Subscriptions. What does the word inspire for you? Loyalty rewarded, endless joyful consumption, the triumph of flexible use over ownership? Or dreaded commitment, unfair monthly tax and the perpetual question — am I getting fair value for my money? Should I stay or should I go?
All in all, it depends on your experience as a subscriber. Let’s first clarify what doesn’t matter as a subscriber: your payment and your bill. These have to be correct, but no one has ever said “I love Spotify because I can pay with my favourite credit card and they sent me a neat receipt”.
There’s only three things that actually have an impact on churn. Let’s dive into them:
Whether it’s an infinite library of immediately streamable content like Netflix and Spotify; the ever convenience of Amazon Prime and HelloFresh; the total flexibility of ZipCar or Turo; or the access to the best thought pieces from the Economist and Wired, the product is the secret sauce of a company and why subscribers come in the first place. It’s the reason the business exists and its their competitive edge. It’s by design unique and it should be hard to reproduce by others because of defensive moats like intellectual rights, network effects, sunk capital or human talent.
A product should always improve. Here a few ways how:
For every subscription, there is a price. Or prices. A subscription is a trade-off between perceived value and readiness to pay. No two subscribers are equal. Find the right price and subscribers don’t churn. But discount too much and you don’t make money. Companies that have a one-size-fits-all pricing strategy are really missing the trick for a variety of reasons.
As TechCrunch put it in their article Subscription Hell, subscriptions shouldn’t feel like a tax. Marketing teams need to start getting creative and look at what other industries are doing for subscription pricing. And it may mean not doing what people usually understand as subscription:
Every company strives for good service. As a subscription company, do you enable customers to cancel online (hint: YOU SHOULD)? Do you let them downgrade easily? Do you allow them to break a contractual commitment at a fair cost? Can a subscriber pause their subscription? Can they get the same good deal as a new subscriber if they’ve been loyal? Can all these things done through mobile, desktop or on the phone? If you’ve answered no to any of those, then you are missing a trick. What’s the point of having a premium version if your customer service feels like Ryanair?
It’s bad business. A subscriber who has had a hard time to cancel is a subscriber who won’t come back. A subscriber who can’t get a discount or pause is a subscriber who is going to vocally complain and churn. Of course, you want to check for abuses. But way too often, it’s more about companies’ inabilities to track and manage the subscriber interactions throughout the lifecycle, lack of technology to dynamically personalise available subscription management options across channels and yes: short-term corporate thinking.
Invest in your self-service mobile and desktop capabilities. Allow for a proper customer service team with modern order management tools. Don’t skimp. Acquiring a subscriber cost 7x more than retaining one. By treating your subscribers well, you may be able to cross-sell them new products or upsell them to your premium tier.
Obsess about it
To retain subscribers, you need to personalise your Product, Price and Service. But delivering omnichannel personalisation at scale is incredibly difficult. You need technology dedicated to helping your marketing and customer teams truly tackle churn. That’s why Limio is solely focussed on Product Catalogue and Checkout capabilities for subscription. We help subscription businesses to create new types of recurring offers and pricing, deploy acquisition and retention experiences across channels, and provide analytics on how the offers are performing 📈
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