Engaging and Retaining for Subscription Based Businesses

Subscription-based businesses have been around for years, well before the internet even existed. People relied on subscriptions to get their milk and newspapers delivered to them long before the likes of Netflix ever showed up.

SubscriptionSubscription-based based businesses make their money through recurring transactions. Most of the time, a customer would pay for the service on a monthly or yearly basis. In a way, subscription companies have customer retention built into their model. They make their money by keeping people there.

But retaining customers for subscsubscription-basedription based businesses and keeping them using your service is a battle that still remains. If you want to last as a brand, people do have to remember you. The last thing you want is to become a monthly expense that is rarely used, leading to cancellations.

Retaining customers with subscription models can be tricky. But, what it boils down to is maintaining the relationship you already have with them and reminding them that you are there to be used. What you send and how you interact with them is of utmost importance.

Types of Subscription Models

Before diving into suggestions for customer retention, it may be worthwhile having a quick look at the three main types of subscription models.

The Curation Model

Businesses with this type of model would generally sell things in the beauty, food, or apparel sector. Although it can work for almost any company. These businesses provide their subscribers with new products or experiences on a timely basis. 

Take Stitch Fix for example, a company that sends their users new items of clothing based on a survey they take at the beginning of their subscription which deciphers what type of style they like. 

The benefit for companies here is that there is potential for some pretty tidy profits. However with this comes the risk of a high churn rate and possibly could become somewhat difficult to operate.

The Replenishment Model

This model is about convenience more than anything. It allows users of the subscription to automate the purchase of the essentials. They can often come at a discount as well.

The type of product that you’re selling is an important aspect here. A lot of products don’t need to be replenished on a regular basis. But things like razors, vitamins, or pet foods would be good options for this model. An example of a company that does this well is the Dollar Shave Club. 

With this type of subscription model you tend to get some pretty high conversion and retention rates. But on the other hand, the margins can be pretty slim unless you sell a lot of products.

The Access Model

The primary value offered with this model is exclusivity. Customers pay a monthly or yearly fee to gain access to things that other members of the public can’t. These usually include special discounts on things or members only perks. Thrive Market is an example of a company with this type of model.

There is a real source of value that the customer gets from using this type of subscription. There is also the opportunity to create a great community around your subscription too. It does however take time to ensure that what you’re offering is robust enough for it to be beneficial for people. 

How to Interact with your Customers 

It’s so important for companies to keep up a quality level of communication with their customers. In the majority of cases, it is often easier and more cost effective to retain already existing customers than to acquire new ones.

However retaining customers forever is a tough task and you will lose a few along the way. Here, we are going to look at three stages that customers are at with your product and how to communicate with them.

Active Customers

These are customers who are currently subscribed to your product or service, and are actively using it. 

Odds are you already have a pretty good relationship with these customers, and they shouldn’t be going anywhere soon. But it is incredibly important that this relationship is nurtured and not taken for granted. 

You should stay in front of the eyes of these customers as much as you can to reduce the risk of these customers becoming dormant. For example, Netflix is great at sending notifications to remind you of the new releases or seasons of your favourite shows that are available to stream.

Be consistent in your messaging and make sure that the customer understands the value that you are providing them with your service. On the other side of things, make sure that the customer understands that they are appreciated by you as well. Do remember that they are parting with their cash for your service on a regular basis.

Dormant Customers

These are customers who are currently signed up to your subscription, but are not actively using your service.

These customers are at a stage where they could quite easily cancel their subscription. But they are not lost quite yet.

Re-engaging these people can be tricky. After all, you don’t want to be the constant reminder of an expense they don’t use. But just like you’ve shown to the active user, you should demonstrate the potential value you have to these customers. It may rekindle that spark you once had!

Something that the take away food industry does quite well is re-engaging dormant users. For example, your local pizzeria might send you an SMS or a push notification if you haven’t ordered from them in a while. They’ll even include a discount on your next order at times. Nine times out of ten, the customer will place an order pretty soon after that nudge.

Sending reminders to customers through whatever channel they prefer (from the data you have collected) will bring customers back to using your subscription.

Past Customers

These are, of course, customers who were subscribed to you in the past but for some reason or another have cancelled their subscription. 

Although they seem like a lost cause, there is every chance that they might go back to using your subscription once again. Again this just comes down to understanding your customer and sending them personalised messages through the right channels.

When someone cancels, consider sending an email thanking them for using your service and that you’re sorry to see them go. You could try to understand why they left your subscription with a short survey and try to rectify that for the future. If you have a community set up, you can encourage them to join that so that they are still somewhat involved with your brand.

You never know, they might remember why they fell in love with you in the first place.

Using Your Data

You need to fully understand your customer in order to communicate with them effectively. Creating a single customer view leads to a longer, more valuable customer lifetime for brands. But it also leads to a more personalised and relevant experience for your customers as well. 

Subscription based businesses can retain customers by giving them this experience. There are a number of channels you can send messages to your customers through. It’s up to you and your data to identify which one is best for them.