Customer retention & acquisition for subscription businesses
ith inflation in mind, we wrote about how you can optimize pricing for a future-proof subscription business. Now, we specifically highlight customer retention during inflation and beyond.
Customer retention is an essential part of a successful subscription business. It hinges on a laser focus and commitment to delivering value to the customer in the product or service as well as the experiences they have with you.
If customers aren't getting value and a great experience from you in the first place, it doesn't matter how cheap or expensive your offering is, they have no incentive to keep buying.
How to innovate to combat inflation-related unsubscribes
If massive price rises are not suitable and neither is sticking your head in the sand, SaaS companies that want to thrive going forward need to think outside the box with a focus on innovation across the board. These are the key areas that we, at keylight, believe you need to focus on to improve customer retention, even when faced with inflation:
Show your value to customers
People and businesses are looking at where they can cut costs, so you need to be on their 'need to have' and not their 'nice to have' list.
What makes you essential to customers and how do you meet their needs? You need to be exceptionally clear in your understanding of this, having an acute knowledge of your subscribers’ wants and needs and why they come to you to fill them.
Continue to innovate, refine and improve your commitment to delivering that value with a focus on lifetime relationships rather than one-off sales. Crucially, you must communicate your commitment to them in marketing as well as actions. For example, in addition to the product or service itself, make sure working and interacting with you is secure, relevant, convenient, productive, and enjoyable.
Make sure your customer is in no doubt about the value you bring to them and how you meet their needs. For B2B businesses that might mean that the service you offer directly supports their own ability to grow their business and boost their bottom line.
Commit to exceptional customer experience
A 2019 PwC Global Consumer Insights Survey of 21,000 online consumers found that “75% of organizations believe themselves to be customer-centric but only 30% of consumers agree."Focusing on customer experience is the cornerstone of what we do at keylight for two reasons:
1. If customers have a positive experience, they are more likely to stay with you and recommend you to
2. The key, however, is in knowing why your customer experience is great. That comes from knowledge
and understanding - the more involved you are in the experience, the more you will understand.
A great customer experience isn't a static thing - you need to keep learning in order to make sure you evolve. To create a great customer experience you need detailed information about the customer's ongoing experience with you, analyzing it and using it to continuously make improvements. This is done through a combination of data and human insights, which can ultimately be used to drive loyalty when they are utilized effectively.
With our customer portal, as well as the wider keylight solution, you can observe customer behavior, understand their pain points, intercede where necessary, and implement updates seamlessly to make sure you're constantly giving your customers reasons to stay loyal.
Personalize your subscription offering
Personalization is the mantra of the modern subscription business. A McKinsey survey found that 28% of subscribers said that a personalized experience was the most important reason for them continuing to subscribe to a product. That's significant and it's far from the only piece of research to show such a trend.
From guided selling to make sure a customer finds the right product to suit their needs at the start, to ongoing data analysis to understand your customer and make sure they're getting what they need, personalization is a powerful tool for customer retention.
Make sure your customers have enough options to cater to their different needs but with the right level of guidance so that they don't become overwhelmed with an overcomplicated customer journey. What's complex in the back end should be seamless to implement and easy to understand/use from a user perspective (internal and external).
Make your subscription offer convenient for customers
Time is precious, for you, your team, and your customers. Make it easy for customers to get what they want, whether it's managing their billing, finding the answer to a question, or upgrading their service. We all know that if a service is difficult to use you will get frustrated, give up, or both.
Give customers autonomy through automation and self-service options with a carefully considered customer portal, but also make sure you dedicate resources to the most valuable points in the customer journey where they may need assistance.
Diversify through strategic subscription partnerships
Constant innovation is the hallmark of a modern subscription business. We have already discussed that in relation to the customer experience, but a wider part of that experience relates to your product offering. If someone likes and trusts you, they will take your recommendation for other services, so why not use that hard-earned trust to the benefit of you and your customers?
While you should focus on offering in your area of expertise, you can leverage the skills of partners you respect and trust in adjacent service areas through strategic partnerships. This enables you to better serve your customers and meet their needs. However, it also means you can move into other market areas and access new audiences with the benefit of an association with a credible and established player in that field.
While there is an investment in doing this properly, if it’s done well, it’s more cost-effective than trying to enter a new market cold. To get it right, you should consider a carefully planned partnership strategy to make sure you get the benefits and don’t succumb to the pitfalls of an ill-planned approach.
keylight’s partner portal enables you to simplify, streamline and optimize the process of onboarding partners, managing the relationships, protecting your reputation, and ensuring that partnerships serve you and your business.
Increase your subscription prices strategically
It's inevitable that such significant rises in inflation as we’re currently witnessing will impact the running costs of your business and will most likely mean you need to increase your fees. However, as a subscription business, you're in a better position than most to approach this strategically and in smaller increments that are easier for customers to manage. Consider the following:
- New prices for potential customers
- Segmented pricing for existing customers
- Increase prices respectfully and in line with competitors
- Consider price guarantees after a rise, such as fixed price stability for the next six month
- Follow up price rises with careful monitoring of customer behavior and rapid intervention such as discounts and loyalty programs
Overall, while inflation is a challenge for all businesses and individuals, there’s no reason that those with an appetite for thriving cannot approach it as an opportunity to develop, evolve, and become even more resilient. Customer retention is an essential part of doing that.
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