3 Tiny and Proven Changes Your Subscription Brand Can Make for CLV and Long-term Growth
Growth is where it’s at. But it can be elusive and hard to hold on to. It can also be expensive. This article explores three small changes that subscription-offering businesses can make to boost their CLV and long-term growth. The strategies bring bonus benefits as well including strengthened customer relationships, cut churn, payment failure prevention, and boosted word-of-mouth marketing.
In this article:
- Offer a Subscription Pause Option
- Letting Customers Pay the Way They Want
- Starting a Referral Program
In business, it’s not very often that something easy to do has a big impact on something important.
And in the subscription industry, it can feel as though everything that’s necessary for growth is a massive drain on time and resources. Marketing campaigns. Product development. Demos. Onboarding. Customer service. Invoicing.
So here’s a little good news. Not everything requires months of logistical planning, consultants, and a slush fund. There are three tiny changes you can make that can have a massive impact on your revenue and growth over the long term, strengthening your market position.
1. Offer a Subscription Pause Option
A subscription pause option simply allows your subscribers to pause your service without cancelling the subscription. This can be for any reason – they might have other temporary priorities, money might be tight, or they may have to re-evaluate their usage and figure out which add-ons and services work better for them.
Subscription companies might feel ambivalent about a pause option because it sounds like a gateway to cancellation. It feels counter intuitive to growth.
But it has the opposite effect. You’re far more likely to keep them as long-term customers because it creates trust.
Why it Matters in the Subscription Arena:
When you give subscribers a pause option, you’re telling them you understand them. That they have differing needs and circumstances. That you would rather have them on board as satisfied customers, over raking in the monthly fee.
It also shows that you understand that they don’t want to lose their account and their data – you’re not forcing them to make the impossible choice of “we can’t keep up, so we’ll have to cancel everything.”
It’s up to you to define what a pause means and how it works:
- Limited or no access to the subscription?
- How long can they pause it for?
- How often can they pause it?
All that is needed is a tunnel – a point of occasional contact that ensures you keep them onside throughout the pause.
The pause option boosts customer long-term satisfaction by giving them the flexibility and sense of control that they want. You might take a temporary financial hit, but you cut your churn and enjoy a much stronger relationship with your customers for the long term.
And that will pay in dividends.
2. Letting Customers Pay the Way They Want
Letting customers pay in the way that works best for them will make them happier and more likely to pay on time, every time.
There is no financial benefit to making customers jump through hoops to pay for their subscriptions. There are far too many competitors out there, who have no problem offering customers exactly what they want.
And when payments are more time-consuming to make, obstacles get in the way. Then payments are forgotten and fall through the cracks. Then you’re stuck wasting precious time chasing tons of payments. You’ll suffer revenue leakage as well.
That gets expensive if you have thousands or hundreds or thousands of subscribers.
On the other hand, accommodating preferred payment methods gets logistically difficult. Often you content with multiple billing cycles, currencies, and regulations, stretched around the world. Accommodating preferred payment methods might not look like a tiny change.
But with the right tool, making this change is easier than your current payment system currently.
Why it Matters in the Subscription Arena
It’s important to cater as much as possible to subscription customers because it’s so easy for them to leave and go straight to your competition.
In the subscription industry, there’s nothing more important than a good Customer Lifetime Value. And keeping customers with you and paying will contribute to your CLV.
Here’s how costly not providing easy payments can be for you:
- How many hours a week do you spend chasing payments?
- How much is your teams’ time worth, versus the size of these payments?
- How much do you lose annually due to payment failures?
- What’s the churn rate for customers who experience failed payments disruption?
- What’s the long-term cost over 10 years?
The costs of not accommodating preferred payments can be astronomical. And that’s revenue and time loss that could have been invested or put toward innovation, development, growth, etc.
3. Starting a Referral Program
We’re all use word-of-mouth. We listen to other people’s opinions. And whether we have good or bad experiences with a subscription, we talk about it.
A referral program leverages the power of word-of-mouth by incentivising your subscribers to refer new customers to you in exchange for benefits, rewards, and discounts.
With the right benefits, happy subscribers turn into brand advocates. Given how much people trust recommendations from family and friends, that advocacy is like gold dust.
92% of consumers trust personal referrals. And people are 400% more likely to buy when referred. (Nielsen)
Referred customers have a 16% higher CLV. (Harvard Business Review)
Why it Matters in the Subscription Arena:
It’s the ultimate marketing plan that you don’t have to plan or find the right words for.
The right referral plans boost customer retention because rewards keep customers on side.
Referral programs are extremely important in the subscription space for customer acquisition. Acquisition is often one of the biggest and most expensive challenges that a subscription business has.
But when existing customers are brand advocates, they attract new subscribers for you. And those new subscribers are also far more likely to be long-term customers.
Why struggle to do something that others can do for you easily? When you leverage the customer base you already have, you broaden your base, and lower customer acquisition costs.
There’s nothing set in stone about which benefits your referral program needs to include. But the rewards should be exclusive to the referral plan only. That locks in the incentive.
Conclusion
Sometimes it’s the little decisions that make all the difference.
Whether you decide to offer a pause, broaden payment options, and/or start a simple referring program you have a lot of potential to boost everything from Lifetime Value, retention, and revenue, while cutting significant costs like acquisition and leakage.
These subtle adjustments can help you as a subscription business position your brand for long-term revenue and customer base growth, and success.
If you’re curious about an all-in-one subscription management software package that implements and automates all these changes for you, why not get in touch? Book a free Discovery Call with our team today.
Let’s chat further.
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