How a Premium Subscription Service Decreased Churn of Their Most Profitable Customers

Morgan Cooper

Results from first retention campaign using Ocurate:

$23,000

increase in gross profit by mitigating churn of high LTV customers

$14,400

in savings by not investing in unprofitable customers

A premium subscription brand that sells health food was experiencing high month-over-month churn, and their existing toolset was unable to identify individual customers who would respond positively and be a better target for retention. 

Challenge

A profitable subscription business relies on long-term customers; when too many customers churn monthly, a brand faces higher acquisition costs and profit forecasts that vary month to month. The best way to retain customers is to motivate customers with a high potential lifetime value (LTV) to stay because they’re the ones that will be the most profitable.

The food service brand faced four main challenges: 

  • High month-over-month churn
  • Limited understanding of the profiles of their high-value customers
  • Inability to individually identify high-value customers
  • Sending the same promo to every customer

The brand did a lot of proactive subscriber outreach to try to reduce churn and build rapport with their new customers. 

  1. The brand maintained the flow of communication in the eight to 12 weeks after a customer’s first purchase
  2. New customers received an order confirmation, a product shipping notification, an educational email about using the product
  3. Customers received a promotion to trigger a second purchase
  4. A customer service representative sent a personalized check-in email 21 days after purchase. 

But because the brand did not understand who their high-value customers were, they were unable to target those customers individually. This resulted in the marketing team sending out identical promotions to both high-value and low-value customers, which is a strategy that can sometimes push high-value customers away. 

In a bid to increase retention, the brand invested in a churn tool, but it predicted churn at the purchase level, not the individual level. The brand knew they needed to refine their targeting to customers with the highest LTV, so they segmented their customers based on purchase value and purchase frequency, but that simply wasn’t enough data to accurately predict who would churn.

“We are all about personal high-touch communication, but it’s not scalable or fiscally responsible to do that with each customer.”
- Customer Success Team

The brand wanted to send out handwritten letters to customers in an attempt to reduce churn, but those efforts are not scalable. To make it more effective and scalable, they wished they could identify customers with the right personality for such a personal touch. They simply did not have the data to know who to target, when to target, and why to target. 

The brand set a goal to understand which customer segments were most profitable, identify VIP customers independent of purchase history, and accurately identify profitable customers at risk for churn that can be retained with intervention.

Results with Ocurate

It is a truth, universally acknowledged, that some customers will churn no matter the offers a brand sends to them, and many of these reasons may be out of the brand’s control. For instance, some customers will churn because they don’t like the taste of the brand’s food and no matter what promo you give them, they will not come back. Ocurate stepped in to help the premium subscription brand identify which customers had the highest LTV and which could be retained with an intervention. This would maximize profitability without wasting resources on customers who would churn no matter what, or on customers who would stay with the brand in the absence of intervention.


Ocurate leveraged its deep learning framework and unique data on 260 million adult Americans  and applied it to the brand’s customer base to create a profile of the brand’s highest value customers. The profile included insights tied to foundational personality traits (such as neurotic or compassionate), behaviors (such as geographic distribution), and attitudes (such as political preferences).

This is a unique differentiator Ocurate provides to brands. By combining the brand’s customer data with a robust dataset of in-depth behavioral and attitudinal profiles for 260 million American adults, Ocurate can create nuanced, well-rounded profiles of a brand’s ideal, profitable customers. 

Ocurate identified key points in the brand’s funnel on when and how to intervene based on predicted LTV and behaviors. In their first retention campaign, Ocurate identified 6,300 high LTV customers that could be retained with intervention. They further segmented those customers into three categories with corresponding high-impact actions to take: 


The data also showed that high LTV customers are not impulse buyers, so sending blanket promos to trigger sales are not the most impactful tactics.

The food service brand estimates a $23,246 increase in net profit from this single campaign. By contrast, if low LTV customers received the same promotion, the result would have been a net profit loss of $14,414.

Taking action on the correct segment of high LTV customers is incredibly important because individuals react differently to the same promo depending on insights that most brands simply don’t have from their customer data alone.

Ocurate generates such detailed insights and identifies more than who’s at risk of churn; they work with brands to identify specific actions to take with each customer segment. Leading brands know LTV is a powerful organizing principle, but it's real impact comes from taking action. And that’s Ocurate’s advantage: actionable LTV to accelerate profitable growth.