Finding new customers isn’t easy. You first need to make your product or service seen in a crowded marketplace, then showcase your product’s value and convince someone to try it. Customer acquisition means casting a wide net to often reel in little rewards. However, once you have a pool of customers willing to use your product or service, they can potentially become repeat customers.
If your product or service can charge recurring payments or subscription fees, then you should utilize those payment models. Subscription-based business models are the best way to monetize your customer base and build a foundation for a successful business. Rather than relying on new customers and occasional purchases, your existing customers become a reliable source of income with fixed periodic payments.
Understanding the goal is one thing, but how do businesses build ongoing relationships that they transform into recurring payments? Here are five tips to help you on your way.
1. Make payments simple
Subscription-based business models boost customer lifetime value (CLV) by keeping clients coming back for more with minimal effort. In general, making life as easy as possible for the customer is an excellent rule to live by in business. Therefore, when looking to build a business around subscriptions, setting up recurring payments should be a simple affair.
This means having an effective bill paying service that allows multiple payment options. As the volume of your customers increases, maintaining smooth recurring payments without the appropriate tools is no longer sustainable. Instead, you need a digital payment system to automate subscription-based billing.
If managing customers’ subscriptions becomes complicated, they will quickly try to cancel the service. Customers need:
- Reminders before payments.
- Timely invoicing for each bill.
- Simple controls to switch between subscriptions.
- Clearly defined and communicated renewal and refund policies.
2. Customer retention techniques
There are a lot of retention techniques to help transform one-time customers into subscribers. These include:
- Freemium models: Offer limited free versions of a product or service to demonstrate its value and to entice customers to pay for the full version. Often the freemium version limits certain functions on the product or service and in that way entices customers to join the paid service. Free versions of a product are an excellent way to grow user base. This is especially helpful for new companies looking to learn how users interact with their products.
- Introductory offers: Many of us are tempted into a service thanks to a free trial or a reduced price. Introductory offers help grow the businesses customer base in the hopes they will pay the full price once the free trial ends.
- Retargeting: Is aimed marketing at previous customers in order to convert them into subscribers that are willing to part with a monthly or annual fee. Companies have many marketing channels available to them for retargeting. This includes personalized email marketing that’s based on customers previous use of the product or service or new recommendations.
3. Develop your services
Subscriptions are a fantastic business model. But, while the product can become “set and forget” for the customer, it absolutely can’t be for the provider. If you become complacent, there are always competitors working to offer a better service and poach your subscribers.
A good approach is working to develop products and enhancing customer experience. The market can change quickly, and you need to remain active when it comes to new features or functionality.
4. Use data to grow
You can gather plenty of data on your subscribers to help guide product development and grow your business. This includes understanding customer activity to determine what they value the most and what can drive future growth. It can be helpful to acquire customer information during onboarding as well as directly asking for feedback through surveys. Other data that helps growth includes bigger picture financial performance of various subscription packages. This could include tracking monthly or annual recurring revenue and renewal rates.
5. Support that keeps customers coming back
Strong customer support is essential for fostering ongoing relationships needed to make a subscription model successful. In a way, every business is really in the customer service industry, but when you’re dealing with recurring payments and high CLVs, creating a good consumer experience becomes critical.
Quickly and accurately assisting customers with any questions, issues, or technical knowledge they require is vital for keeping subscribers. A negative customer experience can be difficult to overcome, and it’s easy for customers to unsubscribe due to frustration.
For subscription businesses, most customer interactions will be based around renewals, payment issues, upgrades, or cancellations. Having a fantastic customer service team and processes in place to deal with common issues can help minimize customer churn. Consumers who enjoy interacting with a company are much more likely to become repeat customers.
Building a subscription-based business for long-term success
While basing your business on subscription-based revenue can be more complicated than individual purchases, it’s a great way to generate sustainable growth and identify new opportunities. In order to justify subscription based billing, you need to build long lasting relationships with your customers and provide them with ongoing value.