Know Your User: How to Improve Customer Retention for Your CTV Channel

Tips & Tricks
Table of contents

    Launching a CTV channel is always an exciting endeavor. Exploring new markets, accumulating large subscriber numbers, enticing new users with lucrative offers, bringing in exclusive shows – there are hundreds of previously researched methods that you can use. 

    While acquiring new users is critical for any new project, it is easy to overlook a potential stumbling block: losing existing customers. While attempting to attract as many subscribers as possible, many channels fail to retain their user base, resulting in unsatisfactory statistics, losses and in some cases, the termination of a promising project.

    Let’s discuss the importance of customer retention and exactly why high turnover may spell doom to a project. 

    Why customer retention is important 

    The churn rate is the percentage of users who leave your channel in comparison to your total user base. From here, two more factors come into play: Customer Acquisition Cost, or CAC for short, and Lifetime Value, LTV. Generally speaking, the upfront acquisition cost comes at a high price that has to be offset by the lifetime value of a customer. If that fails, you will not only lose a customer’s lifetime profit, but you will also inadvertently raise the subsequent CAC.

    If nothing is changed, the business process enters a negative feedback loop, losing subscribers faster than it can generate profit. This is why churn management is necessary. With the OTT industry currently at its peak, subscribers have dozens of options to choose from. With the competitive scene so large, it is crucial to be the channel that subscribers want to stay on.

    So, what exactly drives them away? What minute details important to customers are often left unattended? And what should channels prioritize in order to be profitable? 

    How to reduce OTT customer churn rate?

    1. Just ask!

    A high churn rate directly correlates with the fact that your subscribers are unhappy with the service. Before rushing to abruptly make changes and searching for complex solutions, ask your users why they are unhappy. 

    The most straightforward method is to conduct simple surveys at the critical point of unsubscription. Make sure that it is not overwhelming users with a shower of questions; otherwise, the survey can just add to the negative experience instead.

    While sifting through hundreds of completed questionnaires can be demanding, it helps you understand why OTT subscribers churn. You will know if the problem lies in pricing, an overcrowded interface or the content itself, and you can respond accordingly.

    2. Help customers to minimize spending

    By now, most media giants are already engaged in the OTT scene. From Disney+ and Paramount+ to HBO and AmazonTV, there are dozens of CTV subscription-based services. For customers that are interested in various shows, however, this means following several of them, and more than 50% of CTV users are subscribed to multiple streaming services, which drains their funds faster than they would prefer.

    “Hoppers,” consisting of 32 million US households, are those who regularly switch up streaming services. They are considered one of the main driving forces behind high churn rates. While there are several reasons for hopping from one platform to another and subscription costs are at the top of the list. The best way to retain regular customers along with “hoppers” is to optimize your pricing and introduce several long-term, cost-effective subscription offers.

    With a well-optimized cost and a well-thought-out subscription plan, customers may hesitate to switch from the channel. After all, the alternatives could be more expensive, and your yearly offer may be too good to pass up.

    3. Remember the main catalyst, content

    26 percent of customers who cancel their OTT video services report that the main reason is that they have finished the programs they liked. Additionally, during the early days of the pandemic in 2020, 33% of SVOD users signed up just to watch a single show.

    While one-hit wonders bring a crowd to any platform they air on, this group is quick to dissipate if there is nothing else exciting going on. The secret to longevity is making sure that your channel is always putting out a continuous stream of engaging content.

    This may mean an ongoing, top-rated series or an exclusive show that only airs on your channel. Sometimes, it can be as simple as keeping the program on your channel – about 10% of OTT customers may churn when their favorite series are removed from the service.

    4. Welcome them on board

    If the new user gets overwhelmed with a stream of information when they first enter the app, they may decide to just quit right there. More than 50% of customers cancel their subscriptions as a result of a confusing onboarding process, dramatically increasing CAC.

    The app should show users around and adapt to them as soon as possible. To do this, OTT brands take various approaches. Netflix, for example, asks about preferred titles upon registration and has a percentage match system for their shows. Other platforms may offer a quick tour or direct newcomers to the most popular content at the time.

    Either way, the onboarding must highlight the strongest points of your app and make the experience as smooth and seamless as possible to make new users feel at home.

    5. Make customers’ experience of your channel worthwhile

    Even channels with a great array of shows may experience high user churn. This can be attributed to the overall feeling of the app itself and the lack of services it provides.

    Naturally, users expect their app to integrate seamlessly into their viewing experience. But while problems with UI/UX design may be easy to see, there are many other dangers the creator may overlook. One of the most prominent examples includes churn due to payment complications. For example, Netflix saw higher churn rates when it stopped processing payments through iTunes, which made things more difficult for their subscribers.

    Lack of algorithm optimization may also result in a loss of clients. Lack of personalized recommendations may give the false impression that the library is empty with nothing to watch for customers.

    Making sure that the channel allows users to reach their shows as quickly as possible and takes them on a personalized journey afterwards will minimize the churn rate and make them want to come back.

    6. Be in the loop

    Finally, take a proactive approach and predict the upcoming obstacles. This is where programmatic analytics and data research come in.

    These can help you identify potential problems early on. For example, a high number of passive cancellations may be a sign of problems with your services and app accessibility. Just the same, high voluntary churn can mean that it is time to expand the library or reach out more to your users. Using the provided data in a proactive manner can reduce the number of cancellation surveys required later on.

    It may not not be just your app either; it is important to look at the industry as a whole. Regular updating of the pricing plans in accordance with competitors, overseeing the current trends that users take an interest in, and adding new functionality can all help to retain the user base.

    Attention to retention

    A low churn rate is fundamental for any OTT service to keep profits up. As the industry continues to fill up with new channels, staying on customers’ radars becomes as valuable as ever.

    The main key is to know your client. Learning what the users search for, enjoy, struggle with or avoid should be the main method of reducing turnover. A happy customer seldom leaves and it is in your power to ask them how to satisfy their needs.

    The advice above does not just help to retain subscribers; it should enhance the functionality of the channel itself. With high quality service and efficient communication, it becomes easier to not only stand out among competitors and attract new customers but also to ensure the longevity of your project.