Yesterday we concluded Subscription Show 2020. We had a great time and enjoyed learning from some of the best subscription, payments and technology experts in the industry. In this week’s edition of Five on Friday, we’re going to focus on key learnings from the event. Specifically, we’re going to share insights from our speakers on five primary topics: surviving and thriving during the pandemic; increasing retention and reducing churn; reviewing and adapting the customer journey; growing in a smart, sustainable way; and making the most of new opportunities for your subscription business. (The On-Demand Version is here!)
Pandemic disruption – how to survive and thrive
No matter what business you are in, 2020 has been challenging. Some subscription businesses (e.g., streaming, subscription boxes) have seen record sign-ups, while others (e.g., news organizations, magazines) have been struggling to make ends meet. The demand for their work is high, but advertising revenue is down and, in most cases, subscription revenue is not enough to compensate.
Regardless of the type of subscription business you are in, there are important lessons to be learned and ways to come out ahead. Geoff Colvin, senior editor-at-large for Fortune Magazine, a commentator for CBS Radio, and a best-selling author, reminds us that we need to remain optimistic. The best leaders are experts at crisis management. Effective crisis leaders need to be decisive, explain the crisis in a larger context, define reality, and give hope to their people.
“Difficult times bring out differences in competitors that weren’t apparent when times were good,” Colvin said. “Tough times are when leaders change…it is an opportunity we have to take advantage of.”
The first step to moving through a crisis is to confront reality and to do so quickly and without hesitation. In his keynote presentation, Colvin gave the example of Chipotle Mexican Grill, who understood early in the pandemic that their business had to shift to a takeout model. They had been moving toward this anyway, but the pandemic forced them to accelerate their plans.
Chipotle invested millions of dollars to build digital kitchens to prepare orders that were coming in via the Chipotle app, and they added special lanes – Chipotlanes – in their restaurants just for order pickup. In May, the company hired 10,000 new workers to help implement these changes and, in July, they added another 8,000.
“They went big. They went all in,” Colvin said.
Subscription companies have the ability to pivot during a crisis too. Rafat Ali, CEO and founder of Skift, a business intelligence and marketing platform for the travel industry, found himself in danger of losing his company when the pandemic hit. Ali said his business was badly hit in March and April when they lost 80% to 90% of their revenue. In response, he had to furlough one-third of his staff, and they were in danger of running out of money.
“It was brutal,” Ali said.
Launched in 2002, Skift had a mix of revenue sources including customer advertising, events, research, individual reports and a subscription service that launched in 2013. With so much revenue gone, Skift had to make a drastic change. They decided to become a subscription-first company, and they launched Skift Pro on July 1. The site has a metered paywall, so readers can access three free articles per month. After that, they must subscribe to read more content.
In addition to that quick shift, Ali adapted his mindset.
“I’m a big fan of visualizing worst case scenarios to lose the fear,” he said. “That helps me create ‘what if’ scenarios.’”
From there, Ali envisioned what he would do and who he would call if he had to sell the business. Fortunately, it didn’t come to that. Instead, his company focused on building out the Skift Pro subscription and making that a larger part of the company’s revenue. Though the company had previously “given content away” without charging for it, he said he had to get past the fear that people wouldn’t subscribe. He started thinking of it as a wider funnel.
“You just have to jump in,” Ali said.
How to increase retention and reduce churn
Improving retention and reducing churn were hot topics at Subscription Show 2020, and many of our experts shared their experiences and ideas. Here is a sampling of some of the great ideas we heard:
- Make your customers feel special and unique. Book of the Month has a BFF Club that is an incentive to buy more books and stay longer. It is a loyalty reward where subscribers get a “stamp” for each book purchased and a reward when they buy so many books.
- Remind subscribers of the subscription’s value. BOTM keeps track of a subscriber’s individual statistics including number of boxes shipped, books read, pages read and the number of months as a subscriber.
- Surprise and delight your customers. BOTM gets a free book on her birthday and the opportunity to vote for the book of the year.
Ben Zvaifler, co-founder and CEO of PupBox, told us that he believes retention starts at the top of the funnel. Successful subscription companies need to identify their ideal customer and to nurture customers at the point of acquisition. Zvaifler also recommends identifying churn before it happens and to build preventative measures into the acquisition and onboarding processes. This makes for “stickier” customers and a better subscriber journey.
- The biggest opportunity to reduce churn is on the first two months when subscribers are most likely to leave.
- Focus on onboarding and not just on the first few days of a subscriber’s journey.
- Develop a 100-day communication plan (e.g., direct mail, SMS, social media, calls, etc.) for a strong onboarding experience to engage subscribers. Don’t bombard them all at once and from the same source but spread it out over time and using multiple platforms.
- Mistakes that increase churn including poor communication, focusing on your product or services instead of the subscriber and inundating subscribers with emails.
