Digital IDs reduce churn for subscription firms
Feb 4, 2021 | By PYMNTS.com
All subscription companies want to reduce churn — especially in the digital age, where switching costs can be low.
Consumers, on the other hand, want options to negatively affect that churn, with PYMNTS research showing that the most common reason prompting them to cancel relates to their inability to make changes to their subscription plans. This is true for nearly 30 percent of consumers who subscribed to new services during the pandemic and 15 percent of those who subscribed before the pandemic.
Plan flexibility helps, and so does understanding individual customers. In an interview with PYMNTS, Sumit Parab, head of Product Management at Vindicia MarketONE, said establishing robust digital identities can have a positive ripple effect for these firms, keeping subscribers in place, and even upgrading to new offerings (and generating revenue) as time goes on.
As he told PYMNTS, “At the end of day, you need to know who your user is and how they’re actually going about consuming the service as well as how they’re purchasing the service.”
That means, for the subscription company itself, interacting with the user goes well beyond simply identifying and verifying subscribers. Robust digital identities, he said, can aid in feeding information to those users, helping them see exactly what they’ve subscribed to, what their abilities are to manage their chosen services, and even receive personalized, targeted discounts or upgrades.
Building on top of the ID
Call it a form of enhanced useability — built on top of identity.
“It really comes down to what customer you’re targeting [and] how you want to engage that customer,” said Parab. “Is it through a phone number? Maybe it’s that you’re in an environment where emails aren’t that prevalent. Maybe it’s through a social network that you want to make something that’s easy for them to onboard.”
The ultimate result, he said, is a stickier relationship between the corporate and the consumer as those end users are more efficiently “categorized.”
Progressive profile building, noted Parab, can give users control of their identities. They can start with an email address and password, and then decide to opt for additional step-ups in authentication that are designed to increase security. Subscribers are actively monitoring what data they want to share — or don’t — with firms. Regulations such as General Data Protection Regulation (GDPR) and state-wide privacy mandates such as those that have been seen in California also give individuals control over their data.
“Users are looking for that level of security,” said Parab, adding, “They want to know that any type of commerce purchase that’s being done, is being done securely.”
The emergence of 5G and geolocation services, for example, mean that identifying how and where “trusted” devices are being used can help improve security and foster a sense of trust between subscriber and subscription provider, he said.
For instance, where a subscription — to a streaming video services, say — might be shared among family members in a household, maintained Parab, it might be enough to simply use a PIN, but if the service is being accessed across different locations, more layers of security may be useful.
“The access is really controlled by you, the subscriber,” said Parab.
Leveraging advanced analytics
But beyond mere identification efforts, advanced analytics can help firms establish different levers to identify new opportunities to offer trial phases or discounts, not just for individual users but for households that have subscriptions, too. Of those customers, he said, the propensity for churn is less, and they may be more inclined to upgrade their services. The relationship becomes one where the companies can proactively reach out to their audience rather than simply act at the last minute with a notification that a subscription is about to be renewed and a card charged.
With a personalized approach he said, “you have that advantage, that open window, where [the customer is] excited, or they realize there’s something new to do. That gives the subscription firm the chance to ask, ‘Would you like to renew a subscription now?’”
He noted that Vindicia has been working with companies that are able to effectively map the subscriber’s journey, pinpointing the most opportune time to present those offers and discounts.
That’s especially the case with bundling, Parab said, where a range of services can be consumed, often concurrently, among several members of the same household.
“Being able to identify the family and being able to have that ability to create ‘profile personalization’ or those multiple groups’ personalization, is going to go a long way in terms of keeping the whole household happy and reducing churn,” he said.