Term Optimization
Increase lifetime value and reduce churn by intelligently identifying customers on a monthly plan who are likely to upgrade to longer term. Retain automatically reaches out by email, in-app, and during payment recovery.
Customers on an annual plan have a lifetime value (LTV) that's two to four times higher than customers paying monthly, and they're less likely to churn. Term Optimization, part of Paddle Retain, analyzes customer engagement and other subscription metrics to proactively upgrade customers to annual plans.
Term Optimization automatically suggests plan upgrades to the right customers at the right time — no intervention required on your behalf. You can integrate with Paddle Billing in a couple of clicks, with no additional scripts required.
higher lifetime value on annual
Customers upgraded to annual plans are two to four times more valuable than monthly.
reduction in churn per year
Term Optimization cuts churn by up to ten percent a year without any intervention.
strategies to choose from
You control the upgrade strategy based on your appetite for churn.
Increase lifetime value
Offer 1-click upgrade experiences to customers who are likely to accept.
Identify the right customers
Strategically identify customers based on what you want to achieve.
Multichannel notifications
Send whitelabeled upgrade offers by email and to users logged into your app.
How it works
Customers on annual plans have a higher lifetime value and are much less likely to churn, but most customers aren't ready for a long term commitment when they first sign up.
Term Optimization, part of Paddle Retain, uses machine learning to analyze customer engagement and thirteen other data points to identify which customers are primed to upgrade to a longer-term plan. Once customers are identified, Retain automatically prompts customers to upgrade.
Term Optimization strategy
You're in control of how Retain identifies customers who are likely to upgrade. You can choose from three strategies:
Less churn
When you target for less churn, Retain identifies your less engaged customers.
These customers are more likely to churn than engaged users, so it's a good idea to lock them in on a longer plan length.
Works well for: Turning potential churn risks into long term paying customers.
Keep in mind: Your churn rate might increase if you dormant customers subsequently cancel their subscription.
Sweet spot
When you choose the sweet spot, Retain identifies a balance of both kinds of customers.
These customers are likely to churn and are highly engaged, so you're reaching out to everyone who falls in that sweet spot.
Works well for: Identifying a good balance of customers who are at risk of churn and also engaged.
Keep in mind: You may be leaving cash on the table or missing a chance to lock in customers at risk of churning.
More cash
When you target for more cash, Retain identifies your highly engaged power users.
These customers are much more willing to commit to an annual plan, especially since they're saving money by upgrading.
Works well for: Getting an upfront boost in revenue from annual payments.
Keep in mind: Your monthly recurring revenue (MRR) may dip as customers move to longer-term plans that cost less.
Automated actions
If you use Paddle Billing, Term Optimization automatically takes actions on the related subscription in Paddle Billing for you. There's no need to build logic to handle this yourself.
Customer experience
You can choose how Retain reaches out to customers who are identified as likely to upgrade to a plan with a longer term length:
Retain emails eligible customers
Term Optimization uses machine learning to identify customers who are primed to upgrade, then sends them a short, personal plaintext email to suggest a plan with a longer term length. It includes a prominent link to a one-click upgrade form.
If the customer doesn't take any action, Term Optimization sends a follow-up email a few days later.
Customers get in-app notifications
Term Optimization notifies customers that they're eligible to upgrade when they're using your web app.
In-app notifications reach customers when they're using your product, maximizing the likelihood of uptake.
Retain offers upgrades during payment recovery
Retain can prompt customers to upgrade in payment recovery emails and on the payment recovery form.
As customers are already engaged with billing during payment recovery, this approach feels natural and non-intrusive. Customers are more receptive to cost-saving opportunities at this point.
