The coronavirus pandemic hit the United States hard this spring with the first known effects impacting our way of life in late February and early March. Since then, our economy has waxed and waned and, sadly, we’ve lost 227,000 Americans at last count due to COVID-related deaths. Virtually everything we do has been impacted by the pandemic including everything from remote learning and working from home to grocery shopping and entertainment.
The pandemic has had a significant effect on businesses as well. Some subscription companies have emerged winners, while others have not, depending on their industry and their preparedness for a crisis. The ability to manage a crisis was a key point made by Geoff Colvin, senior editor-in-chief for Fortune magazine, a CBS Radio contributor and best-selling author, during Subscription Show 2020. The most successful subscription companies behave differently from their competitors when the environment changes.
“In a crisis situation, people will never forget what you did – good or bad – so do what you want to have remembered for a long time,” Colvin said.
Colvin also said we need to be courageous and fearless in times like these.
“Aristotle said courage is the greatest virtue. I think that’s true. It’s what we need most. It is easy to get easy and afraid in this environment,” Colvin said. “Being brave enough to go ahead anyway, that’s what it takes, and it does pay off.”
Here are examples of some subscription companies that made the most of a bad situation to deliver on their brand promise to their customers.
Before 2020, Zoom was not a household name. It was just one of dozens of video conferencing services. Now it is a popular “go to” resource for virtual meetings, webinars and conferences. It has even become a verb (“I zoomed with my team yesterday, and we had a great meeting about…”). According to CNBC, in March daily downloads of the Zoom had app increased 30 times over the same time last year, and it was the top free app for iOS between March 18 and early April. In March, the video conferencing app had 200 million users in March, compared to 10 million free and paid users in December 2019.
As states shut down one by one, school districts moved to online learning, and Zoom stepped up to help. The company, which uses the freemium model, offered Zoom for free to more than 100,000 K through 12 schools around the world. This new influx of users presented some issues for Zoom who had designed their platform to support enterprise organizations, not millions of individual users. They listened to their users to find out what they needed to do differently.
In addition to expanding the platform’s capacity, Zoom provided training, webinars, live daily demos, video training, and they improved customer service to reduce wait times. “Zoombombing” also became a problem, where hackers gained unauthorized access to Zoom meetings and classrooms. Zoom updated security protocols and put new safeguards in place to protect their users, free and paid, from such attacks. Along the way, they communicated with their customers about what was happening and why.
Once things had settled down a bit, Zoom turned to its hardware business segment to provide hardware as a service (HaaS). Zoom partnered with third-party vendors including DTEN, Neat, Poly and Yealink to offer state-of-the-art hardware for use with video meetings and calls. They saw an opportunity and seized to offer their customers something new.
Last week, the company announced a new platform – OnZoom – to help paid Zoom users host paid events, including fundraisers, classes, lessons and webinars. This new platform gives entrepreneurs and business owners the opportunity to offer new services to their customers while being able to earn money. For example, a yoga instructor could host a series of online classes, charging for each session as they would if they were teaching in person. A nonprofit who holds an annual charity gala could host a virtual event via OnZoom instead, charging admission and giving people a way to donate.
Zoom takeaways: listen to your customers, adapt to a rapidly changing environment and keep your customers informed while doing so, be a good corporate citizen, seize new opportunities to grow your subscription business, and meet your clients’ needs.
This is one of our favorite success stories that has grown out of the pandemic. We first heard about Mask Club in June. Amazon third-party seller Trevco makes licensed apparel and accessories. By mid-March, in less than a week, Trevco’s sales had dropped 60% and founder and CEO Trevor George had to lay off half his staff. He wasn’t sure how or if his company could survive the pandemic.
“It was like a cliff. It was really tough,” George said. “I couldn’t do anything for three weeks but man the ship and keep it afloat, but there’s a happy ending here.”
While this was happening, George saw there was a huge need for personal protective equipment (PPE), including face masks, for medical personnel and first responders. Using his connections, he was able to provide a hospital with 250,000 masks. Meanwhile, his wife Morgan was at home with a 10-month-old telling her husband that he had to do something to help. After much urging from Morgan George, the concept for Mask Club was born. Four days later, they were in business.
Mask Club sells face masks outright and via subscription*. Available in adult and children’s sizes, the masks feature much beloved characters including Cookie Monster, SpongeBob Squarepants, Marvel characters, Frozen, Harry Potter, as well as seasonal, solid and patterned designs. With each mask purchased, Mask Club donates a mask to Baby2Baby. So far, more than 300,000 masks have been donated. Mask Club has now expanded into Europe.
While the company’s model has shifted, the takeaways for Mask Club remain the same – the company saw an immediate need for face masks, and they had the capacity to meet that need while also serving the greater good. Through the sale of their masks, they are helping to prevent the spread of COVID-19, and they are donating masks to those who need them most.
*When we first wrote about Mask Club, the company was offering a subscription option. According to the Mask Club website, they are not currently offering new subscriptions. The EU MaskClub website said they are working on updating club options and plans with new features to shop and save.
Six Flags, NBA, NFL and NHL
Six Flags offers a tiered membership program to give members the best value for their theme park enjoyment. There are four tiers, starting as low as $6.49 per month. Each tier has different pricing and benefits, some of which include unlimited soft drinks, preferred parking, 50% discounts and more. When the pandemic hit, Six Flags parks around the country closed. The Six Flags team brainstormed and to prevent membership cancellations, they came up with an ideal solution – the ability for members to pause their memberships.
When the shelter in place orders started, members could pause their memberships. They would automatically “unpause” when the park in a particular area resumed operations. Members could pause for any reason, and they could unpause when they were comfortable visiting a park again. Six Flags put the pausing control in the hands of their members. On the flip side, if members stayed “unpaused,” Six Flags would upgrade their membership level for free, an incredible value.
