Here’s a quick exercise. Check your latest bank and credit card statements. How many monthly payments come out of your accounts?
Probably at least ten. Firstly – essentials: rent/mortgage, energy, internet, council tax, insurance. Maybe car finance too.
Then there’s your non-essentials; they might include magazines, music, movies, cloud storage, Amazon Prime, gym, maybe a gaming service.
No wonder more and more people are succumbing to subscription fatigue; the feeling you get when you look at your accounts, realise just how much you spend on monthly services and decide it’s time to cut down.
Usually it’s the non-essentials and luxuries that go first. So if your business accounts for one of these, what can you do to decrease your chances of being culled?
The clever folk at music streaming service Deezer realised that when we find ourselves in the situation above, it won’t be the mobile phone contract that gets binned.
So they partnered with mobile billing service Boku to offer customers the chance to pay their Deezer subscription through their mobile bill.
Not only do customers have one less payment on their bank statement, but they don’t even see Deezer’s name, so consideration to unsubscribe is greatly reduced.
They call it a “new and easier” way to subscribe. We call it a stroke of genius.
The act of evaluating which subs to drop is primarily a rational one. Which ones do I feel I’m not getting enough value from?
Value nurturing is the process of combating this by continually adding value long after the initial sign-up.
And Spotify’s comparatively low churn rate is due in no small part to the innovative personalisation tools it keeps adding to its experience.
REINVENT, REINVENT, REINVENT
Stitch Fix is an American online personal styling and shopping platform that, for a $20 monthly fee, sends subscribers a box of clothes and accessories from selected retail brands. The user then pays for what they want to keep, with the $20 going towards the purchase as a credit.
It started out as women’s clothes only, but is constantly diversifying its offering. In the last year it has added shoes, accessories and most recently menswear.
As such, it’s now one of the most profitable subscription box services in the States.
IMPROVE YOUR RETENTION STRATEGY
How often do you contact your existing subscribers or members as their renewal date approaches, and how do you do it? Direct mail, email, or both? Perhaps a phone call?
It’s vital to find the right balance of frequency and medium for your customers. We recently worked with the publishers of TIME & Fortune magazines to review and optimise their renewal strategy.
They send out several efforts as direct mail pieces – a strategy they felt was the correct one, but with some efforts that were underperforming.
By making the messaging around each one more compelling and distinct, and adding aspects such as surveys and offers, we were able to dramatically improve renewal rates.
IF THEY GO, WIN THEM BACK
For those businesses that do find themselves in the unfortunate position of being one of the culls, all is not lost – if you have a strong win-back strategy.
Test your offers though – both for number of win-backs and profitability.
In a report by by V. Kumar, Yashoda Bhagwat, and Xi (Alan) Zhang entitled “Regaining ‘Lost’ Customers: The Predictive Power of First-Lifetime Behavior, the Reason for Defection, and the Nature of the Win-Back Offer”, they reference a telecoms company who tested four different win-back offers across 40,000 ex-customers.
The offer with the highest success rate (a discount and upgrade combo) had the lowest ROI, whilst the offer that was taken up by the fewest customers (a free movie channel upgrade) actually drove the highest ROI.
In summary, with an estimated £448m wasted on unused subscription in the UK, make sure yours isn’t one of those chopped out of your customer’s life!