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Re: The Growth Framework for Your Subscription Services

When launching and scaling a subscription service, there are so many things to think about. At Limio, we break it down into three key areas: Acquisition, Retention, and Upsell / Cross-sell. Let’s dive into it

Acquisition

Regardless of what subscription you sell, you are going to have to acquire subscribers before they can start enjoying your product or service. So how to go about it?

Getting traffic

There are a couple of ways to get people to your subscription service. Broadly, in the digital world, there are:

  • paid social or organic social: Facebook ad vs. Facebook content from your Facebook page shared)

  • paid search or organic search: Google ads vs. having a high ranking on Google for the keywords you care about, also called SEO

  • PR: getting in the press, which also has an impact on your SEO

  • Partnerships: this other company is referring traffic to your site because it complements/improves their products or you’ve paid them to do it.

In the physical world, you’ve got:

  • word of mouth and refer-a-friend strategies

  • distributing flyers at your physical location or elsewhere

  • knocking on doors

  • setting pop-ups shop across town.

  • advertising on billboards, local radio, TV etc...

All can work, and most subscription services will operate all of these channels at scale. When you start, it’s worth investing in only one or two key channels, and double-down on them, rather than do three half-hearted. It’s worth noting that, as big brands have entered the direct-to-consumers space, cost of acquisition for Facebook and google have exploded. So you should really keep an eye on your CAC and LTV. If you’re not tracking this, get in touch now, you absolutely need this.

2018 Internet Trends Report: 10 Big Takeaways for Ecommerce from Tinuiti

Conversion

What is the first thing your customers are seeing? Well, it depends on the type of incoming traffic:

  • Is your customer coming from an ad? Your customer should see a landing page that is consistent with the ad. Similar messaging, visuals, promotional offers and CTAs are critical to increasing your chance of converting the customer who clicked on your ad because they liked the content of your ad.

  • Coming from organic traffic or owned channels like a newsletter? If your customers land on your blog or content, they are unlikely to land on a purchasing page and need to find it easy to navigate back to your conversion flow. Ideally, they could hit subscribe from your content page, rather than having to find their way to your purchasing page.

  • Coming from a real-world campaign, like flyers or billboard ads? The best would be to have individual promo codes for each campaign, so you can analyse the performance of your physical campaigns for individual subscribers. If that’s hard, you can also create a set of code like SUBWAY10, PARTNER15 etc

In all cases, you'll want to track your conversion funnel and conversion rate by channel, so you can see which channel works and which doesn't as well as how your website performs. Your conversion rate is the percentage of people who landed on your website and signed up for a subscription. This does vary a lot by industry, so you could be doing great at 1% or badly at 2.5%, depending on the industry.

E-commerce conversion rates – how do yours compare?
15 Ecommerce Conversion Rate Statistics (Updated 2019)

To summarise, you will need the ability to create landing pages, add subscribe CTAs on content pages, and allow for promo code input on your homepage. And of course, have an awesome, catchy homepage for everyone else. (plug-in: you can do all of this in Limio and track conversion rate). 

Offers and pricing

When thinking about acquisitions, you need to find your pricing strategy. Free trial? With or without a credit card? A highly discounted trial like £1 for the first month? A small discount like -20% on your first two months? Special bundle with a great price? Promotions are important for acquisitions, but you don’t just want to acquire subscribers that are just interested in a free box, goodie or quick access to content, though acquiring their email can be valuable to win them overtime with drip marketing or to retarget similar audiences on Facebook and Google.

In the end, what matters here, is your ability to track your CAC and LTV relative to your channels and discounts. Let’s take an example:

  • You spent £50 acquiring a subscriber through a Facebook ad (you can get this cost in Facebook Business Manager - if you don’t know how, give us a shout)

  • Your subscriber get a 50% discount for their first month and pays £25 for their first month. Your subscriber churns in month 2

  • You are now -£25 in LTV.

Now let’s take another example:

  • You spend £1000 on handing flyers, and you acquire 100 subscriber (so effectively your CAC £10 per subscriber)

  • The subscriber gets the same promotions and also churns in month 2

  • You are in the black at +£15

What is customer acquisition cost and why does it matter?

