The insider’s guide to subscriber retention and LTV with Alaska Airlines & The Guardian
The twin pillars of retention and loyalty are the bedrock of sustainable growth and long-term success for subscription businesses. In an era with vast consumer choices and low switching barriers, companies recognize the battle doesn't end with acquiring new subscribers–it’s just the beginning.
Alaska Airlines Principal Commercial Product Manager Taylor Putnam, The Guardian SVP of Growth Emilie Harkin, and Recurly VP, Growth Evangelist Mary Rosberg, held a thrilling conversation about what’s working–and not–in subscription retention. These are the highlights.
How do you define retention and loyalty and what are some of the challenges you're facing?
Emilie Harkin shares that media companies are increasingly becoming paywalled. However, The Guardian’s mission statement is to be “free for all, beholden to no one. All journalism is accessible to anyone, regardless of their relationship with the newspaper, and their willingness or ability to pay.”
The motivation for supporting The Guardian is different for everybody. The company has multiple customer support levels, whether low-fee, recurring subscribers, high-value recurring supporters, or one-timers.
Even though The Guardian has a unique way of attracting subscribers and building revenue relationships with them, once the relationship is established, it follows the same definitions and tactics as a subscription business, such as measuring churn, growth, and retention rates.
On the other hand, Putnam explains why loyalty to Alaska Airlines is synonymous with stickiness and goes beyond their subscription product. The company measures customer behavior for all travel needs like cars, hotels, vacations, and flights, meaning that the subscriber’s preferences should increase as the loyalty to the subscription also increases.
How do you balance short and long-term loyalty building, and what considerations do you take?
Putnam states that traditionally, subscription businesses measure their success in terms of breakage. But at Alaska Airlines, the goal is for subscribers to use their flight credits or Wi-Fi passes.
In terms of short-term tactics, if someone is not using their subscription, Alaska Airlines will remind them of the benefits they have. Transparency helps Alaska Airlines in the long term, ensuring the terms and conditions are clear and making customer service available via phone.
The Guardian wants to ensure users are satisfied by reading to be informed or delighted, from in-depth investigative pieces to a live blog, which chronicles stories in real time.
The strategy to keep the content free and open to all is about the coverage and articles. The Guardian reports on the environment, for example, so people who feel strongly about the importance of climate change can find a way to support them through this cause.
Which parts are critical during onboarding and renewal journeys?
Harkin shares, “For every action someone may take with your product, what is your reaction?” And sometimes, the best reaction is to let them do what they want.
If someone wants to get more familiar with The Guardian, the company encourages exploration. But if someone shares their email address, that requires a reaction from the brand. If someone has a recurring payment coming up, reinforce the importance of their support and how much journalism The Guardian has published since the last time they supported.
On the other hand, Putnam highlights that Alaska Airlines is new to subscriptions, which means the company is still learning onboarding and renewal best practices. However, Alaska Airlines is passionate about experimentation early in the journey, such as A/B testing or multivariate testing.
“If you think removing the address field at sign-up will get you more customers, more subscribers, then test it versus just going with your gut feeling,” says Putnam.
Additionally, benchmarking has been incredibly important to Putnam’s team in discovering what successful onboarding looks like.
When a business is new to subscriptions, you’re looking to boost customer acquisition. A/B testing helps identify the best-converting strategies–like a free trial with or without credit card requirements.
As a business matures, the questions you may ask are:
How valuable are the customers you acquire?
What is your conversion rate across channels?
If a customer didn’t provide a credit card at the beginning of the trial, is that customer still invested in the subscription now?
“What you measure ends up driving the A/B testing and your focus on any given quarter or any given year,” states Rosberg.
What does personalization mean to your company and how does it show up in your business?
From recommendations to curated trips, personalization is a huge strategic focus for Alaska Airlines. While it is still new to subscriptions and doesn’t have the historical data needed to personalize as it wishes, the company learned early on that its original offer had too many customization offers and customers felt confused.
“When you're innovating or releasing a subscription, simple is best, then layer on personalization and additional options because you want people to first understand the core offering, and then make it more tailored,” Putnam states.
Rosberg chimes in to explain how these levels of personalization should also be considered across the maturity of your customers. For example, when a customer subscribes to a box-of-the-month service, they start with something basic. As time passes, the brand can start layering the personalization options based on behavior.
As Harkin states, you want experiences that enchant people and make them want to return. However, some subscribers like exploring without an over-personalized journey that could take away the joy of discovering something new.
Do you feel like you’ve crossed the threshold of hyper-personalization?
Putnam highlights the generational differences across customer cohorts. Gen Z expects Alaska Airlines’ offers to be personalized to eliminate the burden of planning a trip, while older generations might find it intrusive as they expect to invest time in finding the right option for them.
Harkin adds that The Guardian works to be ethically responsible and communicate their terms and conditions. When readers aren’t comfortable with tailored offers, the brand looks for other ways to enrich the experience that aren't at a personalized level.
What are you doing to foster a sense of community amongst your subscribers?
Alaska Airlines doesn’t think about establishing communities at the subscriber level, since their loyalty programs are a bigger umbrella. The brand has a mileage plan program, which is world-class in earning miles. The company ensures that its subscription product complements and amplifies the broader community they’re trying to establish.
Harkin poses the question all businesses should ask: “How much do people want a community with other subscribers, and how much do they want a community with you specifically?”
The Guardian’s powerful opinion writers create communities of readers who seek connections with journalists, allowing the journalists to have points of view and show their personalities through their reporting.
Are there any key insights into what's shaped your approach to retention and loyalty?
Retention for Alaska Airlines is finding the balance of breakage with its product offering and revenue. The use of benefits has a much higher propensity to stay and renew at the next billing cycle.
It’s also important not to overlook the importance of reliability when thinking about retention. Sometimes it's easy to see the product as separate from Alaska Airlines’ platform or uptime. If something fails to load, that can drive churn just as much as the product offerings.
When you make the quality your proposition and can always deliver, that's a success. This has been a constant at The Guardian for two hundred years and counting. It's about the basics and the core value of your product.
How Recurly can help you manage and reduce churn
Churn can be unintentional and preventable. Working with a subscription management and recurring billing platform with the right automated tools and insights can avoid involuntary churn and recapture lost revenue, making a significant impact on customer retention.
Recurly’s churn management approach through intelligent retries, automatic account updater, and dunning campaigns can help you dramatically reduce both voluntary and involuntary churn.
