6 Tips to Navigate Cancellations in a Subscription Box BusinessNov 09, 2023
Discover 6 things you can do to navigate cancellations in your subscription box business.
Cancellations are part of any subscription box business. As much as we’d like to think all of our subscribers will stay with us forever, that’s not reality. Subscribers cancel for many reasons, most of which have nothing to do with us or our subscription boxes.
The economy is tough. Still. And people continue to have to make tough choices about how to spend their money. That doesn’t mean you can’t continue to grow your business. It just means you have to get even smarter about how you manage all aspects of your subscription box business, including cancellations.
Accepting that cancellations will happen is important for your business mindset. However, there are things you can do to minimize cancellations and navigate them effectively when they do happen.
Cancellations can be discouraging and December and January tend to be months with higher than average cancellation rates. Don’t let that get you down. Instead, focus on navigating cancellations and putting some systems and strategies in place to reduce them as much as possible.
Today I want to talk to you about six things you should do to successfully navigate cancellations in your subscription box business.
1. Understand you are always going to have cancellations.
I said it already but I’m going to say it again to make sure you heard me. And then I’m going to tell you to write it down somewhere so you don’t forget it.
You will always have cancellations.
It’s the nature of our business. When you run a subscription business, you work hard every day to gain new subscribers. You also work hard every day to keep the subscribers you already have. But you will have occasional cancellations. Everyone does.
That doesn’t mean I want you to just shrug and accept cancellations without doing all you can to minimize them. As a subscription box owner, it’s crucial that you have retention strategies in place to keep as many happy subscribers as possible. Learn more about retention strategies in this blog post.
2. Know your subscriber numbers.
There are certain numbers you have to know in your business. Numbers that have to do with the cost of goods sold, shipping costs, labor costs, and profit.
The numbers I want to talk about right now are your retention rate and your churn (cancellation) rate.
When an increase in cancellations feels heavy, discouraging, or overwhelming, it helps to know that the truth is in the metrics.
Every month you need to track three things.
- Number of subscribers you started the month with.
- Number of subscribers gained during the month.
- Number of cancellations during the month.
These numbers will help you look at the bigger picture.
Let’s say you lost five subscribers and that was the most cancellations you’d ever had in one month. You start to panic, right?
But what if losing five subscribers meant you had a 95% retention rate? And a 95% retention rate is really good! Suddenly, those five cancellations don’t feel so bad.
There is a resource inside Launch Your Box, my subscription box coaching membership, that I want to share with you. Use the Retention Rate Calculator to calculate your subscriber numbers and track any patterns. Grab this simple Excel spreadsheet below.
When looking at your subscription box business metrics:
- 95-100% Retention - Amazing! This is really, really good. Keep up the good work.
- 90-95% Retention - Very Good. You are doing awesome. Anything 90% or above is fantastic.
- 80-90% Retention - You are doing well, but could do better. You want to strive to be at 90% or above.
- Below 80% Retention - A retention rate this low usually indicates a low subscriber number or some type of disconnect with your messaging or subscriber expectations.
Knowing your numbers takes the feelings out of it and lets you focus attention where it’s needed.
3. Have someone else handle the cancellations.
Early in my subscription box owner days, I handled everything for my business. Including all the cancellations. Every time I opened my email and saw a cancellation, I’d get all the feelings. I wondered what I was doing wrong. I took it personally.
As soon as I was able, I turned the handling of cancellations over to a VA. That way I was able to focus on the numbers and what they told me rather than seeing each cancellation as a personal failure.
If you aren’t able to hire an assistant yet, try to look at your monthly numbers and what they are telling you rather than focusing on each individual cancellation.
In a recent month, I had 68 cancellations.
If I tried to emotionally process each of these cancellations individually, I would end up sitting in bed eating out of a tub of ice cream and wondering what I did wrong.
But… When I took those 68 cancellations and plugged them into my Retention Rate Calculator, I found out my retention rate for that month was 96%! In other words, I was doing great and didn’t need to worry about those 68 cancellations.
4. Know they will come back.
Statistically, December and January will be your highest months for subscription box cancellations.
Some of your subscribers may have overspent for the holidays and may be looking for ways to cut some costs. Others may have made budgeting a New Year’s resolution. Since subscription boxes typically offer “wants” rather than “needs,” we’re more likely not to make the cut.
Don’t let this affect you.
In my experience with my own subscriptions, about 75% of people who cancel at any point come back.
It’s so important to remember that how you handle these cancellations matters. Let them know you understand, give them grace, and make it crystal clear that they are welcome back anytime.
5. Build your waitlist.
I talk about the importance of building your waitlist a lot. That’s because it’s extremely important to have a waitlist and to consistently put effort into growing it.
A healthy waitlist means you have a list of people to pull from when cancellations leave you with available slots in your subscription. Those 68 cancellations I mentioned? I can send an email to my waitlist and fill most if not all of those quickly and easily.
Every time you talk about your subscription box, even if you operate under a closed model and are sold out, give your audience the opportunity to get on your waitlist.
Once they’re on your waitlist, it’s time to nurture them. Read this blog post to find out how.
6. Set up a cancellation form.
When one of my subscribers wants to cancel, they fill out a cancellation form. This not only allows them to cancel, it also provides me with valuable information that helps me run my business.
On that cancellation form, I include a sneak peek for the next month’s box with a short message to entice them to stay. The form also includes my cancellation policy and instructions followed by a section where I ask them for their feedback and reason for cancellation.
When you ask subscribers why they’re canceling and they tell you, it takes the guesswork out of it. You may be tempted to automatically assume they don’t like their box or they don’t like you, but the reason is usually something very different.
Cancellations are going to happen. It’s the nature of our business. Knowing your numbers, taking yourself out of the process, and requesting feedback will allow you to keep cancellations in perspective. Keep working hard every day to retain the subscribers you have and grow your waitlist of subscribers-to-be.
Learn from me:
- Subscription Box Blueprint eBook: This $10 ebook covers logistics from product selection to packaging to shipping. Plus a 90-day launch plan and bonus ‘Instant Scripts’ for your social media.
- Launch Your Box: My complete training program that walks you step by step through how to start, launch, and grow your subscription box business.
- Launch Your Box Podcast: I share tons of practical tips and strategies to help you start, launch, and grow your subscription box business. You’ll also hear from industry experts and current Launch Your Box members who are crushing it - get ready to get inspired!
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