Maintaining Subscribers For Your Subscription-Based Business

Mike Gunderson
Maintaining Subscribers For Your Subscription-Based Business
The Subscription-Based Business Model Is Here To Stay, But Unless You Can Hold On To Your Subscribers, You May Find Yourself Without Much Of A Business At All

Whether or not you realize it, the way we buy and consume products and services has changed in a significant way. Don’t think so? Your friends at Netflix, Spotify, Blue Apron, and Dollar Shave Club beg to differ.

The subscription-based business model favored by these companies and many others are quickly replacing traditional commerce as we know it, and the industry is booming. The market has grown by over 100% per year, rising from $57 million in sales in 2011 to a whopping $2.6 billion in 2016.

Subscription-based services are more prevalent in sectors such as baby and toddler, pet care, fashion, meal kits, TV and movies, spirits, and even oral care.

If you stop and think about it, you’ll be hard-pressed to find any industry that couldn’t effectively transition to or at least incorporate a subscription-based business model.

Take a piano, for example. It’s not likely that you could sell anyone on a subscription service that delivers a new piano to your customers’ doorstep every month, but you could incorporate a service that offers free online piano lessons for a flat monthly fee.

As “out there” as that concept may sound, you can continue selling a product while simultaneously selling a digital subscription service, just like Fender has by offering access to guitar lessons for just $9.99 per month.

Subscription-based business models will continue into the future, but let’s be clear – there are harsh realities that coincide with this budding business trend. As foolproof as it may seem on the surface, the subscription model is highly susceptible to customer turnover.

According to a study by McKinsey & Company, about 40% of subscribers eventually choose to cancel their subscriptions, with one-third ducking out after just three months and a little over half continuing on for six months.

Why is there such a high potential for churn? Because canceling a subscription is easy, and customers can do it quickly and guilt-free. That’s why it’s crucial to build relationships and create an authentic experience for every single subscriber.

Direct mail is often considered an efficient customer-acquisition tool by subscription-based companies, and while the effectiveness of that strategy should not be discounted, direct mail can and should also be used as a tool for retention and reactivation.

Direct Mail As A Subscriber-Retention Tool

Unless you use various communication channels to increase and maintain customer satisfaction, the money you spent on acquisition will be as good as gone after just a few months.

Sure, digital strategies should be employed as a means of holding on to your customer base, but to help recoup the money spent on customer acquisition, direct mail should also be used and triggered during pivotal lifecycle phases for subscribers.

For example, when someone signs up and completes a purchase, a mailer with personalized new customer information, including a referral code or discount for recurring purchases, should be automatically triggered. You can even create highly customized experiences with the use of personalized URLs and corresponding website copy to help make customers feel appreciated and connected with your brand.

By triggering direct mail during various phases of a customer’s lifecycle, you will maintain relationships and consistently engage with subscribers. The goal is to keep your customer base feeling well cared for, instead of being marketed to only when the threat of leaving arises.

Direct Mail As A Subscriber-Reactivation Tool

There will always be customer loss, even when employing the best retention strategies. Customers may choose to unsubscribe for myriad reasons, but the odds of reactivation are greatly increased with timely and relevant communication.

If a subscriber decides to unsubscribe, there should be another automatic direct-mail trigger in place. Not only will a timely postcard or mailer with a reactivation offer incentivize the customer to re-up their subscription, it will allow you to re-engage with the customer.

To take it a step further, marketers can design different direct-mail triggers to address the various reasons that a customer may decide to leave. For example, if someone unsubscribes due to a poor experience with your company, you can create an automatic trigger that deploys a postcard with a humbling message and an enticing offer to remedy the situation.

In any scenario, when it comes to sustaining a subscription-based business model, preserving relationships and helping customers feel engaged and recognized with your brand are crucial to long-term success.

Need help building and maintaining your customer base for your subscription-based business? Drop us a line.

Mike Gunderson

Mike is the founder and president of Gundir, the award-winning direct marketing agency. Since 2003, Gundir has helped businesses drive new leads and close more sales through traditional offline channels, especially direct mail.

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