If you’re in the process of rolling out a subscription business model, it’s not news to you that you’ve just fundamentally changed your relationship with your customer. While once you focused on a lot of one-off transactions to drive quarterly revenue growth, now you need to optimize long term relationships and increase the Average Customer Lifetime Value (CLTV) throughout the subscription lifecycle.
I know this is a tall order, but the road to success is simple.
For me, the key is to leverage the massive volumes of data produced throughout your subscriber lifecycle – from acquisition to renewal – and turn all data into actionable insights for every employee interacting with your subscribers.
To do this, you need to marry the varied subscription dataset with AI and machine learning (ML) methodologies. Tightly choreographed data flows and insights derived from multiple interactions over time give your team the insights needed to help your subscriber feel their needs are understood and connected to your brand promise.
Essentially, a subscription relationship is an ongoing dance with your customer and data is your instructor.
There are several important steps in this dance – attracting new customers, retaining them, renewing them – and perfecting these steps is no easy task.
You will see that subscription business models cut across all key business functions in Marketing, Product Development, Sales, Supply Chain, Service, Customer Success, and Finance. With this model, no employee can be excluded from the relationship and no business process or system can be left untouched.
So let’s break down the five stages of this all-important dance:
I find it helpful to think of acquisition as asking someone to dance, dating a new relationship. This is why it is extremely important that you make sure that whoever communicates with the customer first on your behalf is doing their best.
You are judged from the first click, call, or advertisement by potential subscribers who rate your product, compare your prices and packaging, and read peer reviews to see if they’re interested. Consumers today have many options, so you need to be crystal clear about your intentions.
The information about what you offer should be current and properly represented throughout the experience that hits your customer first. You need to give marketing, sales and service associates accurate, real-time data on subscription prices, packaging, and promotions to seal the deal.
However, also keep in mind that sometimes followers want a bit of space for brand representatives. That is why I encourage you to make sure that the content of the website reflects the latest and greatest pricing models and offers that your employees have, as this will allow those customers to make their own choices.
In a nutshell, marketing, sales, service, and commerce all need access to precise subscription pricing, packaging, and grouping from all of your systems – and they have to be in sync with each other, so as not to step on each other’s toes (see how the choreography analogy comes into play?).
Flexible billing – the key word here being: flexible – is your strategic weapon for acquiring subscribers and also ongoing income and retention. Being flexible in a relationship means that you are open to new ideas, different ways of doing things, new adventures, and different life experiences.
All kidding aside, flexible billing is innovative subscription marketing. It allows you to offer multiple pricing strategies to attract subscribers with different preferences such as usage-based billing, recurring charges, discounts, tiered options, and virtual currencies.
At the heart of a flexible billing strategy is – you guessed it – data! Automated invoice creation, tax calculations, fraud detection, payment options, global currencies, variable payments, chargebacks, collections, revenue recognition, reporting and customer portals all need to be securely stored and connected to customer data.
This includes subscriber payment, usage, contract, and billing information so that it can choreograph massive amounts of price, usage, and product data into one unified process.
Okay, you get them from the first glance thanks to your wonderful acquisition experience and your flexible billing strategy. Now that the relationship is really at high stakes, it’s time to take the dance floor and prove that you are a worthy dance partner.
Acquiring a new customer is five times more expensive than keeping an existing one. The business case speaks for itself – there’s really no escaping the importance of lifecycle data at this point.
Making good use of subscriber lifecycle data can not only help you keep tabs on how you’re serving customers, but also on their investment in your offering for the long term.
The time to start churn prevention activities is when the client converts. By leveraging business intelligence that can help you use all the data available to you – both raw and third-party – you can predict whether your subscribers are planning a wild race to exit.
The AI and ML models consuming all this data can be viewed through the product usage models (total user, logins, time spent), interaction levels (average support calls per month, payment models ), changes in the sector (new competition, lower prices), organizational changes (new C-suite), or new business models (new funding cycle, new product categories).
Subscription information can help you predict and prevent subscriber churn rate; and more importantly, recommend corrective actions for historically similar opt-out indicators. AI-based analytics can help implement an early warning system for your frontline employees.
For example, if a member of the accounting department notices that a customer has not paid on time for several billing cycles, they can pass the information on to a sales person for exploration. In turn, perhaps offering a new plan, billing options, or other corrective measures to similar subscribers in the past can prevent unsubscribing.
The usefulness of data in keeping a healthy subscription business only applies to those businesses that they have to actually do something with the information they generate.
Let’s say you’ve nailed the retention part of the relationship and now have a loyal dance partner. Everything is fine. You are in tune with the needs and moods of your subscribers because you tap into all the data about how they use your products.
Now is the time to think about spicing things up a bit – and driving revenue growth – with new cross-sell and up-sell offers that improve on what is already working, adding a few new dance numbers to your routine. Or maybe you dare to launch new product offerings or expand into new market segments or geographies.
Expanding and growing revenue on your current base is much easier if you’re already using subscriber lifecycle data to listen to how customers are using your products and services, as well as what they’re not. The data gives you the information you need to intelligently extend the areas of operation to new products or packages and new lines of business.
This is what it ultimately comes down to: customer success. Success is what ultimately maximizes the customer’s lifetime value.
Keeping a healthy and successful subscription relationship is all about empowering every part of the organization to contribute to customer retention and renewal. Each part of the organization cannot function with its own slice of data, as communications with clients over time would break down into different unconnected messages.
As you deploy or optimize your subscription business model, imagine at each step how the entire communication process fits across the entire customer lifecycle. Think about how to create a pattern of logical interaction over time and at all times, at every stage of your business.
Actively seek to connect data and processes throughout the subscription lifecycle to empower every employee in the business to become a retention specialist and ensure that every communication contributes to customer success. And, finally, enjoy dancing.
Published March 31, 2021 – 08:18 UTC