- Make your sales process about the subscriber instead of about you and what you’re about to offer them.
10 tips to improve the subscriber journey
A successful subscriber journey from pre-acquisition to cancellation, and everything in between, helps subscription companies attract and retain subscribers and to grow. While the journey involves many aspects and steps, we grabbed some of our favorite tips from Subscription Show 2020 to highlight.
- Ensure that your company is effectively mapping the subscriber journey, which may need to be adapted as circumstances change. Robert Skrob, president of Membership Services, Inc.
- Everyone in the organization needs to think of customers as members. Robbie Kellman Baxter, founder of Peninsula Strategies and author of The Forever Transaction
- Subscription companies need to make a company-wide effort to understand the subscriber journey. Erik Zenhausern, director of subscriber acquisition and retention, Newsday
- Earn trust. This is the beginning of a relationship, not just a transaction, and all good relationships are built on trust. Anne Janzer, author of Subscription Marketing
- Try to understand the goals of your members. What do they really want and why? Connie Gao, director of marketing, Book of the Month
- What subscribers are really looking for is value. They want to know what more you can give them. Sarath Dorbala, CEO of Vindicia
- Listen to your customers. Not everyone does. Anthony Naplitano, HP, Inc.
- Use data at all stages of your business to launch, expand and refine your subscriber base. Emma Nicoletti, director of predictive client solutions Wiland
- Make your company a “must have.” Make ourself indispensable. Right wrongs, challenge convention, and be humble. Chris Lawson, founder and CEO of Moreno Marketing
- Smart subscription marketers make it easy for subscribers to leave. Let people go gracefully if they need to go. Anne Janzer, author of Subscription Marketing
Tips for growing your subscription business
Ro Bhatia, chief operations and strategy officer for Sticky.io, gave a great presentation on growing your subscription business. We don’t want to give away all his secrets, but here are a few of the top tips he shared with us during Subscription Show 2020.
Tip #1: Have a dedicated landing page with your offer and nothing else. By the time a prospect gets to your landing page, they have probably already made their decision. Don’t distract them.
Tip #2: Make it easy for your customer to opt-in to your subscriptions across different channels with omnipresent subscriptions.
Tip #3: Empower subscribers to manage their own subscriptions (e.g., pausing subscription, changing frequency, etc.) This helps you build brand trust because subscribers feel like they have more power.
Tip #4: Subscribe and save more. Offer financial incentives for higher frequency and quantity (e.g., Chewy auto-ship, Amazon subscribe & save).
Tip #5: Tell a story and customize it for a particular customer. Show personalized recommendations and bundles based on data for similar customers.
- Subscription companies need to understand subscriber needs that lead to action and to use that information to design a positive subscriber journey.
- Use social proof (ratings, reviews, testimonials) on your website to increase credibility.
- The pain and pleasure principle says that pain is twice as emotionally powerful as pleasure. In terms of the subscription funnel, subscribers are aiming for pleasure (your products or services and the solution you are providing) and avoiding pain (cost, inconvenience, giving up data, etc.) Maximize a subscriber’s pleasure while minimizing their pain.
- Optimize for every stage of the subscriber journey (acquisition – optimize for quality; engagement – optimize for habit; expansion – optimize for lifetime value)
Connecting to your communities
Many of our experts had ideas for using this time for experimentation and taking advantage of opportunities. Chris Lawson of Moreno Marketing believes the pandemic is an important time for subscription brands to connect to their communities and to focus on building stronger relationships. This includes defining what you stand for and finding common ground with your subscribers. Ask yourself, “what do we believe in that our audience also believes in” as a starting point. Be authentic, and be clear about who you are. Be bold, but be humble.
“Community starts at home with your employees,” Lawson said.
Shutterstock, which offers tiered subscriptions and a la carte digital products, is in the midst of a global expansion. This isn’t as simple as just scaling the organization though. It involves understanding local regulations, preferred (and allowed) payment methods, understanding cultural and language differences, and much more. In each market, they’ve had to work through these challenges. For example, in some jurisdictions, they aren’t able to use the words “free trial.” In another example, when employing “seasonal” searches, they have to be cognizant of where the subscriber is located. What might be winter in one part of the world might be summer in another. This is a good time to experiment and test your subscription company before adapting to a specific market.
Partnering with complementary services
In one session, our co-host Vindicia talked about providing additional value to customers. They recommended partnering with complementary subscription services to provide both companies – and their subscribers – with more value. Subscribers get the benefit of a bundle of products and services (likely with a cost savings), while the companies get more visibility and broader exposure by joining forces. Robbie Kellman Baxter cautions companies to ensure they are getting a good deal before agreeing to bundle their services with another, because not every deal is a good one.
See you next year!
This is only a small sampling of the amazing content we gleaned from our experts this week. If you missed Subscription Show 2020, you can watch the sessions on demand! We hope you can join us next year!