This post will go over how to increase subscription sales with seven proven strategies and provide more value to customers.
Boosting sales is a top priority for any business. After all, increased sales mean increased revenue. For subscription-based businesses, where customers pay recurring fees to have ongoing access to products or services, boosting sales usually requires some extra work. There is an ongoing need to convince both prospective and existing customers that a brand's products or services are worth shelling out money for.
This can be a daunting task if you’re adopting the business model for the first time or if you've already launched a subscription-based business that isn’t meeting your expectations. How do you then get back on track and keep the sales rolling in?
Contents:
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Issues With Retention and Loyalty for Subscription or Membership Businesses
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6 Must-Try Strategies for Subscription-Based Businesses to Increase Sales & Revenue
1. Launch reward programmes with partner offers and triggered incentives
3. Prioritise retention efforts
4. Upselling and cross-selling
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FAQs
Key Takeaways:
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Transparent pricing strategies help prevent customers from cancelling their subscriptions.
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Email marketing and marketing automation are crucial for engaging potential customers.
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Effective customer onboarding improves the overall customer experience.
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Subscription software can streamline operations and enhance customer journeys.
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A compelling subscription offer is key to attracting and retaining your customer base.
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Understanding what customers expect helps in addressing their pain points.
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A well-trained sales team can significantly reduce customer acquisition costs.
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Tailoring your approach to your target market increases the success of subscription boxes.
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Regular customer interactions build trust and encourage repeat purchases.
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Software as a Service (SaaS) models benefit from continuous improvement based on user experience.
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Developing a clear buyer persona helps create more effective marketing strategies.
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Short-term wins should be balanced with long-term customer retention goals.
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Small businesses can leverage subscription models to build a loyal customer base.
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Improving conversion rates often involves optimising the entire customer journey.
Issues With Retention and Loyalty for Subscription or Membership Businesses
Brands are loving the subscription business model because it produces steady revenue.
According to The Subscription Economy Index report the subscription economy has grown by a remarkable 435 percent over the last decade. It is expected to grow even more by reaching a market size of $1.5tn by 2025.
This popularity, however, comes at a price. As the competition heats up, some of the industry's biggest names are struggling to retain their customers. Just 20% of subscription-based businesses will succeed in growing customer loyalty in 2024, according to Gartner.
In addition, it is more difficult than ever to manage retention in subscription products due to the availability of flexible short-term subscription plans and customers having the option to cancel at any given moment.
This is a worry because customer loyalty is key to the success of subscription-based businesses. Keeping loyal customers is crucial for achieving long-term success, particularly for building the resilience required to survive economic downturns
What makes customer loyalty so important?
Let's say we have two subscription businesses, both of which charge their customers once every month. Monthly subscriber retention for Business A is at 70%, whereas for Business B is at 50%.
Each month, Business A sells 1,000 new memberships. About 8,400 clients will be retained annually if the current retention rate of 70% is maintained. With the same monthly subscription sales, Business B will have 6,000 customers after a year if its retention rate is 50%. To match Business A's total number of customers after a year, Business B must sell 200 more memberships every month.
It's easy to see that Company A has far more growth potential than Company B does, all thanks to its superior customer retention rate. Gaining new customers isn't enough to ensure expansion if those customers don’t stick around.
Your retention rate is crucial for increasing ROI and subscription sales. Keeping existing customers happy and reducing churn are the cornerstones of a successful customer retention strategy. The goal is to transform those one-time subscribers into loyal supporters.
6 Must-Try Strategies for Subscription-Based Businesses to Increase Sales & Revenue
Boosting sales shouldn’t mean providing value to your business alone. You must also provide value and engage your members - both existing and new. Provide clients with personalised experiences, ease of use, and other value-added features in your subscription-based and wider marketing efforts to keep them satisfied and loyal to your brand.
1. Launch reward programmes with partner offers and triggered incentives
A member reward programme is another fantastic strategy subscription-based businesses use to retain customers. By providing triggered incentives and access to exclusive offers from select partners, you can increase customer satisfaction with your product.
Over 75% of consumers prefer companies that offer rewards. The ease of use and the benefits they receive are the main reasons why customers keep their subscriptions active.