This pause feature helped Six Flags retain members, offered their members an incentive to keep paying their monthly membership fee, and showed their members that they cared about their safety and well-being. This is exactly the type of thinking Geoff Colvin was talking about. In a crisis, do things that you want your subscribers to remember you for – Six Flags customers will remember this.
NBA League Pass, NFL Game Pass and NHL.tv followed a similar pattern. With sports on hold this spring, streaming subscription services for the NBA, NFL and NHL allowed fans to access their content for free. In an announcement, the NBA said:
“Limiting social interactions is a critical way to minimize the spread of the virus, but staying home for long periods of time can be difficult. With the 2019-20 NBA season on hiatus, the NBA and Turner Sports are providing all fans with a free preview of NBA League Pass, the league’s premium subscription-based product, until April 22. This complimentary offering will provide you with access to full length and condensed replays of all games from the 2019-20 season, as well as an expansive archive of classic games and content. You can redeem this free offer by signing into your NBA account through NBA.com or the NBA App… Thank you and please stay safe.”
Takeaways from Six Flags, the NFL, NBA and NHL: Recognize the situation your subscribers are in and meet them in the middle. You can’t expect members or subscribers to pay for a service they aren’t able to fully use, so offer them an incentive to stick around. By being gracious and acknowledging that this is no one’s ideal situation, each organization fostered goodwill with their customers – and prospective customers – by pausing their service or their payments until the situation improves.
Rent the Runway
High end fashion subscription service Rent the Runway saw significant changes in their business during the pandemic. The company had already been considering changes to their business model when he pandemic hit, forcing them to accelerate their plans. In September, the company announced how they were adapting and adjusting to better meet their customers’ needs:
- The company closed its physical locations but added new drop-off sites for clothing rentals.
- They eliminated their unlimited rental subscription option.
- They developed new plans that better fit how shoppers’ lives have changed.
- They added new benefits to the plans, including faster turnaround time on shipments, free “fit do-overs,” and a commitment to sustainability (recyclable garment bags, fewer shipments, etc.)
The plans were redesigned to consider Rent the Runway’s customers’ changing lifestyles, needs and budget.
“Next week, we are debuting a new membership structure that offers more customization and introduces some of our members’ most-requested features. With this evolution, the majority of our members will pay less for their membership,” said Rent the Runway CEO Jenn Hyman.
“We believe that when a member is in the right plan that matches their needs and budget, they’ll stay with us longer and keep renting — helping us on our mission to reduce clothing waste and build a better future for fashion,” Hyman added.
This was something that author Robbie Kellman Baxter stressed during Subscription Show 2020. Instead of focusing on the product or service, focus on the customer journey. In this case, Rent the Runway saw a need to shift based on customer feedback and data from how your subscribers are using your product or service. Prior to COVID-19, 70% of unlimited swap members were renting fewer than eight items per month at $159 per month. With the new plan, they can get the same or more items in a lower priced plan. Listen to what your customers are telling you and adapt in a way that makes sense for your subscription business.
Streaming Services: Netflix, Disney+, Amazon Prime and More
With so many of us stuck at home during the pandemic, entertainment became a more important part of our lives than ever before. Hemmed in by four walls and instructed by the government not to leave home unless absolutely necessary, streaming video on demand subscription services were among the options people turned to.
During the pandemic, HBO Max and Peacock launched, while other SVOD services offered longer free trials than normal. This allowed many consumers to hope from one service to the next without ever having to pay a subscription fee. They would get 30 days free with one service, binge watch their favorite content on that SVOD service before canceling and moving onto the next.
According to Consumer Reports, Acorn TV, Amazon Prime, CBS All Access, HBO, Hulu, Netflix, Showtime and other services offered 30-day free trials, sometimes just by logging in and other times with a special promo code. With so many broad SVOD services available now, a viewer could potentially make it through a whole year of streaming content without ever paying a dime.
The whole idea behind the free trial is to attract potential subscribers, show them what you’ve got to offer with the idea that they love your content library so much they’ll stick around. While offering a longer free trial was generous, it backfired to an extent. Perhaps that’s why Disney+ and Netflix stopped offering free trials altogether. Disney+ was first, discontinuing its free trial in June, just before the premiere of Hamilton, and Netflix which stopped its free trial in the U.S. earlier this month. The key difference between these two is that Netflix still offers a rotating library of limited content for free for viewers to sample before signing up.
Most people who sign up for Disney+ are already familiar with Disney’s content, and they subscribe for the family-friendly content, Disney, Star Wars and Pixar movies, and premieres like Hamilton and Mulan. The company doesn’t “need” to offer a free trial to attract subscribers. Netflix, which is constantly adding new content, offers a vast array of content appealing to wide global audiences. As a result of the pandemic, they saw huge increases in traffic during the pandemic, so they don’t need to offer free trials either. Regardless, this adaptation to the pandemic was disappointing to see.
Going in the opposite direction, Apple TV+, which launched in November 2019, has extended its free trial through the end of January. People who have purchased an Apple product in the last year were getting free subscriptions anyway, but this extends their subscription by a few months. This also provides an incentive for others who want to try Apple TV+ extra time to do so without paying subscription fees.
The takeaway here: expanding your free trials as a gesture of goodwill can increase the number of potential subscriptions to your company, but taking them away is a business decision that must be carefully considered before implemented.
In part 2 of “10 Ways Subscription Companies Have Adapted to the Pandemic,” we’ll look at food delivery subscription services, news organizations providing free COVID information in front of the paywall, Amazon’s operational changes to keep up with consumer demand, the huge growth in pet subscriptions, and Google’s funding of more than 5,300 newsrooms through their Journalism Emergency Relief Fund.