April 7, 2021 | Authored by: Nelson Veiga
Dear subscription providers: what do you need to achieve sustainable revenue growth?
For those who have read my previous blog posts, you know I index on providing actionable insights. As we move beyond the myriad challenges of 2020 and into the hopeful possibilities of a post-pandemic world, subscription businesses need to rethink/synthesize the current reality, refocus based on what that reality is, and re-strategize both short- and long-term business goals to take advantage of opportunities. As more companies embrace the subscription business model for its ability to re-vector/adapt to ever-changing marketplaces, one of the key questions is how to scale and lead in order to establish and sustain revenue growth.
Subscriptions are mutable, and in a world where change is the only constant, subscriptions adapt to people’s consumption styles better than any other monetization model. So how should one go about achieving sustainable revenue in this marketplace that’s continuously shifting towards eCommerce?
1. Leverage data and insights to find new areas for monetization
Every business today, regardless of size, has to become better, faster and smarter. Leveraging data and deriving insights from that data is essential to develop this ability. Whether 2020 was a year of major growth or an unflinching reality check, it’s crucial that subscription companies analyze the past twelve months of performance, surface what is performing/not performing, and develop a plan to course correct where needed.
How? Use subscription intelligence to leverage your existing data so you can get smarter about where and how to spend time and energy. For example:
- Ask questions such as: what were the conditions that led to successful customer acquisition and retention efforts? When did acquisition and retention strategies miss the mark?
- Analyze the degrees to which the business satisfied target audience preferences and their expectations. Which audiences continued subscribing and onboarding? What is the subscription providing for your power users?
- Recalibrate expectations to new levels of consumption and demand. Which KPIs and volumes should be pared down or turned up a notch?
- New revenue channels show up every day. What partnerships and combinations with other brands or within your business can increase sign-ups?
To create sustainable growth rates, subscription businesses should utilize their history to sharply define proven and new revenue streams to acquire new users. However, it’s certainly possible to maintain accelerated growth in line with Research and Market’s forecast of having a steady two-year growth rate, but companies must first assess the subscription landscape and make their acquisition practices fit within that landscape. This is the more effective way to align acquisition strategies to the needs of the market: attracting users rather than tearing down competition. This is a strategy for leading an industry.
2. Consistently engage in strategic, active retention
Retention is a disciple and not an event. You need to commit to it, develop processes/strategies to take action, and have technology to support your strategy. It should not be a surprise that retention strategies should be a high priority in 2021 for both subscription businesses that see a path forward to significantly increase new subscriber numbers and those that believe those rates will level off. After all the hard work to capture so many additional subscribers, the last thing businesses want is for those users to cancel services and jump to another provider. Consider the following:
- Effective retention strategies holistically focus on subscriber engagement, the full customer experience, and addressing both active and passive churn. The overarching goal is to create a high-level of engagement/usage, frictionless experience across the entire subscription journey from acquisition and onboarding to renewal and even post-cancelation, rather than nit-picking and over-refining a singular part that isn’t optimizing.
- When tackling active churn, remove pain points at any stage of the subscription lifecycle that might lead to low engagement. Take user experience issues, for example. They make it difficult for customers to navigate the subscription platform and gaps in the onboarding process that prevent new users from getting the most value from their subscription. 40% of onboarding processes are abandoned because users found them too lengthy and complicated. When sign-up and login friction are minimized, chances for active and passive churn are greatly lowered.
- Strategies to address passive churn often focus on billing and payment issues that result in an unintended cancelation. For example, an account may be canceled after a failed payment transaction due to outdated payment card information. Basic efforts like dunning should be combined with more sophisticated, analytics-driven strategies to prevent those kinds of scenarios.
Above all else, it’s important to continually refine and improve the user journey and experience so customers feel compelled to consume and renew their subscriptions even when those kinds of issues arise.
3. Reinvent the value of subscription offerings through personalization
The subscription market is constantly evolving. That’s what makes subscriptions exciting and fun: people who make subscriptions unabashedly recreate what they’re all about! Leading players in each industry are able to anticipate and adapt to changes in consumer expectations and preferences, personalizing and tweaking offerings to deliver consumer needs. These are effective ways how subscription companies reinvent the value of their offerings to drive appeal across their various customer segments and stay ahead of the competition. When you appeal to a higher volume of various segments, you create more value and revenue.
However, understanding what customers want and gravitate to is an important piece of this puzzle. Every interaction and subscriber experience is an opportunity for increasing engagement, building relationships and driving brand loyalty. Redfast partnered with Vindicia to provide subscription-based businesses with essential insights and technological capability for personalization. Imagine being able to get the full story on how a subscriber is using their subscription, then being able to present them with different ways and offerings to use more of their subscription. As a result, the subscriber derives more value from the subscription and is less likely to actively churn.
With more customers being more careful about personal finances, it’s crucial that subscriptions tailor their approach in outreach and presenting offerings. Similarly, businesses must be able to track engagement at different stages of the subscription lifecycle to understand, for instance, what drives a user to go from a free trial to paid or what factors are most likely to put a long-time customer at risk for churn. These are some of the top pain points that Vindicia MarketONE helps subscription businesses tackle. With insights in hand, subscription companies should refine services and touch points — ideally, according to each target demographic and customer segment — to ensure they continue to deliver meaningful value to those customers.
Sustainable growth = MarketONE
Vindicia’s MarketONE platform provide the expert support and feature-rich subscription solutions needed to drive success in this exciting industry. From simplifying service bundling and accelerating go-to market efforts to boosting retention levels and increasing customer engagement, Vindicia empowers companies to create a truly frictionless subscription journey.
Subscription businesses must delve into these three umbrella considerations when aiming to lead in their industries: data analytics of your business and peers’ performance, active retention strategies, and attunement to unspoken customer needs.
Every subscription provider strives to deliver a great experience and customer satisfaction at all times. Often, it’s the insights and execution that separate companies that actually achieve these goals and those that become industry also-rans. With Vindicia and MarketONE, subscription businesses have a comprehensive subscription platform to help them make good on that promise. Now that you’ve launched your business, scale it and lead your industry at an accelerated pace that creates happiness for your customers.
To learn more, contact Vindicia today.
On the CMO's agenda: 7 unexpected ways to improve retention and other KPIsDownload