Get Audience Cut Through: Expert Tips On Marketing Your Subscription Service
Subscription Management leader Chargebee reveals five golden rules to marketing and growing a successful subscription business – make an impact and challenge your competitors.
The news that Disney+ has surpassed Netflix for total streaming subscribers fuels the notion that the subscription market continues to grow, only with more fierce competition.
Whether you’re a global streaming giant like Disney or produce mainstream software that helps businesses streamline their operations, Chargebee says five golden rules help subscription services grow and challenge their competition across all facets of the market.
So, what are these five golden rules? And how can a new business make a big impact in a competitive market?
“The subscription market is normalizing” – says Chargebee
When we see large subscription businesses like Netflix announce subscriber losses (like we have this year), reports are often met with suggestions of ‘subscriber fatigue’ – but this is not an accurate reflection of the market as a whole.
“What we are actually seeing is that there are more and more subscription services entering the market every day, and new competitors to ‘legacy’ subscription providers are cutting into overall subscriber numbers,” said Chargebee CMO Sanjay Manchanda. “Digital natives, who have never known a world without technology, are making subscription commerce the new normal and we see no reason that will slow down.”
Most people don’t even recognise how many subscription services we use each day. Subscriptions now operate in all facets of life, from the app we use to listen to music on the bus to the software and tools we use that help us perform and automate the tedious tasks we used to dread.
Here are some of the most insightful subscription market statistics we’ve seen this year:
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84% of consumers underestimate what they spend on subscription services each month (West Monroe).
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In 2021, 75% of consumers believed people will subscribe to more subscription services and own fewer physical items (What’s New In Publishing).
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“The global market of physical good subscriptions is set to surpass digital subscriptions in 2022” (Whistl).
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In 2021, 81% of UK households were signed up to a subscription service – that’s up from 65% in 2020 (Forbes).
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The average person in the UK spends £620 per year on subscription services, and meal boxes (16%) and technology (14%) are the most popular subscription categories behind entertainment platforms (Barclaycard).
The subscription economy is changing, perhaps for the better. Instead of dramatic fluctuation, the market is simply normalising. Rather than deterring new businesses, this newfound stability should encourage more startups to adopt a subscription model.
Growing a subscription business: Chargebee’s five golden rules
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Decide on the best pricing strategy for your market. Setting the right price for your service is essential. There are many options to choose from. For example, businesses in a new market might take an approach called ‘skimming’ where you set a high price to capture clients who are willing to pay for the value you provide. Or you could choose a more aggressive approach called ‘penetration’ – this is where you undercut the competitors in your market so must be willing to sacrifice profit in order to get a greater number of customers.
Chargebee has also overseen a recent trend in usage-based and metered billing. This pricing structure is unique to the user and charges them based on how much (or often) they use your service. Such an approach is thought to increase customer satisfaction because users are charged for exactly what they use. Consider this option to improve customer retention.
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Emphasize customer retention: Acquiring new customers is exciting for a new subscription service, but did you know failing to retain these acquisitions is the greatest threat to your model? Data from Chargebee’s retention experts report that placing emphasis on retaining and monetizing existing customers is up to 7x more cost efficient than acquiring new customers.
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Utilise ‘freemium’ or ‘trial’ strategies to improve acquisition. Freemium and trial strategies are powerful tools to wield at the very start of your subscription workflow. These strategies cast a wide spotlight on your service, they’re astute marketing strategies that get customers through the door. The barrier to entry is zero and you can work on acquiring paid sign-ups later down the workflow. The key is providing a seamless customer experience that encourages people to upgrade.
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Provide a flexible billing system. Customers will often request a change in their billing date, This might be because of cash flow problems or even an issue with their desired payment method. If you’ve built your own billing system, accommodating, these requests can feel like a chore. We recommend most growing businesses use an automated billing solution to provide internal flexibility where requests can be granted almost instantaneously. It’s all about delighting customer needs.
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Value customer experience above all else. Retention is the ultimate marketing tool. If you’re able to delight users through your product and its focus on customer experience, your users will likely recommend your services to another. The key is to be as helpful as possible. If a customer wants to pause their subscription, allow them. If they need to cancel, make the process simple. And if they decide they want to reactivate their subscription, make sure they can do it with a click of a button.
