A ruthless retention strategy: How to win and keep subscribers for the long term
The landscape for subscriptions services has changed dramatically during the 2020s. After the rapid acquisition phase of the early 2020s, merchants face a new set of challenges. Retention is becoming increasingly important for merchants to stand the test of time and master the competition.
In partnership with Change Makers, we sat down with 35 different product and retention experts from brands like Bark, NBCUniversal, HelloFresh, and The Guardian to understand how to create a retention strategy that keeps your subscribers coming back year over year.
Get the report here or continue reading for the highlights.
A shift from acquisition to retention
As inflation spiked in the aftermath of Covid-19, subscribers began to reevaluate the subscriptions services they used. Consumers have cut back on services they do not deem “essential,” including subscriptions. Furthermore, competition has increased for these fewer dollars subscribers have. Even small merchants can easily launch and compete with larger subscription services often responding to the market quicker than larger entities.
“Whilst the demand is predictable for at least a three-month period, it's certainly not easy when the barriers to entry nowadays are so low that within three months, you can launch a whole new brand. AGI can now be used to build content and create advertising campaigns at product deployment, which makes it difficult for us to predict demand.” - Herculano Rodrigues, The HUT Group
Subscriber acquisitions have also become more expensive over time. Merchants are now taking a much closer look at retention and focusing on strategies that provide subscribers with value. Some of the key strategies are below.
Personalization
Key to improving subscriber retention is personalization in content and services. To provide personalization that taps into subscriber’s wants, you need to know them intimately.
“We are focusing on personalisation... providing more offerings that are internally created, as well as understanding customer needs, and then personalising offers for the customers.” - Srinivasan Damodaran, HelloFresh
AI is already playing a key role in this effort, analyzing data and offering suggestions around content and product offerings. A one-size-fits-all approach is no longer applicable—subscribers want services that provide immediate value.
Bundling
Merchants are not only offering personalization in content offerings, but also pricing through complimentary bundles. For instance, Disney+ offering a bundle with Hulu and Max, or a food delivery service bundling with a wine company. The key to bundling services is to offer more of what your subscribers love at a discounted price.
“We are seeing a lot of success in cross-vertical bundling. It helps customers feel they’re getting more value for their money, making it harder for them to churn." - Stephanie Johnson, Recurly
Taking initiative
Because there is so much competition, merchants need to focus on being proactive in winning their subscribers throughout their entire lifecycles. Merchants are able to use AI and analytics tools to personalize services and spot patterns indicating potential voluntary/involuntary churn.
Merchants can use this data to proactively manage these relationships by targeting offers and messages to those likely to churn. Analytics can identify churn rates by a number of different factors including payment methods. Taking these steps helps merchants constantly showcase their value and win back subscribers who are on the brink.
Update technology
Outdated technology hampers many subscription businesses, and homegrown legacy systems often keep these businesses from reaching their full potential. Subscription companies need to update their technology capabilities in order to capture and retain subscribers, especially as they scale across borders. Updated technology capabilities have the added effect of helping businesses serve the products subscribers want, reduce involuntary churn, and fine tune processes to maximize revenue. Build vs. Buy is at the heart of the question, and we have the perfect guide for you.
Wrap up
Subscriber fatigue and increased competition are making acquisition costlier than ever before. Merchants are turning to retention as a source of improving revenue and establishing themselves as a market leader. By prioritizing retention, merchants can identify new opportunities and prevent subscribers from churning in the first place.
This Ruthless Retention Strategy report goes into more detail and provides even more options for improving retention. Check it out now!