel?) where Donny asked him flat out whether, due to the current economic crisis, Paypal was getting more returns/chargebacks from people who normally wouldn't have done so.

 

(in other words, someone is strapped for cash, so they log into their Paypal account and with a few mouse-clicks they request refunds for several recent purchases, and wa-la! instant cash in their pocket)

 

Paypal's answer was Yes, they are seeing more returns & chargebacks, most likely due to the fact that folks needed some quick cash.

 

If you're a Paypal merchant who has experienced increased returns/chargebacks apparently due to the economic crisis, please chime in.

 

Mark

[handsonwebhosting]

Hey Mark,

 

Well we're definitly seeing more paypal unsubscribes, and even so much as people claiming fraud (after having hosted with us since March 2008 and submitting tickets etc). Granted we're still fighting that one with Paypal as we have IPs, ticket responses etc to go with, but we are definitly seeing more cancels these days.

 

Even with just regular credit card clients. We're seeing a lot more people who had HOBBY sites or sites that they just didnt' know what to do with yet, that are cancelling. They're keeping the domain, but killing the site (at least temporarily).

 

We've questioned a few users and their responses have been the economy, no need for the site, and that they will likely set back up again. We're not seeing transfers to other companies, just people temporarly killing their site to save a few dollars I guess.

[Styles]

I'm seeing the same. A lot of fraudulent orders (more than before, but there being caught). A lot of chargebacks, but WHMCS' proof via transactions really helps. You just have to fight for the pennies per client.

[zonker720]

Hi Mark,

 

Your post raises some really interesting issues. We are currently building a membership site. I was planning to use EasyMemberPro because it auto suspends a subscription when the PayPal subscription in cancelled. (It seems a bit more up to date that AMember)

 

Do you know a way that you can get WHMCS to automate the suspension of service?

[chickendippers]

That seems a bit unfair seem as a PayPal subscription is cancelled just by changing the funding source, and you then can't recreate a new subscription 'till the rebilling date.

[Nexxterra]

Have you ever noticed that in pretty much any business the accounting department is tucked away in some office and the accounting staff rarely rub shoulders with your clients?

That is because MONEY is a bi-product of your successful business, not the product! do what you do, listen to your customers, adapt to their needs and in the end you will retain as many clients as possible.

You will lose some, thats what ongoing marketing is for. I had a client go through some hard times, I credited his account for 1 year of hosting, about 9 months later things changed for him, there was activity on his account, a few months later his invoice was sent out, he renewed and has been with me since...

For most of us here, our servers have a fixed cost, not a per client, so we can do what it takes to keep customers in tough times! this way they wont go to godaddy in 6 months when their lives change!

Happy New year and good luck in 2009!

I hope we can all meet back here in December and chat about what we did to get and keep our valuable customers!