Many different business models compete for consumers’ attention. Among them, subscription businesses are on the rise, furnishing money-making opportunities for entrepreneurs who successfully navigate the distinct subscription-oriented growth strategy.
Subscription businesses stand out from other types of ventures, because operators enjoy built-in repeat business. Though customer acquisition is competitive, subscriptions lend themselves to building long-term relationships, which can make the business model more stable than some other approaches. It’s up to you to nurture trust and retain subscribers, as well as steadily expanding your customer base. A recent Entrepreneur article shared several tips for growing your subscription business.
If your business success relies on the subscription model, consider these strategies for growth.
Make Sure Your Goods and Services Are Correctly Priced
Despite bringing good ideas and functional products to market, your subscription business is always subject to pricing pressure from competitors. If you expect the value of your products to resonate with subscribers, it’s important to evaluate the market, pricing accordingly. And it isn’t enough to do it once. Conditions can change overnight, so you should regularly analyze the market, and adapt your subscription strategies in line with competitors.
There’s more to an effective subscription pricing strategy than simply undercutting your competitors’ cheapest offers. In fact, you’re more interested in finding the correct balance for your target market. Priced too low, subscribers may not recognize the value of your product. While setting prices too high may cause buyers’ remorse among your existing customers, or turn away would-be buyers, seeking a bigger bang for their buck.
Your subscription renewal structure is as important as the individual prices assigned to each unit. It is thought subscribers hang on for an average of about 3 months, so your goal should be enticing them into a longer term. Adopting a monthly pricing model may not be your best approach – customers can leave at any time. Instead, cement longer commitments by offering pricing incentives on lengthier packages.
Forge Strong Connections With Customers
Irrespective of the industry in which you operate or the types of products you sell, forming relationships with customers is an essential part of building business. Increasingly so, in fact, as communication technology now makes it easier than ever to connect. As important as it is for brick-and-mortar retailers and eCommerce vendors to forge bonds with customers, the process is even more crucial to the success of subscription businesses.
Your business needs a steady supply of new subscribers, in order to remain viable, but customer retention is actually more important than acquisition is, for subscription businesses. Your existing customers will be the first to embrace new products and explore your cross-marketing efforts, so if you don’t keep them around for more than a few months, high churn rates may spell disaster for your enterprise. Utilizing customer messaging platforms and sharing personalized videos with your existing base can help strengthen relationships with your subscribers.
Offer Useful Content
Engaging content adds value to your subscription services. Whether shared directly with your customers or posted to a well-promoted blog; offering content members can use not only keeps them focused on your brand, but also makes them feel better about subscription spending. Once converted, content may be the thing that keeps customers coming back.
Your subscription may lend itself to a particular platform for delivering content. Whether you choose to make videos, send emails, or offer a series of podcasts related to your product line, you should be comfortable and consistent with the medium you select. The material you share with customers may include:
- Training videos
- Interviews with authorities from your niche
- User tips
- Best practices
- Event announcements
- Informational podcasts
It is thought referral marketing may result in a conversion rate five times higher than any other channel. There’s no telling how much subscription business you’re missing, without an effective referral system. Tapping friends, family members, business contacts, and most importantly, existing customers, is an important growth strategy for subscription businesses. These are the people most familiar with your business and the products you sell, so word of mouth originating from these sources carries credibility you can’t buy in other marketing channels.
Understand Financial Indicators
Studying financial metrics provides information you can use to adjust your approach for greater profitability. There’s more to understanding your organization than tracking upward and downward financial trends. To get the most from the data, you should be intimately familiar with concepts such as:
- Lifetime Value (LTV) – As the name suggests, lifetime value is the total amount of revenue you can reasonably expect to bring in from a single customer during the course of the subscriber’s relationship with your business. In some cases, LTV accounts for billing lasting many years.
- Monthly Recurring Revenue (MRR) – Based upon the number of subscribers and other income streams, monthly recurring revenue is the amount of money you can reliably expect to take in every 30 days.
Tracking tools, as well as personal insight, and your own subscription business experience can help you organize your finances and make the most of these valuable metrics. According to Entrepreneur, you should also understand why payments fail and the steps you can take to prevent the damaging phenomenon.
Subscription ventures have unique requirements, compared to other business models. Offering valuable content, building strong relationships with subscribers, correctly pricing subscription packages, and accommodating referrals are only a few of the available strategies for strengthening your subscription business.