Business Advice: How to Thrive in the Subscription Economy in 2021
This article is for you if:
- You're looking for data-backed ways to retain new subscribers
- You want to learn about specific ways you can offer convenience and flexibility to your customers
- You're on the prowl for a robust subscription management solution for Magento or Salesforce
- You would like to speak to an e-commerce expert about ways to increase recurring revenue
Subscriptions have seen tremendous growth in recent years. As a result, more companies are flocking to a recurring revenue model.
One of the biggest challenges faced by new subscription merchants is getting their offerings right. Is it best to attract customers with new features and pricing promotions? Or would it be better to focus efforts on customer service and reducing churn?
The Subscription Commerce Conversion Index
PYMNTS.com regularly publishes a Subscription Commerce Conversion Index that compiles research from the subscription economy across industries. It details the ways subscription companies are improving their services to build long-term relationships with new subscribers. The data is a goldmine for merchants who are looking for business advice that will help their recurring revenue efforts prosper.
According to the November edition of the Subscription Commerce Conversion Index, the number of U.S. adults who subscribe to at least one service grew to 182 million from February to July 2020. The 9% increase was spurred by the COVID-19 quarantine that had more people staying at home. While the country faced an economic downturn, e-commerce prospered, and many new subscribers are apparently hooked (as nearly half say they will keep their services post-pandemic).
With subscriptions gaining momentum, it’s time for businesses to re-think their offerings. Generating recurring revenue while catering to consumer needs is a no-brainer. However, competition is ripe, and success often lies in the small details that make up your customer experience.
Follow the business advice below if you want to be a top performer in subscription commerce. (We also tell you how you can achieve all of these strategies with one simple solution).
Subscription Business Advice: Implement a Quick Sign-Up Process
The PYMNTS.com study reveals that one of the best ways to make subscriptions more fruitful is to implement a quick and easy sign-up process for your customers. In fact, 61% of merchants had a faster sign-up process in Q4 of 2020 than in Q3.
According to the research, it took 127.6 seconds to sign up for an average subscription service in Q4 of 2020. That’s a drop of 26.3 seconds from the previous quarter.
This is an area where the top 20 subscription performers and B2B services are getting it right. 70% of merchants in these categories have reduced their sign-up times (as compared to only 45% of the bottom 20 subscription performers and 57.3% of B2C service providers).
Simply said: Don’t over-complicate things. What is the bare minimum of information you need to get from customers to opt them in? Also, evaluate your website. Are there ways you can make it more user-friendly, reducing onboarding times?
Subscription Business Advice: Be Flexible With Plan Changes
Another way to prosper in the subscription economy is by allowing your customers flexibility when it comes to cancelling or changing their plan. Don’t make it a nightmare to opt out of or downgrade a subscription. (We talk more about this in our previous blog post The Dos and Don’ts of Starting a Subscription Business).
Nobody likes to endure a cumbersome cancellation process. The average subscriber has become quite sophisticated and expects value, control and flexibility in exchange for their commitment. Additionally, f opting out is a nightmare, word will get around in the form of negative online reviews.
Allowing customers to easily make subscription changes, choose different plan options and even cancel their contract gives the consumers convenience and peace of mind. Do not be afraid to give your customers more control, even if that means access to cancel. Some states — like California — have implemented laws requiring subscription businesses to allow customers to cancel online.
In an effort to reduce churn, consider offering an option that allows customers to pause their subscription for a certain amount of time before it resumes. Everyone’s situation is different, and while your product or service may not be in the budget this month, that could change in the future. In fact, according to the Subscription Commerce Conversion Index, 44% of consumers who are likely to cancel would instead pause their subscription if given the option. By not offering the choice to postpone, you are potentially leaving money on the table.
Also keep in mind that if your customers happen to unsubscribe, it allows you the opportunity to request feedback for why they made the decision. This can help you to make improvements that will ultimately benefit you bottom line.
Subscription Business Advice: Offer a Free Trial
Having the ability to “try before you buy” is appealing to most people. After all, a great product sells itself, right? That’s why 70% of the top-performing subscription merchants offered free trials in Q4 of 2020.
A study by Forbes found that offering free trials is a more lucrative approach than live sales presentations. That’s because it allows merchants to “show and not tell.” Their findings showed that free trials were beneficial in the sense that those who convert are seldom disappointed with the service because they know exactly what to expect, and transparency is never a bad thing.
For those who do not go on to purchase products or services after a free trial expires, it gives your business another opportunity to collect feedback. Put together a quick survey giving them the opportunity to explain why they chose not to do business with your brand.
The Blanket Solution: Flexible Subscription Management Software
With the rising demand for subscriptions comes rising competition. The PYMNTS.com Subscription Commerce Conversion Index concludes that retaining subscriber loyalty is directly tied to faster, more flexible experiences.
While thinking about implementing all of the above into your subscription business may seem overwhelming at first, there is actually one way to kill all three birds with one stone: robust subscription management software.
PowerSync’s products, mPower for Magento and Recurrex for Salesforce, are great examples of this. If you want to see our powerful and dynamic subscription management solutions for Magento and Salesforce, watch the demos below. You can also schedule a complimentary call with one of our e-commerce experts to get subscription business advice and discuss a potential fit.