This Is the Fastest Way for Subscription Businesses to Grow Exponentially
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Because of the lockdowns and people working from home, subscription brands were one of the areas that benefited from the epidemic.
The data speak for themselves, therefore this remark isn't merely rhetorical. During the epidemic, roughly 20% of all American families subscribed to some type of retail service, according to surveys. As a consequence of the increased activity, total revenues grew to $23 billion.
Some of the increased activity may be attributed to individuals seeking to pamper themselves at a period when good news was rare. This kind of behavior was not limited to the epidemic; it also happened throughout the global economic downturn.
When compared to the preceding five years, sales of beauty items doubled during this time.
As a result, it's not unexpected that more than half of subscription service subscribers joined up to bring a little joy into their life (and the lives of their loved ones) during the epidemic.
However, in the post-pandemic era, we are now navigating through a new normal, and scalability has become more difficult to attain.
With that in mind, here's what you should be doing for your subscription business in order to keep it growing well into 2022 and beyond.
Data collection and activation could be improved
To support your subscription brand's future development, you'll need the infrastructure for data connection analysis and activation. Your chances of attaining effective growth will improve if you expand your relevant data.
More zero-party data, which refers to information that a consumer offers you deliberately and purposefully, may improve your chances of success. Their preferences, buying intents, and how they want to be identified by your business are all included.
Using zero-party data can help you better identify which consumers have a high LTV and will allow you to acquire additional customers with comparable LTV. This is particularly true when an LTV prediction model is used.
How can you get your hands on zero-party information? It's quite straightforward: you start by asking them the correct questions.
To avoid churn, start by asking the proper questions
It's all too easy to miss resurrection or win-back potential as your subscription service grows. You should also think about how you may turn previously churned subscribers back into paying clients.
Even if you're one of the most well-known businesses, churn is unavoidable. You may, however, lower it and begin by focusing on high-value consumers.
Of course, this begs another question: how can these users be identified? The easy solution is to ask the correct questions, which you can accomplish via questionnaires. In the user acquisition game, questionnaires may be a force multiplier.
You may acquire significant information through surveys that can help you forecast the true worth of consumers. As a result, you may concentrate your marketing efforts on a high-profit clientele. However, before you begin collecting your questions, you must first establish some groundwork.
For example, how would you motivate your audience to take the survey? If you run a beauty box subscription business, for example, you might inform your consumers about new goods more quickly if they shared their preferences with you.
You must also provide context for your consumers so that your questionnaire is relevant to their needs. Similarly, great thought should go into freezing your inquiries, since you don't want to make a bad impression via misinterpretation.
Questionnaires are useful throughout the onboarding process, and they are also useful throughout the client life cycle. As a result, you may utilize them as a starting point for future acquisition plans.
Examine cohort retention and loyalty-focused initiatives to see what may be done
Concentrating on cohort retention and generating more loyalty-focused marketing may help your brand significantly. It's especially true when using predictive models to figure out which consumers have a greater LTV than others.
This will allow you to identify users who are more likely to make a purchase over time.
Your growth team's job will be a lot simpler if you use predictive modeling for these efforts. Because you'll be able to foresee long-term profitability, you'll be able to remove a lot of the guesswork and amp up your efforts.
Furthermore, you may do it in a timely and cost-effective manner while comparing your results to retention standards.
Keep in mind that cohort analysis should not be limited to a certain proportion of subscribers during a specific time frame. Instead, you should conduct this in your analyses' outer-month ranges. As a matter of thumb, the flatter and more asymptotic your curve is, the better off your subscription company is.
Customers who have churned may be re-engaged
After churn, don't give up hope of regaining clients. This is why a win-back plan might be advantageous.
Because you already have a communication channel, regaining lost consumers is completely possible. Additionally, if you have previously given them your questionnaire, you will be in a better position.
To win them back, use the open communication channel to provide them with speedy bargains and tailored offers.
Make a change to your acquisition approach
To revamp their user acquisition approach, several subscription businesses are switching from CAC to payback methods.
Their motivation is owing to recent modifications in operating systems and ad networks, which have resulted in increases in CAC. These increases make it more difficult to maintain the same level of velocity and profitability as before.
Because you lock the pricing and the client LTV, CAC restricts your capacity to grow. Although this works on average, since it does not discriminate between good and great clients, it does not assist growth.
A payback approach, on the other hand, enables your growth team to concentrate on the return and pushing the envelope. You are not limited to the quantity of clients in a certain bracket by extending limitations.
Profit from upselling and add-ons
Offering last-minute add-ons and upselling before a purchase is completed may provide substantial value. As a result, you should know what proportion of your consumers and income comes from last-minute transactions, and how you can take advantage of it.
This may be accomplished through improving your funnel, product, or marketing. A solid LTV model can assist you in determining who your most valuable customers are.
Increase the appetites of your subscribers
When it comes to raising your subscribers' desire to purchase more, there's a lot you can do. For example, you might start by presenting a modest, low-cost item to encourage them into making a larger purchase.
Another good strategy is to provide a little discount for buying many items in a bundle. This strategy has proven to be effective for Amazon Prime.
The lift you may have felt during the lockdown may have worn off as the new normal has progressed. However, you still have time to get back on track to attaining long-term development in 2022 and beyond. There's no better time than now to rethink your UA approach and consider the advantages of predictive marketing to achieve exponential growth.
Thanks to Ido Wiesenberg at Business 2 Community whose reporting provided the original basis for this story.