When users feel that a business understands their individual needs and offers personalized recommendations, they are more likely to continue their subscription. Proactive recommendations not only provide users with cost-saving options but also demonstrate that the business values their satisfaction and aims to provide the best possible experience.

Yet very few online services do this today. In part, this is due to the “let sleeping dogs lie” mindset that is pervasive within online businesses. It is also hard to do this properly. Studies show that users who switch to a lower priced plan have a 25% higher lifetime value and 50% higher NPS than users that do not.

Within the next year, we expect that the vast majority of media & entertainment, news, sports, and health & wellness services will offer this capability. Proactive recommendations can have a significant impact on user retention and satisfaction for subscription businesses.

The simplest first step is to identify users who may be considering canceling their subscription due to cost concerns. You can intervene with targeted recommendations for lower price plans. This proactive approach shows users that the you are willing to work with them to find a solution that meets their needs while still providing value.

Here is a “How to downgrade” playbook:

1. Start with data-driven analysis: Utilize user data and analytics to understand user preferences, usage patterns, and pricing sensitivity. It is much easier to identify segments of users who may benefit from a lower price plan and tailor recommendations accordingly.

2. Setup segmentation and targeting: Divide users into different segments based on their needs, preferences, and pricing preferences. The ‘safest’ starting point are users with declining usage and above average lifetime value.

3. Test multiple pricing strategies: Conduct pricing experiments to determine the optimal pricing strategies. Often times, a  payment plan can have the same impact as a lower price.

4. Continuous optimization: Continuously monitor and optimize the effectiveness of proactive recommendations. This involves analyzing user feedback, tracking retention rates, and making adjustments to the recommendation algorithms to ensure they remain effective over time.

Through our efforts with some of the leading consumer subscription businesses we see that allowing downgrades is a net positive. Talk to us to see how we can help your business or start using the built-in multi-step downgrade prompts within Redfast.