July 7, 2022 | Authored by: Vindicia Team Blogs
It’s summertime and inflation time: make the most of promo offers to boost subscribers and revenue
Promotions during the summer months are a great way to attract new subscribers with fun and entertaining offers. In this volatile time of macroeconomic changes and inflation, customers are demanding and expecting deals.
Deals are effective at helping customers cope with inflation. The rising prices of just about every essential and luxury good from gas to food to travel are encouraging consumers to pull back on spending. So, what can you do to help your customers spend more wisely as you grow your bottom line? Promotions and deals.
Promotional offers give consumers a chance to sample your products or services without requiring a major upfront investment. Especially this time of year when cost-conscious consumers are looking for a little fun and entertainment. In the subscription world, promos work wonders at getting new prospects to sign up with maximum ease. Not to mention getting existing customers to stay engaged and subscribed.
According to McKinsey Research, “30 percent of consumers say that a lack of fun or new experiences is a factor in their decisions to cancel.” What’s more, Vindicia’s research shows that subscription businesses that offer free trials, discounts, and other promos such as digital scavenger hunts and rewards programs produce a higher customer lifetime value (CLV) and lower the likelihood for subscribers to churn.
There are many ways for businesses to approach promotions, including free trials, discounted services, and stackable discounts. Deciding on the right promotional campaign should depend on your specific business goals.
Lower the barrier to entry with a free trial
The limited-time free trial is arguably to easiest way to entice prospects to sign up for a subscription service. While giving away free services for any amount of time can be a bitter pill to swallow, it more than often pays off in the long run. Free trials give prospects a chance to try out the product or service before they are required to pay for it.
A potential issue with the free trial strategy is that consumers who sign up for free trials may plan from the outset to cancel their subscriptions before their first payment is due. Or they may game the system by starting accounts with different contact information to string together free services. With that mindset, users may never really embrace the platform or feel that they need to get their money’s worth by exploring all the features available to them.
In this case, your business will not generate a profit from the customer. So, you should carefully evaluate this potential downside when deciding on a free trial strategy.
How do you ensure that the free trial will generate a profit? The most effective way is to construct your free trial so that it transforms into a paid subscription after a certain number of days, weeks, or months. The most important task — besides asking for payment details upfront and ensuring payments go through using Vindicia’s AI-driven technology — is to keep your subscriber informed of when the free trial is about to end and when the paid portion will begin. That way, you are giving room for people to actively cancel if desired or to continue being subscribed without having to lift a finger.
Beware the disadvantage of discounting services
Discounting the price of subscription services over an initial period – say, three to six months – can give your subscription business a little more time to showcase your services, demonstrate value, and become part of the customer’s daily routine. Because users have already committed some money to the subscription, they may be more inclined to use it regularly and realize everything it has to offer.
There are some disadvantages to this approach that need to be considered. It’s not as easy to entice new users with discounts as compared with free trials. Customers need to make an upfront investment to begin their subscription, and even if it’s at a reduced price, that could be enough to turn them away.
Stacking discounts provides greater opportunity for building engagement
Rather than lower the price of your entire subscription, try offering promotions that can be used in conjunction with each other. This method gives subscribers the autonomy to use the type of offers they want. The Vindicia subscription management platform supports stackable discounts to help subscription companies empower subscribers by creating promo codes, allowing different promo codes to be used with each other, expiring promo codes, and leveraging promo codes to accomplish revenue goals.
Your business should A/B/C test all three promo methods: the free-trial-to-paid method, discounting services method, and the stacking discounts method to determine which approach produces better results. To figure out why one approach may resonate more with your target audience, you’ll need to continuously analyze data from your promotional campaigns.
Vindicia’s expertise and subscription intelligence can help you analyze your promo data and optimize your summer promotional strategies – or any seasonal promo – according to different customer bases and demographics, encouraging more subscriptions, and generating greater recurring revenue streams. Contact our team to find out what Vindicia can do for you.
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