How to Improve Performance on Your Subscription-Based Business
The subscription-based business isn’t exactly a new model. Long before Software as a Service (SaaS) and product subscription companies emerged, magazines and newspapers were already dependent on locking customers in for multiple purchases over a set period of time.
Print media may not be doing too well these days, but their legacy lives on as the subscription model is making a comeback. Commodities such as entertainment media, productivity tools, clothing and even personal care items can now be purchased on a subscription basis. Not having to worry about going to the store each month – or even opening a shopping app on your phone – makes things more convenient to consumers and more profitable to sellers.
If you’re operating a business that follows the subscription model, the keys to growth are the acquisition of more customers and the reduction of churn rates. Here’s how you can achieve both targets en route to greater returns on investment:
Start with Thought Leadership–Putting your brand out there and telling people how great your subscription-based product or service usually isn’t enough to win over new customers. People love to buy but they hate being sold to. That said, traditional marketing channels are helpful but only if you use non-traditional tactics to encourage positive customer action.
Instead of direct advertising, try more creative strategies such as content marketing. This is a method where a company produces useful content relevant to its product and promotes it to the target market. All the content assets will be offered free of charge, with the goal not being sales but thought leadership.
Being recognized as an expert in your field can be a very lucrative thing. In the same way that a cancer patient will only want to have surgery with the most experienced surgeon he or she can afford, customers are more likely to buy from a company that knows everything about what it’s selling. Writing comprehensive user guides, being active on social media and regularly posting on a company blog are all major components of effective content marketing.
Develop a Community – Building a robust relationship with your target market and your existing customers is the intersection of your marketing and customer support efforts. Having a community forum, a Facebook group, an official Twitter hashtag and hosting events can all help resolve issues and encourage greater customer loyalty.
Keep in mind, though, that this isn’t a case of “build it and they will come.” Having official representatives actively monitoring your community channels goes a long way in making sure the customers feel that you’re listening to their questions and concerns.
Use Analytics to Make informed Decisions–Sometimes, the smallest business decisions can have profound impacts on a company’s bottom line. Considering both quantitative and qualitative feedback from your target market and existing customers is essential so you can make the smartest choices that lead to growth and consumer satisfaction.
While forums, social media and customer support tickets can provide verbal feedback, website and app analytics can give you stats and insights that quantify user behavior. Platforms such as Google Analytics can help you understand what causes churn and what roadblocks potential customers run into when they’re trying to do business with you.
Prioritize retention–On average across all industries, it costs 50% more to acquire a new customer than to have an existing one buy again from you. In that regard, the focus of your operations should lean more towards the retention of existing clients than the acquisition of new ones.
Smart business people know that true profitability is reliant on a healthy level of customer lifetime value. The longer a customer stays with you, the greater the number of transactions and the higher the profits. Keeping a customer around longer also means denying competitors access to that person and tightening your grip on your market share. This is precisely the reason why subscription-based businesses tend to be valued 800% more than businesses that use other models.
Double Down on Customer Service–Making customers feel like you’re always there and ready to help goes a long way in retention. People hate it when they commit to a long-term engagement with a company and the company starts paying less attention to them after they sign up. This is why a responsive and readily available customer service system is so crucial in subscription-based businesses.
While it’s great to have a call center that’s ready to take calls 24/7, a lot of companies can’t afford to maintain one. If you’re operating a startup, email and chat support is a good start. For medium-sized enterprises, having a number that people can call during office hours is more appropriate.
Make renewals automatic – Convenience is a cornerstone of the subscription-based business model. Part of the reason that people make subscriptions is because they don’t want to go through the entire checkout process every month. To make things easier for your customers, make billing scheduled and automatic. Just make sure that you make customers aware as they sign up and that you send them regular invoices just before their credit cards are charged.
Reward Loyalty – Your customers may be happy with your subscription-based product or service but that doesn’t mean you should stop sweetening the deal. Small favors that let your customers know you appreciate their long-term business will help keep them locked in. Offering freebies, discounts and rebates are common ways to reward loyal subscribers. Sending them tokens on special occasions like Thanksgiving, Christmas or birthdays is even better.
Sure, these things may take a wee little chunk of your profits away, but that’s a small price to pay for the financial flexibility that your customers’ sustained patronage brings.
Always remember that having a genuinely good product or service is the core of any successful business. The seven tips listed are meant to enhance the appeal of that product so you can snowball some business momentum and enjoy sustained growth.