Subscription-Based Businesses: 5 Lessons for Marketers

There are two obvious things successful subscription-based businesses have in the plus column: they’ve got their customers on speed dial and access to recurring revenue, which can make the future feel a tad less scary.

In fact, there’s much to be gained from the successes of subscription-based businesses, especially around the tactics they employ toward customer retention. In fact, a March 2022 survey by Recurly found that just over half of consumers feel more loyal, while 42% typically spend more money with brands and businesses to which they subscribe. They’ve built a relationship such that when times get rocky, customers are more likely to think twice about leaving, making these companies as recession proof as you can get these days.

Furthermore, by dialing up loyalty strategies, businesses can foster stronger bonds with their customers as they ride out unpredictable fluctuations, creating an infrastructure where commerce and loyalty converge. With that in mind, here are five takeaways that marketers with subscription-based businesses can employ to drive retention, scale and ultimately create powerful loyalty experiences.

Explore Complementary Brand Relationships

In retail, things aren’t often as either/or as we’re led to believe. Lots of offerings complement rather than compete with one another, especially among B2C businesses. Consider teaming up with other companies to offer bundles that not only give your customers more bang for their buck, but also increase stickiness.

Disney, for instance, created The Disney Bundle, a single subscription offering that gives customers access to Disney+, Hulu and ESPN+. It isn’t just for streaming companies, either, as companies across sectors have come together to offer custom bundles aimed at a single, shared audience.

Lastly, in times of economic uncertainty, bundled partnerships can help offset costs and resources, making it a more viable choice until the market stabilizes.

Create An Intentional Journey to Increase Loyalty 

The first 30 to 60 days of a customer’s experience with your brand are critical, so ensure you’ve mapped out what those multichannel communications will look like. Combine physical and digital goods to create a comprehensive experience.

In the meal kit space, for instance, companies have added ingredients and recipe cards, while supporting the organization of virtual dinner parties over video chat. Leverage virtual and physical events to both attract new customers and keep existing ones happy, all while making sure there’s enough exclusive stuff for existing subscribers.

Last year, beauty retailer Sephora upped its convenience game for subscribers, launching an unlimited same-day delivery service for $49 per year, a service not offered by main rival Ulta Beauty, which charges $9.95 per delivery without the app option.

Over time, get your customers to think about the long-term value of what your brand offers. For example, movie theaters offering half-off for two months, instead of one free movie, tend to get customers in the habit of attending regularly. Find out what the time-to-value is for your product or service and align your promotional strategy with this schedule. If you have an annual renewal cycle, consider shifting that same level of attention you’d put into an onboarding journey into a renewal journey.

Promotions, Free Trials and Ramp Pricing

While retailers continue to compete for share of wallet, there is an opportunity to tap into unique pricing and promotional strategies to gain new customers and keep existing ones on board for a longer stretch.

As with many things, choice is key in subscription-based businesses. When looking at free trial or ramp pricing, test both. You will of course see higher adoption of free trial offers, but likely higher churn of these non-paying customers when conversion time comes. For ramp pricing, you will likely have lower initial acquisition, but higher conversion to paying customers. Define a testing framework where you can compare both and even offer the option of choice.

Additionally, companies are increasingly finding new ways to tap ramp pricing to maintain customer loyalty, offering discount resets that ramp back up during key points in a subscription lifecycle. This flexibility means you can be fluid with you pricing as needed to offer deals aimed at retaining customers.

Experiment With Pricing, Plans and Payments

Flexible payment methods, pricing and promotions can unlock lifetime value. But remember, nailing pricing is more than getting packaging right. It also means lowering the barrier to entry by offering different payment options and cross-promoting to optimize your offerings.

Always report on promotions at the point of acquisition and subscriber performance downstream — how long they stay, what they buy, etc. — to focus acquisition efforts and deliver long-term results. Embedded gifting options offered throughout the customer lifecycle build loyalty and go a long way, such as sending welcome gifts, celebrating milestones or sending a free product on a customer’s birthday.

Don’t Overlook the Importance of Remarketing

Every business will experience churn, but that doesn’t always mean it’s the end of the road. Once a customer churns, many companies often mistakenly assume they’re gone for good. With this mistaken impression, they overlook important opportunities to win them back, or simply deprioritize such efforts.

Remarketing to former customers is a key tactic which can help you reignite loyalty. Remember, the fact that you’ve already had a relationship uniquely positions you to re-engage them with a tailored offer. By leveraging the intel you’ve gathered on your them throughout their lifecycle, you may just be able to win them back.

Also, consider that for these reasons, acquisition costs are usually much lower for these sorts of customers, so putting money behind paid strategies is another sure-fire way to entice former customers to reconsider.

Theresa McEndree is CMO of Recurly