7 Marketing Initiatives Subscription Based Businesses

A subscription-based business is one where customers pay a regular fee to access a product or service. This type of business model is increasingly popular as it creates the possibility of multiple sales once a customer has signed up. However, the subscription route can involve a lot of extra work for marketers. They must convince potential customers that a product or service is good enough to warrant multiple payments. They must also ensure existing customers don’t leave. 

Once customers are paying for a subscription, the recurring sales can help businesses achieve sustainable growth over time. If you’ve never created a subscription model, though, it can feel intimidating. Where do you start? On the flip side, if you’ve initiated a subscription model, it may not be performing as you thought it would. How, then, do you get back on track? 

With those questions in mind, here are seven marketing tips you can try to boost your subscription-based sales:

  • Free basic package
  • Free premium trials
  • Discounts for advance payments
  • Transparency
  • Automatic renewals
  • Relationship nurturing
  • Keeping pricing in line

A Free Basic Package 

Your entry-level, or basic, package should often be a free option. This isn’t feasible for all businesses.  If you were, for example, offering home delivery of clothing or grooming products you can’t go down this route. However, if you’re selling software or any other type of intangible service, it’s a great way to hook a new user. 

Take a look at Evernote, for example:

Evernote Pricing
Source: Evernote

Evernote is a cross-platform app that serves multiple purposes. It can be an online file cabinet, note-taker, daily journal keeper, project management system, a place to store recipes, and more.

The basic package is free, which gets users familiar with what it can do. If a customer had to pay to use Evernote from the beginning, they’d be less inclined to use it in the first place. But because it’s initially free, a prospect is more likely to try it out, and if it’s useful, pay for it going forward.

It’s a no-risk, all reward methodology adopted by countless brands. If offering your primary product or service for free is a possibility, then it should be how you introduce yourself. 

Free Premium Trials

Say you’re offering a basic package but are struggling to get people to the next step. Perhaps providing them with a free trial of a paid service will make it harder for them to return to the free, limited option. 

Online radio platform Pandora offers a 14-day free trial of their Premium service without users needing to commit with credit card details. For two weeks, those users get ad-free, higher quality streams with more personalization. Once the trial ends, the free service is full of ads and users can no longer personalize. That inevitably makes them more inclined to return to the benefits of Premium, and the enhanced experience that comes with it. 

Free Premium Trials Conversion
Source: Marketing Charts

If you’re offering physical products, such as a box of items mailed to customers monthly, you can still use this strategy. Even though you may not be able to do it long-term, you can offer a month or two of your package for free.

The more expensive your subscription is, the longer you can make your free trial period. 

Discounts for Advance Payments

Evidently, the longer a subscription goes on, the higher your revenue. But, forcing customers into a long-term contract will turn anyone off instantly. Consumers need the option to cancel any time they like, in order to enforce the feeling that they’re ultimately in control. This is why monthly subscriptions are so popular.

However, payments each month can be problematic. If they’re canceled relatively quickly, you don’t get a chance to make a profit from that subscription. To counter this, you must offer those who pay upfront a reason to do so.

Monthly Yearly Subscription Pricing
Source: Wistia

Wistia is a professional video hosting site for business. The brand helps firms add videos to the web, monitor their performance, and encourage new ways to build and engage with their audiences. 

When paying for a Wistia subscription, you’re offered a monthly vs. annual price breakdown.  On the right-hand side of the table, you can select monthly or yearly pricing. The monthly fees within each of the paid tiers alternate to reveal the 20% discount a customer receives if they sign up for an annual contract. The pricing is still shown as monthly, but displayed in a way to reveal the discount. 

Despite Wistia making less off each customer per month, they’ve locked them in for a longer-term. This is a far more effective strategy than making their customers commit to a year-long contract or charging them monthly.

Be Transparent 

The general misconception of a subscription-based service is being locked into a contract. This can scare customers off. Having your terms and conditions big and bold up front, therefore, should be a priority.

Subscription Pricing Transparency
Source: Android Developers

No matter what kind of service or product you provide, you will have to prove your worth to customers over and over again. Integrating a smart contract, (or self-executing contract) through a blockchain that alters and amends all interactions, upgrades, or cancellations is a way to ensure clarity. It’s a forward-thinking, tech-driven way to boost trust without having to go back and forth with the client. 
In addition, great customer service can come via a dedicated phone line or even a live chat software, that helps both customer acquisition and retention.

Automatic Renewals

You’ve just gained a new subscriber, congratulations! You’ve got their payment information and have begun processing. It’s now essential you set the payment to renew based on the terms and conditions they agreed on when signing up (which, as we’ve established, you’ve made transparent).

You don’t want to be messaging them at the end of each month with a reminder to pay. That’s why you must get this permission upfront. If you give them the option to opt-out each month, it’s far more straightforward for them to cancel. But if their card is charged without notification, they may keep the service even if they aren’t using it.

Like a gym membership, whether you show up and use the gym each month is irrelevant. You’re charged either way. Of course, you’d like your customers to make use of the service or product you’re offering, but if they’re not, it makes less difference to you than to them.

Nurture Relationships 

A strong customer relationship is key to a good subscription model. Without robust relationships, there cannot be any sustained growth. As your customer base increases, this becomes more and more essential. Acquiring new customers is critical, but losing existing ones is far more costly. 

As a result, you must provide customers with smart and thorough tools to control their spending across the entire subscription life cycle. Carefully monitor your customer usage and enactment to reduce churn. A reliable, satisfied customer base is vital for steady growth.

Connect all your customer data like location, price points, product selection, and feedback. Garnering and collating such data is far easier today, thanks to the internet of things (the network of internet-connected objects able to gather and exchange data). As well as related developments in tech. 

With such data, you know who your users are, and what they want. This helps tailor interactions with them. You can use a unified communications platform, for instance, to reach out via an individual’s preferred channel. Doing so means the customer always feels like you’re talking to them personally, and not just shouting into the void. 

Why Improve Customer Experience
Source: Super Office

Keep Pricing in line 

Subscription-based sales come with limitless pricing options. Most begin with a standard recurring model because you need to start somewhere. However, markets evolve in an instant, and customer needs change over time. For example, competitors may enter your marketplace with a different offering. It’s critical for you to monitor such changes and adapt to maintain your base. 

A subscription business needs to be flexible on pricing models to maximize customer acquisition and market share. Be ready to change your models in an instant, without alienating your existing customers. If prices need to go up, gift your customers with a new product or offer them discounts compared to the higher prices paid by new members. 

Summary

Subscription-based models can be extremely profitable and are growing in popularity. Whether you’re adding this type of service, or altering your existing model, the seven tips outlined above can improve your chances of success.

Offer your basic service for free, then encourage customers to sample a premium version for a limited time only. Make signing up for longer more enticing with discounts, and always be transparent every step of the way. Keep your customers satisfied with excellent customer service and communication, so if you need to raise your prices, you minimize the backlash. 


About the author

Sam Obrien

Sam O’Brien is the Senior Website Optimisation & User Experience Manager for EMEA at RingCentral, a global UCaaS systems provider. Sam has a passion for innovation and loves exploring ways to collaborate more with dispersed teams. He has written for websites such as InsideBigData and Network Computing.

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