Downgrading is a strategy used by companies to adjust the services or products offered to a customer , reducing the level or quantity of features available, usually in exchange for a more affordable price .
Applied strategically, it allows companies to meet the needs of customers who are in financial transition, while preserving the commercial relationship and the perception of brand value.
Key takeaways from this article:
Downgrading doesn’t have to be seen as a loss for fronk oil email list the company; it can actually strengthen customer relationships .
Knowing when to offer an upgrade or downgrade is essential to maintaining customer satisfaction and avoiding churn .
Offering an upgrade or downgrade can be a powerful tool for building customer loyalty and increasing revenue.
One of the keys to avoiding churn rate is to position the downgrade as a temporary and flexible solution, rather than something definitive.
To understand how to map and implement downgrade strategies effectively, we recommend the Sales Funnel in Practice material .
How to identify the ideal moment to suggest an upgrade or downgrade ?
Knowing when to offer an upgrade or downgrade is essential to maintaining customer satisfaction and avoiding churn. This analysis requires a combination of:
data monitoring;
understanding user behavior;
personalization in service.
Next, we will explore the main points to identify this ideal moment.
Monitoring service usage
The first step in suggesting adjustments to a customer’s plan is to monitor their usage of the service. Many consumers opt for packages with features they don’t use or that exceed their actual needs.
Analytics tools can detect patterns of under- or over-use , providing valuable insights .
For example, if a software customer uses only 30% of the features available on an advanced plan, it may be a good idea to propose a downgrade to optimize costs and improve value perception.
On the other hand, if demand is well above the contracted limit, upgrading may be the ideal solution.
Feedback analysis and satisfaction level
Customer feedback is another crucial indicator. Satisfaction surveys, support reviews, and direct interactions can help identify whether the customer is experiencing issues with the current service .
Often times, dissatisfied customers prefer to reduce costs rather than terminate the contract.
For example, if a customer is dissatisfied with the cost-benefit of an intermediate plan, downgrading to a more basic option can alleviate this negative perception.
Likewise, feedback may reveal that the customer is willing to pay more for additional benefits, making it an ideal time to suggest an upgrade .
Specific events and cycles
Economic cycles and specific events in a customer’s life also influence the choice of upgrades or downgrades .
It is important to be aware of seasonal changes, economic crises or even personal phases that may impact the consumer's budget or priorities.
For example, during times of recession, offering more economical plans can help retain customers who would otherwise cancel their service.
In times of expansion, such as the launch of a new premium feature , an upgrade can be an attractive offer.