Marketing and Retention in a Subscription-based Model
by Brandon Hartness
posted on 05-11-2015
We all understand how basic customer acquisition works in a data-driven world. Leveraging data, monitoring real-time consumer actions, and tapping into automated personalization tactics, brands from all verticals can drive engagement, consideration, and conversion. Through ongoing relevance delivery, these same brands can continue to re-engage those same customers, fostering a strong relationship over time, one that’s built on loyalty and personal alignment. Simple enough, right?
But what about subscription-based products and services? Those are, from the gate, ongoing relationships between customer and brand. The early stages of the purchase funnel may mirror a “standard” conversion path, but then the immediate need all but disappears—the customer no longer immediately needs something from the brand. Likewise, the brand no longer needs to convert the customer. Unless there’s immediate upsell potential, the actual purchase journey becomes a hurry-up-and-wait until renewal day.
It’s tempting to kick back and let the month, quarter, or year run its course—but then what? Will your customers have built the kind of meaningful experience with your brand and, when the clock runs out, pop out their credit cards and renew? In a lot of ways, it’s the same as driving ongoing engagement—the space between conversion points is just that much farther apart. But in a lot of ways, it’s a totally different beast.
- Make sure you’re relevant, 24/7/365
Your product or service needs to remain as relevant to her life as it was the day she signed up. Think about it: haven’t you at some point waited out your gym membership? Fine, maybe not _you…_but a “friend.”
You (ahem…your friend) loved the gym the day you signed up, and you probably went every single day. Then three times per week. Then sometimes. Then after a particularly indulgent weekend. Then…the countdown to the expiration date began. Don’t be the never-used gym membership—because, at the end of the term, you/your friend aren’t coming back. And that’s a customer with a low lifetime value.
She hasn’t streamed a video in a while? Check in and recommend something that you know she’ll love based on what you know about her. He hasn’t ordered anything from your food delivery app in weeks? Offer up a high value promotion with a short window to lure him back come lunchtime. And if the opposite is true—she is watching movies and he is blowing half his paycheck on gyros—thank and reward them. Make sure they know you value their business, and throw in something that further aligns the two of you. Be part of their lives when, where, and how it makes sense and, come renewal day, re-upping will be the easiest decision ever. Commitment should breed consistency—but when that consistency starts to waver, so does the commitment.
- Relationships are a two-way street
It’s the ultimate relationship saga: I love you. You’re perfect.
Subscription-based sales models are no different. The CSA box filled with local produce looks so great. Free shipping on books for a year? Sign me up! The latest, greatest plan for my smartphone? Amazing! I love you! You’re perfect! And then it’s not quite right anymore. We don’t have time to cook. We aren’t reading as much. The data plan costs start to add up. We start to drift out of love and either don’t want what we once had to have or, maybe, wish it were different. But by the time renewal day comes around, it’s too late to woo your lost love again because she’s found something else that sparks her interest—it could be another product, another service, or even that extra cash in her pocket. But it’s not your brand anymore.
My advice for fanning the flames is simple: first, see #1—make sure you stay relevant and keep the love alive. And #2, just ask. Monitor consumption with Adobe Analytics, and dig into what your subscription, your loyalty program, your monthly mustard club be doing differently. What options, add-ons, or features would you like to see? Is there something that’s more relevant to your life right now? And now that you’ve been using subscription X for a while, how would you tailor it? Make it bigger? Smaller? Cheaper? More frequent—or less? Consumers are happy to share—they just want to be invited to the conversation. All too often by the time there’s finally a dialogue, it’s too late—because those conversations, typically, are had with customer service to complain or end a subscription
- Innovate, innovate, innovate
Some subscription models—Amazon Prime, FreshDirect DeliveryPass, Dropbox—are more or less essential services for many of their subscribers. Sure, you can start going to the actual grocery store (the horror…) or store your files on your local hard drive, but at the end of the day you’re still spending money week after week on the goods and services these platforms provide. If you’re subscribing, you likely already see the value proposition. In a lot of ways, these ongoing subscriptions just incentivize commitment and consistency
But plenty of other subscription services and solutions aren’t quite so engrained into our day-to-days. There are countless examples from that brand new gym membership (hello, New Year’s resolutions), to content delivery platforms, media subscriptions, software solutions, or even the booming “box” memberships. They’re novelties-turned-seeming-essentials, luxuries disguised as every day must-haves—and that’s great. Maybe having these products or services will improve your life and truly make your days and weeks that much better. But if you’re the marketer on the other end of that equation, you can’t bank on that “maybe.” It’s critical to focus on innovation and constantly revisit what your customers need right now. Needs change, trends shift, and consumer desire goes with those tides. If you aren’t twisting, turning, bending, and reinventing with those new wants and needs, then you’re teeing your brand up to be a short-term solution or luxury, versus building a meaningful, long-term brand relationship. Based on users’ real-time movement—or lack thereof—plus first- and third-party data, points of access, and feedback, what are they looking for in this experience now? Is it more engagement? Less? A new or different product offering? If you aren’t leveraging Adobe Analytics, being data-driven, and innovating, you’re all but guaranteeing low lifetime value and engagement that drops off after a certain point in the customers’ lifecycles—so it’s a lot of work in terms of acquisition for what’s ultimately a brief fling.
And what about renewal day? By then, marketers should have enough relevant data, context, and predictive power to build a comprehensive view of their subscribers and determine how best to drive increased lifetime value—in other words, how to get them to sign up all over again. If you’ve done your job and delivered ongoing relevance, engaged in positive, forward-moving conversation, and innovated along with them this entire time, this stage of the journey (which is usually the most challenging) becomes the easiest and most seamless piece of the experience. Of course I’ll sign up, this is exactly what I want—still. Focus too much on the acquisition piece alone, and you’ll constantly need to keep filling the funnel. Loyalty is always a powerful thing. But within the subscription framework it’s the key to low-cost revenue streams, organic word-of-mouth marketing, and long-term success.