Last week, Recurly was a sponsor at the first annual SUBSCRIPTION SHOW, hosted by Subscription Insider and held in the beautiful if chilly downtown Boston. The show featured presentations and panels from some of the top in the industry including Worldpay, JPMorgan Chase, the NBA, A+E Networks, Sirius, Marvel, and Intuit, along with a number of other other Enterprise businesses and SMBs. The primary subscription verticals represented were OTT/streaming media, publishing, SaaS, and box of the month, and most attendees are from companies looking to mature their subscription product offerings or transition their product/service into a subscription model, rather than businesses that are completely new to subscriptions.
Three main themes emerged this year. The first involved retention, an ever-important consideration for subscription businesses. Many companies, however, get so focused on acquisition, they give short shrift to retention until their customers start churning. It was posited that this may be particularly true for physical goods companies. To be successful, subscription businesses need to be sure to pay attention to all phases of the customer journey, especially as it’s so much easier and more cost efficient to retain current subscribers than convert new ones.
Another tactic for mitigating voluntary churn is to calculate prices based on a value metric, such as usage-based or tiered pricing. This can help subscribers better understand the value they’re getting from your subscription service and, for many verticals, better meet their expectations of how they want to pay.
A third theme was the ever-present “build vs. buy” question: whether it makes more sense to build your own solution or buy a ready-made solution. Things to consider are the opportunity cost of building your own solution and the time and resources this effort takes away from your core mission. System maintenance (and the many and varied expenses this entails) is another concern for those who choose to build—but not for those who buy.
Additional learnings included a possibly non-intuitive suggestion to make it easy for your customers to cancel, if they want to, by making your cancel button obvious and prominent. Another was the idea that chargebacks could be an untapped sales opportunity. Finally, the value of converting customers from monthly to annual plans to increase LTV was discussed along with the most optimum timing to attempt this (hint: it’s after the initial sale).
One highlight was the lively fireside chat that Dan Burkhart, Recurly CEO, hosted with Saleem Malkana, Head of Product and Design, News Digital at NBCUniversal. They discussed what’s driven the rapid change in the television and entertainment industry, how streaming businesses can think about acquisition through pricing, packaging, and trials, as well as the unique challenges OTT businesses face in terms of content rights and costs of goods and services.
During Subscription Show’s keynote presentation, the entire audience was given a sneak peek into author and consultant Robbie Kellman Baxter’s new book, “The Forever Transaction: How to Build a Subscription Model So Compelling, Your Customers Will Never Want to Leave.” Baxter previously wrote about the rise of the membership economy and consulted with industry leaders such as Netflix, Oracle, Electronic Arts, and eBay. Her new book focuses on how subscription businesses can continue to retain subscribers in a world where we are now surrounded by them. In other words: how does a transaction move from being a one-time to a truly forever relationship.
Running through all of these themes around maximizing retention in order to increase lifetime value and recoup acquisition costs is the fact that no subscription business gets it completely right at the onset. Instead, they need to adopt an interactive approach, testing the key levers that have an impact on extending lifetime value. Recurly’s Chief of Staff, Emma Clark, gave a presentation on this very topic entitled, “Test, Learn & Iterate: Testing Best Practices for Subscription Businesses.”
During this session, Emma walked the audience through various case studies, benchmarks and best practices from Recurly customers which demonstrated the three key topics where subscription businesses should be consistently experimenting. The three areas of experimentation Clark proposed are pricing, dunning recovery, and payment gateway routing.
Be sure to visit Recurly at our next tradeshow, Streaming Media West, being held Nov. 19-20 in Los Angeles, CA.