3 Areas Subscription Businesses Need to Focus On to Retain Customers – PYMNTS.com

After 2022’s “great unsubscribe,” subscription brands are hyper-focused on strengthening retention for the year ahead.
That’s what Thomas Marks, head of growth at eCommerce subscription management and recurring billing platform sticky.io, told PYMNTS. Marks said that while 2022 was a challenging year for many subscription brands, he sees three key takeaways  value, flexibility and relationships  that when effectively activated, should help businesses position themselves for success in the current climate.
The current climate is one where nearly 2 in 3 U.S. consumers (64%) are living paycheck to paycheck. As inflation continues eating away at their purchasing power, it’s only becoming more mission-critical than ever for subscription brands to reinforce the value they provide to their customer base.
“The brands that fared the best created value for their customers, not just convenience but actual value. Whether that was through a loyalty program, rewards, discounted pricing … they won by making their customers feel like they were getting something from their subscription that they couldn’t otherwise get,” Marks said.
See also: Subscription Businesses That Measure Lifetime Customer Value Outperform Competitors
Research in PYMNTS’s January “The One-Stop Bill Pay Playbook” finds that subscription businesses face an uphill battle to keep their customers during challenging economic times. Only 17% of consumers say that paying their streaming subscription service bills is a priority when times are tight and budgets are stretched.
“The second key takeaway,” Marks said, “is flexibility. Consumers really want flexibility in their subscription, whereas in the early years of the pandemic people were subscribing mainly for convenience and didn’t necessarily care that much about the intervals at which their subscriptions were renewing, but now that people aren’t trapped at home 24/7 they want flexibility in being able to pause a subscription, being able to suspend it for a period of time or change their frequency to an every-other-month option. The subscription brands that fare the best offer a very robust consumer portal that puts total control in the hands of consumers.”
Read more: 78% of Online Subscription Purchases Are Made With Stored Credentials
Marks’ third crucial takeaway, building customer relationships, acts as an umbrella for the other two of value and flexibility.
Historically, customer acquisition has always held more attraction for brands than retention, as it’s about growth. Still, ironically it’s the companies with the strongest growth who focus most on retention and relationships.
“The third key takeaway, relationships, goes back to [subscriptions] not being just about convenience anymore,” Marks said. “We’re not trapped at home, we can all go out and shop, and so relationship is really tied to value  as the subscription brands that fare the best create a community around their brand. They actually build a relationship with consumers, another vehicle to remind consumers of the value they’re providing, so it’s not just a product that consumers are subscribing to but the relationship [they have with the brand].”
As consumers continue to examine their spending, and acquisition costs skyrocket for businesses, customer retention is becoming the name of the game for subscription brands.
“Again, at the start of the pandemic customer acquisition was easy, so brands could grow subscriber count, even with really high rates of churn,” Marks said.
Now, things are a little different.
“I’m seeing more and more subscriptions turn to newer forms of affiliate marketing, employing influencers to help merchandise their products, but also going back to that sense of value and sense of community  building a loyal customer base,” Marks said.
Word of mouth is the most powerful marketing tool that any brand has, he added.
Still, there are certain avoidable frictions subscription brands should work to address  one of the biggest being involuntary churn when customers’ payments, for one reason or another, can’t be processed. PYMNTS research in the February “Subscription Commerce Tracker” finds that tackling failed payments is integral to customer retention strategies.
Additionally, Marks emphasized that reducing friction at checkout is of the utmost importance to increasing conversion and retaining customers.
“The more [payments] flexibility you have, the more likely you are to have success,” he said. “Just the act of reaching around and getting your wallet out of your pocket to type in a credit card is a barrier just one more opportunity for someone to say, ‘Eh, I’ll do this later,’ and then never come back.”
PYMNTS Data: Why Consumers Are Trying Digital Wallets
A PYMNTS study, “New Payments Options: Why Consumers Are Trying Digital Wallets” finds that 52% of US consumers tried out a new payment method in 2022, with many choosing to give digital wallets a try for the first time.
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