Unit economics matter. This a simple case: you will likely test multiple channels, multiple promotions, and your subscribers will churn at different moments or be saved by further promotions. You are in for some intense analytics setup and some serious math without a specialised tool like Limio to track the performance of your subscribers and spend by channels.

Retention

Your product experience is the most important part of retention. Whether it’s a digital service or physical product, your subscription can only be popular if it’s something people want over and over again - see Paul Graham's. But what can you do outside of your product?

Your product experience is the most important part of retention. Whether it’s a digital service or physical product, your subscription can only be popular if it’s something people want over and over again - see YC's Essential Startup Advice. But what can you do outside of your product?

Get feedback

You can only improve if you know what your customer thinks about you. Can subscriber give feedback on the service? Can you turn your champions into advocates? Make sure disgruntled customers feel treated fairly?

Surveys tools are powerful to make sure people have a voice in how their recurring service is delivered. Drip campaigns for feedback, chatbot, even your customer service can compile for you what people like and what people dislike about your service.

Personalise

With a recurring service, you have the ability to make every bit of the experience personalised. Your content, whether digital content or physical products, should reflect the evolving needs of your subscribers over time. For digital service, you can easily track what customers are consuming and focus on those aspects. For physical products, surveys, personalisation quizzes, and pick-your-next-box-content are your friends. Personalisation will also enable you to test out and identify new areas for upsells and cross-sells. 

Community & Reviews

If your subscriber likes your product, they will be vocal about it. Whether on Facebook, Twitter or Instagram, they will want to discuss with other fans or with you. You can bring this discussion into your website, such as Instagram or Twitter feeds or Facebook and Google reviews. Instagram and Pinterest can be a great way for physical products, as people can show themselves using it. For digital services, Trustpilot and Feefo are great review options in the UK - though they come at a price.

You may want to consider a community tool like Discord to channel your community onto your site, generating traffic to your own properties and having control over the discussion.

Why Great Reviews Aren’t Always Great for Sales

Be flexible

One of the best ways to prevent cancellations is to allow for flexibility around your subscription management options. Pausing subscriptions, skipping months, changing frequency, downsizing the content provided, are all good ways to avoid hard churn. It gives you an excuse to re-engage those customers when a new promotion or new content goes Live. It’s important to let subscribers in control. Send them a note before an upcoming charge or delivery, so they can make changes they need.

And finally do let subscribers cancel online. Use cancellation prevention flow that reflects your branding, your message, the subscriber experience. Redirect the subscriber to alternatives to cancellation as mentioned above. Also, many people will have a look at their cancellations options before actually cancelling - fire a note to customer service that the customer is considering cancelling and catch them before they do (Limio does this for you!)

If you don’t do it, the community will inundate your Facebook page, Trustpilot reviews, Google SEO by angry reviewers. This will harm your acquisition and will make it incredibly hard to win back churned customers.

Upsell and cross-sell

As Techcrunch recently wrote about (https://techcrunch.com/2019/10/24/to-scale-subscription-startups-get-to-know-your-customers/), once you launched, you should obsess about what your customer wants next. If you’re shipping beauty samples, well the next thing your customer may want next is full products with a dose of personalisation. If you ship a streaming or news service, people may want you to provide content recommendations suited to them. If you launch a digital fitness class, they may want you to sell real-world classes or receive branded merchandise.

Don’t neglect this, it’s key to prevent churn but also to grow your company. Not everyone can rely on a single product. Even Spotify co-sells concert tickets and serve ads. Apple relies on its subscription services to get you to buy iPhones and Macs.  Subscription and e-commerce are the perfect mix, one bringing the loyalty and being habit-forming, the other bringing extra affinity with the brand and extra revenue. After all, that’s what the most successful eCommerce company on earth has done with Amazon Prime!

Amazon Statistics: Need To Know Numbers about Amazon [Infographic]

Limio

Limio is the subscription commerce platform for people serious about growing subscription revenues. Whether selling subscription boxes, launching a digital SaaS service or building a subscription marketplace, Limio has the advanced site-building capabilities, commerce and payments functionality, and subscription analytics that you'll need. There is no better way to create and grow your subscription business. Get in touch today with a free 14-days trial to get started.

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