In Pursuit of Lost Subscribers: A Field Experiment on Effective Resubscription Strategies

39 Pages Posted: 27 Jun 2024

See all articles by Che-Wei Liu

Che-Wei Liu

Arizona State University (ASU) - W.P. Carey School of Business

Xiaowei Liu

Zhejiang University - School of Management

Shenyang Jiang

Tongji University

Jiang Duan

School of Computing and Artificial lntelligence

Date Written: June 22, 2024

Abstract

Many subscription-based platforms struggle with significant user churn rates and seek effective strategies to re-engage lost subscribers. While discounts have shown effectiveness in various contexts, they may not suffice for re-engaging lost subscribers in subscription-based platforms. This study, conducted with a leading online imageediting platform, reassesses this approach within the context of a subscription-based business model and introduces an innovative method to fulfill users' psychological needs: providing a feedback channel. Through a field experiment, we found that financial incentives are not effective in winning back customers, but providing a feedback channel can positively increase the re-subscription rate by a substantial 40.9% relative to the mean of the control group. To gain more insight, we conducted a vignette-based lab experiment. The results indicate that while a coupon is beneficial in providing financial incentives, it results in strong perceived unfairness among users, leading to a lower re-subscription rate. Conversely, the feedback treatment can increase users' satisfaction, likely because the feedback channel grants users a way to voice their concerns and suggestions. Furthermore, our heterogeneous treatment effects analyses indicate that providing a coupon to lost subscribers with a longer prior subscription experience is more detrimental to re-subscription. In contrast, the impact of providing a feedback channel is more effective for lost subscribers with a longer prior subscription experience or a shorter unsubscription time gap. Our findings challenge conventional marketing methods and underline the importance of adopting more appropriate strategies to address user churn problems on subscription-based platforms.

Keywords: User Churn Management, Subscription-based Business Model, User Re-subscription, Coupons, Feedback Channel

Suggested Citation

Liu, Che-Wei and Liu, Xiaowei and Jiang, Shenyang and Duan, Jiang, In Pursuit of Lost Subscribers: A Field Experiment on Effective Resubscription Strategies (June 22, 2024). Available at SSRN: https://ssrn.com/abstract=4873436 or http://dx.doi.org/10.2139/ssrn.4873436

Che-Wei Liu (Contact Author)

Arizona State University (ASU) - W.P. Carey School of Business ( email )

Tempe, AZ 85287-3706
United States

Xiaowei Liu

Zhejiang University - School of Management ( email )

Hangzhou, Zhejiang Province 310058
China

Shenyang Jiang

Tongji University ( email )

Siping Road 1500
Shanghai, Shanghai 200092
China

Jiang Duan

School of Computing and Artificial lntelligence ( email )

Chengdu
China

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