In part one of this post, we covered the options that subscription businesses have today when it comes to billing customers. It’s important to achieve balance between the needs of the business and the preferences of customers. Having a flexible subscription management solution in place allows you to offer customers options that work for them. This makes sense, but you may not be completely sure what your customers’ preferences are.
Determining Customer Preferences
This is where a bit of market research could come in handy. You may want to communicate with a core group of subscribers and ask them what they believe the value of your product or service is, and how it best benefits them to pay for it. An alternative method is to A/B test several price points and see which has the higher conversion rate. This kind of research is important because it can help you determine not only the best billing frequency but also the best price point. Be sure to consider the customer lifespan value: if you discover that a higher price has a lower customer conversion rate but higher customer lifetime value, it may make sense to go with a higher price.
Consider the “Freemium” Model
If you’re providing entertainment content, you may find that the “freemium” model works well. This means offering one tier of content for free but restricting access to premium features to paying subscribers only. It’s a good way to allow users to “test” whether they like your products or services before they commit to payment.
“Forced” Free Trials
Amazon Prime is the best example of this model. Most customers pay for Amazon on an annual basis, but they get the first month for free. In fact, there is no way to sign up for Amazon Prime and pay immediately…users must go through this first-month trial. It sends a strong message to customers: we’re so sure you’re going to get value from this service, that we’ll give it to you for free for a month. Audible, the audiobook service, immediately provides new subscribers with a free audiobook upon signing up.
A good place to start is to examine your competitors’ subscription details. How can you improve on them (while still making money, of course)? What need can you fill in subscribers that your competitors aren’t?
Communicate with Your Subscribers
Communicating with your subscribers is critical, which is why your cloud-based subscription management platform should allow you to extensively communicate with and market to your subscriber base. Subscription DNA’s communication tools allow you to easily engage in drip marketing, communications, and membership management.