Tip # 1
Understand that the secret to subscription growth is high retention: It sounds counter intuitive but the secret to growing a subscription business is to focus on retaining subscribers rather than just acquiring new ones. Typically, acquiring a new subscriber can cost 4 to 15 times more than retaining a current subscriber so the maths supports this strategy. In addition, happy retained subscribers will, unprompted, recommend your product to their friends and colleagues. Word of mouth remains the cheapest and best source of new subscriber acquisition.
Tip # 2
Always be clear exactly what you mean by subscriber retention rate: When measuring subscriber retention, ensure you define your terms so they are widely understood in the organisation. For example, at what point does a previous subscriber who returns to the fold count as a retained subscriber as opposed to a new one? Less than 30 days after their previous contract ended or more? Should you count subscribers who pay up after an introductory discounted trial as a retained subscriber or a newly acquired subscriber? Agree your retention definitions before you measure.
Tip # 3
Measure the right retention metrics: Always calculate retention rate by retained volume and retained revenue to understand the true value of the contracts you have retained. Separate out the first contract retention rate from the overall retention rate to find out if you are successfully delivering on your acquisition sales promise or not. This first contract retention rate is arguably the most important retention metric as a positive upwards move will have a big impact on your subscriber lifetime value.
Tip # 4
Design your subscriber experience to create loyalty: Subscriber retention is merely a measure of customer loyalty. Subscription products with high customer loyalty are specifically designed to embed positive habitual behaviours. For example, reading a daily email newsletter during your commute, logging into your business data insight account as soon as you start work, or setting time aside on Sunday morning to read a magazine after walking the dog. Actively promoting these habitual behaviours through design leads to higher subscriber retention.
Tip # 5
When selling a subscription product, make a promise you can keep ‘forever’: All successful subscription products deliver continuous value over time, otherwise why would anyone renew? Distilling what this ‘forever’ value is into a simple sales promise can take time but it is always worth the effort. Publishers who succeed in articulating the right ‘forever promise’ to their target subscriber audiences attract subscribers who then stay. The reason is simple, the new subscriber wants the ongoing value the subscription offers and stays when the sales promise is kept.
Tip # 6
First impressions really count. Make sure you make your new subscribers feel welcome: If you think the process of retaining a subscriber begins a few months before the subscriber contract is due to expire, you are making a big mistake. How successful you are in welcoming new subscribers has a huge impact on how likely those new subscribers are to stay with you. First impressions really do count. Ask yourself if you are proud of the speed, efficiency and warmth of your welcome and if you are not, do something about it quickly.
Tip # 7
Never stop looking for subscribers willing to pay you more: Within every subscriber base, there are subscribers who are extracting more value from the subscription than they are paying for it. When you find these subscribers, a simple targeted price rise will flow straight to your bottom line. Identifying these subscribers correctly is key. Look for signs of high engagement and/or longevity and then conduct a controlled retention price test. You could be surprised at the results and kick yourself for not increasing prices earlier.
Tip # 8
Don’t rip your loyal subscribers off: At the point of renewal, your subscribers will often ask themselves (or google) ‘can I get this subscription cheaper than the renewal price I am being offered?’. If the answer is ‘yes’, you have undermined the subscriber’s trust in you that their loyalty is valued, ultimately limiting your ability to increase pricing. This doesn’t mean you cannot make strong price driven acquisition offers but it does mean these offers have to be targeted and discrete.
Tip # 9
Don’t let subscribers who want to stay go (by mistake): It is deeply annoying for both the publisher and the subscriber if a recurring payment by credit card or direct debit fails for technical reasons and not because the payment was actively cancelled. To prevent this ‘involuntary churn’ requires detailed work to understand the causes of payment failure, such as expired credit cards, and the implementation of processes to reduce future payment failures. It is boring but important work and always worth the effort.
Tip # 10
Know your most expensive cost per acquisition number: Most publishers will know the average cost to acquire a new subscriber, often referred to as the cost per acquisition (CPA), but they might not know what the very highest cost is they pay to acquire a new subscriber. This is an incredibly useful number because when it is compared to the highest cost paid to retain a current subscriber, it often reveals that marketing money should be moved from acquisition to retention to generate a better overall return.
Julian Thorne is the author of the InPublishing Guide to Retention Strategies for Publishers, which you can purchase here.