With inflation continuing to break records and whispers of recession spreading, you may expect customers begins cutting a variety of costs. In economic down cycles, customers tend toforegolong car vacations for local outings, they buy off-brand products plus they cut premium subscriptions.
“Subscription-based services,” says Larry Chiagouris, a professor of marketing at Pace University,”are generally premium priced, since they save people time. But if people don’t possess the money to cover the savings with time …They will do a few of these things for themselves.”
Subscription services which are predominantly for “discovery and delight” should already be finding your way through a recession, says Paul Chambers, CEO of the Subscription Trade Association, a Troy, Michigan-based association focused on providing a network forthe DTC subscription community. He notes an upsurge in churn rates is more probable than not for a few subscription services. The rate of customer attrition, or churn,had beendropping through the pandemic, as consumers flocked to subscription services. Itdroppedto 5.4percent in 2021, from6.3 percent per year earlier, in accordance with a2021 subscription economy indexreport from Zoura, a subscription management platform located in Redwood City, California.
But it doesn’t mean all is lost if your business’primary revenue model involves subscriptions. Here are some tactics Chambers and Chiagouris suggest for evaluating your subscription business and priming it for a downturn:
Add tiered subscription offerings
Without ideal, an inflationary period could be idealfor some businesses, says Chambers. “It’s a chance for companies to leverage subscriptions where individuals are seeking to save.” A subscribe and save model might be a smart way for brands to capitalize on the tightening of wallets as people turn to save where they are able to. For streaming services, tweaking mainstream models can help lower the churn rate of consumers. Creating leveled tiers of subscription is really a strategy gaining traction as companies like Netflix turn to curb its cost to consumers. For instance, rather than canceling, a person may tap a lower-cost tier or key in to the company’s forthcoming ad-supported offering.
Let them hit the ‘pause’ button
Some consumerswillcancel subscriptions. However, others would elect to halt them temporarily if given the choice, says Chiagouris. While a delay option might not be what businesses desire to do–because this means lower revenue in the meantime–doing so could make getting those customers back to the fold, and spending money on your service, easier.
Put yourself in yourcustomers’ shoes, says Chambers. “The firms that elect to engage their consumers and enrich their experiences will be those that see reduced churn, because they will function as companies which are providing consistent value.”In the end, he adds: retention isn’t about retaining and locking consumersinto their subscription and hoping they never leave. “It’s aboutproviding value and known reasons for them to keep to remain.”
Brining on ads is something thestreaming services are doing, but Chiagouris says companies should turn to utilize ads in different ways aswell. “Every subscription-based service has the capacity to incorporate some type of advertising support,” Chiagouris says. This may include running advertisements on an internet site to highlightunrelated services and products with the purchase of another thing. Thatgenerates revenue, too.
Secure your subscribers
While Chambers emphasizes the significance of keeping consumers by creating product and service value, Chiagouris still anticipates “lock-in” deals willincrease. He notes that companies have to overcome the brief inflationary period, and could find lock-in methods stabilizing. “What they will make an effort to do is make an effort to lower their price a bit, or maintain their price rather than increase it… but using one condition: They will attempt to secure the amount of orders or along the partnership with penalties, pre-identified and pre-documented penalties if someone terminates the partnership before the secure period.” That is right from the cellular phone carriers’ playbook, he adds. But it’s something other brands can try, too. Ultimately, it isn’t really probably the most consumer-positive method, nonetheless it can help a brandname bridge a downturn.