Most should be familiar with the concept of Customer Acquisition Costs, or CACs - where winning over entirely new customers is the most expensive process of all, while up-selling and contract / subscription renewals should take increasingly less levels of effort and maintenance. For a number of years we’ve been encouraging our own customers to move more towards subscription-style service business models which more evenly sustain a company’s cashflow.
The model of Service Subscriptions goes back several decades actually and owes much in recent times to innovations like Xerox’s 1959 business model where customers balked at the high prices of the new Model 914 Photocopiers/Xerography Machines, but were sold on the idea of paying a monthly fee on the basis of number of copies made per day / averaged over a month. Since that time there has been a huge increase in subscription-based businesses - with most digital properties nowadays having a subscription component to them.
Once you have established a connection with a customer and onboarded and enrolled them as such - it should be relatively easy for you to maintain the relationship - providing of course you are delivering something of value that they will want to access and use regularly. Recent data in fact shows that 90% of customers decide whether the service is delivering adequate value and benefit within its first 100 days - so those are obviously critical for building and maintaining your audience reach.
We ourselves are great advocates of openness and transparency - the Internet is such that you will always be found out in the end - so be honest about your intentions and be clear on how your business derives its revenues and what it delivers in return to its customers. We believe inherently and adhere to the notion of fair play - sending automated notifications out for instance in advance of renewal dates. While less scrupulous businesses will try to get away with notifying the customers after the period has lapsed and has been automatically renewed (i.e. money already taken). The Affino platform has automated renewals now as active components and we believe the customer should be fully aware of what is happening to their service contract at all times. If you try and play fast and loose with their loyalty - many a disgruntled customer will simply unsubscribe reactively and cancel well ahead of the next time - and you will build a reputation for yourself accordingly.
All this means though that you need your level of service to be percolating appropriately right from the start - with regular news and information updates, reports and insights or whatever the service entails. It’s that early period that is essential for establishing a favourable impression and doing the most to ensure that the customer is happy to renew within the magic 100 day limit. As the time of renewal approaches you should be reminding the customer - with the automatic renewal notification - just why they are subscribing to the service and what they would miss out on by ending it.
Nowadays a huge variety of businesses have ongoing service/renewal components to them. I for instance pay ongoing renewals for my Ocado deliveries - ’Smart Pass’, a portion of the Amazon Prime Service has always been about deliveries, but now includes other on-demand services too like Video, Audio Books and Music. I have an auto-renewing subscription with Specsavers for contact lenses, with BT and O2 for telecoms services - obviously Spotify, Netflix, NowTV etc. And more recently we have seen the resurgence of more old-fashioned subscription services like Shave Clubs. Back in the 80’s I even belonged to a Music subscription club for a period. So the Subscription model is pretty pervasive everywhere nowadays.
As an example of communicating renewal benefits - my recent Ocado Smart Pass renewal notification included the following text:
"In case you need a little reminder, these are the great Smart Pass benefits you’ll continue to enjoy:
- Wave goodbye to delivery charges (excluding Christmas week)
- Always save at least 10% on your favourite brands
- Priority access to Christmas deliveries
- Front of the queue for product samples
- A subscription to ocadolife magazine
- Exclusive offers and discounts
- Anniversary gifts"
So you can’t take for granted that the customer fully actively values and remembers why they subscribed to the service in the first place. You need to regularly reinforce the benefits of membership and remind customers why it’s in their best interests to keep renewing and being subscribed, and what they would stand to loose if they were to cancel the contract as such. A proactive way around this is to have a scripted and referenced calendar of events spread through the year - with the key events at either end of the year so that is makes sense to be subscribed for the duration.
We often talk at Affino about maintaining customer expectations - which really means a need for continuous and consistent communication - but there is a fine balance between regular updates and inadvertently sort of spamming your customers - so you need to draw a best-fit-line on those activities too. It’s also not just about email or SMS notifications, it’s about having relevant resources - landing pages etc. which fully set out your position and the ongoing benefits of membership - so customers can easily find those touch-stones to reassure themselves at any time. Another essential here is the use of Case Studies and customer affidavits - so customers can see how others benefit and absorb some of that warm glow of satisfaction and success.
Right now Service Subscriptions have never been more pervasive - but it’s important to do them right, and to have them right from the start - so you maximise the likely propensity for renewal. With our Unified Business Platform Affino we can only do so much and go so far with mechanical and process elements / automations - it is up to you to establish and build your brand reputation to such a level that renewals become habitual and routine.