After the “big unsubscribe” of 2022, subscription brands are extremely focused on strengthening retention for the coming year.
That’s what Thomas Marks, head of growth at e-commerce subscription management and recurring billing platform sticky.io, told PYMNTS. Marks said that while 2022 was a challenging year for many subscription brands, he sees three main ways – value, flexibility and relationships – that when activated effectively, should help businesses position themselves for success in the current climate.
The current climate is one where nearly 2 in 3 American consumers (64%) live paycheck to paycheck. As inflation continues to eat away at their purchasing power, it’s becoming more critical than ever for subscription brands to reinforce the value they provide to their customer base.
“The brands that delivered the best value created for their customers, not just convenience but actual value. Whether it’s through a loyalty program, rewards, discounted pricing … they’ve won by making their customers feel like they’re getting something out of their subscription that they couldn’t get otherwise,” Marks said.
See also: Subscription businesses that measure customer lifetime value outperform competitors
Research in January’s PYMNTS “The One-Stop Bill Pay Playbook” reveals that subscription businesses face an uphill battle to retain their customers during challenging economic times. Only 17% of consumers say paying streaming subscription service bills is a priority when time is tight and budgets are stretched.
“The second key to delivery,” Marks said, “is flexibility. Consumers really want flexibility in their subscription, whereas in the early years of the pandemic people mostly subscribed for convenience and didn’t necessarily care as much about the intervals at which subscriptions were renewed theirs, but now that people aren’t stuck at home 24/7 they want the flexibility to be able to stop a subscription, be able to suspend it for a period of time or change their frequency in an option every months. Subscription brands that have the best prices offer a very powerful consumer portal that puts total control in the hands of consumers.”
Read more: 78% of online subscription purchases are made with stored credentials
Marks’ third important takeaway, building customer relationships, acts as an umbrella for the other two of value and flexibility.
Historically, customer acquisition has always held more traction for brands than retention, as it is all about growth. Yet ironically it is the companies with the strongest growth that focus most on retention and relationships.
“The third key word, relationships, comes back to [subscriptions] no longer just being about convenience,” Marks said. “We’re not stuck at home, we can all go out and shop, and so the relationship is really about value – as the subscription brands that are the best create a community around their brand. They actually build a relationship with consumers, another means of reminding consumers of the value they offer, so it’s not just a product that consumers subscribe to, but the relationship [they have with the brand].”
Holding takes center stage
As consumers continue to scrutinize their spending and acquisition costs skyrocket for businesses, customer retention is becoming the name of the game for subscription brands.
“Again, at the beginning of the pandemic, customer acquisition was easy, so brands could grow subscribers, even with really high churn rates,” Marks said.
Now, things are a little different.
“I’m seeing more and more subscriptions turn to newer forms of affiliate marketing, hiring influencers to help market their products, but also going back to that sense of value and sense of community. – building a loyal customer base,” Marks said.
Word of mouth is the most powerful marketing tool any brand has, he added.
However, there are some avoidable frictions that subscription brands should work to address – one of the biggest involuntary setbacks is when customer payments, for one reason or another, cannot be processed. PYMNTS’ February “Subscription Commerce Tracker” research reveals that handling failed payments is an integral part of customer retention strategies.
Additionally, Marks emphasized that reducing friction at checkout is critical to increasing conversion and customer retention.
“More [payments] “The more flexibility you have, the more likely you are to succeed,” he said. “Just the act of reaching over and pulling your wallet out of your pocket to write a credit card is a deterrent. – just one more opportunity for someone to say, ‘Eh, I’ll do that later,’ and then never come back.
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