All of these can be amplified through a reward programme that offers benefits and incentives to members for keeping or renewing their subscriptions. Renewal incentives motivate customers to trust your brand and can be significant differentials. The programme should offer extra value beyond your core offerings. It’s an effective technique for creating a community of loyal members who appreciate your organisation.
Building that sense of belonging is crucial to achieving customer loyalty. Customers are more loyal to your subscription service if they have a keen interest in your brand. When there is an active user community, it sparks insightful discussions about your brand and enriches the experience you provide your customers.
Tailor the experience and rewards for your subscribers to get the most out of your programme. This will strengthen your connections with your customers, which in turn will help you retain them for longer.
2. Deploy a referral programme
It's a great idea to introduce a referral programme if you want to expand your subscription business and generate more revenue. The average lifetime value of a customer acquired through referral marketing is 16% higher than that acquired through paid channels.
A referral system is a proven strategy for new member acquisition. To succeed, you must stay informed on industry-related updates and offer relevant incentives for loyal customers to refer your brand to friends and family.
Over 92% of consumers trust recommendations from friends or family , which further underlines the importance of implementing a referral system.
3. Prioritise retention efforts
To make money from subscriptions, you should ideally have stable, long-term relationships with your customers. Maintaining your subscribers' attention and showing them you appreciate their business are both crucial to the success of any membership offer.
In addition to your membership value proposition, one way to do this is to actively request customer feedback (and act on it where appropriate) or to promptly address all feedback in the form of reviews, comments, and queries. As a means of lowering churn and increasing loyalty, taking a keen interest in your customers' likes, dislikes, and other input is invaluable.
In terms of financial investment, it can cost anywhere from five to ten times as much to acquire a new client as it does to keep an existing one, and loyal patrons can increase subscription revenue by as much as 67%.
A study also found that a 25%-95% boost in profitability is possible by raising customer retention rates by only 5%. That's why it makes more sense to focus on keeping existing customers happy rather than trying to get new ones.
Leverage information about your clients, such as their location, purchasing habits, product preferences, and opinions to personalise your interactions. Developments in technology have made it much easier to gather and organise such information. You can learn a lot about your customers and their preferences using this information. Plus, this facilitates more personalised communications with them.
Visit 10 ways to boost membership retention for more ideas on how to keep more subscribers.
4. Upselling and cross-selling
Due to the nature of the subscription model, upselling and cross-selling are particularly effective methods of driving growth through ongoing customer relationships. You can maximise customer lifetime value in relation to acquisition costs by monetising these relationships with your current customers.
Upselling
Adding value to a customer's contract through upselling allows for an increase in income generated from that customer. This tactic works well for both business-to-consumer and business-to-business subscription services, whether the company is shifting customers to a higher pricing tier based on feature differentials or adding exciting upgrades to existing packages.
However, it’s not always easy to integrate these upgrades into pre-existing client relationships. You'll need to persuade your current customers that upgrading to a more expensive plan is well worth it, in addition to meeting their expectations for your product’s ongoing value.
An upsell may raise the total cost of the order, but it often comes with bonuses for the buyer, such as a larger discount or free delivery. Get more people to take advantage of your offer by making them aware of the benefits.
Cross-selling
The goal of cross-selling is to increase the average order value by suggesting additional products that complement what they have previously purchased or the items they have in their shopping carts. This tactic works particularly well if you have a number of products to sell that target different segments of your market.
If you want to see results from cross-selling efforts, it's important to try out several approaches to segmentation. Segmentation is the process of dividing a client base into subsets defined by shared characteristics. To further refine your suggestions for each individual consumer, segmentation divides them up according to demographic characteristics like age or location.
Accenture found that 91% of customers are more inclined to buy from companies that understand them and focus on providing personalised suggestions and relevant deals.
5. Offer transparent and flexible pricing
Businesses have several pricing options in subscription models. Most businesses start with a basic recurring model. Yet, markets can shift overnight as the needs of customers change. For instance, new entrants to your market may provide an alternative product or service. It's crucial to keep an eye out for these changes and adjust accordingly.
This flexibility in pricing models is essential for a subscription business to increase user acquisition and market share. Be ready to make quick adjustments to your models without blindsiding your customers. If price increases are necessary, consider giving existing clients a free bonus item or offering them a discount off the new, higher rates.
Never leave your customers in the dark about price changes once you've implemented them. If you unexpectedly raise rates, customers will be compelled to look for other options. Always inform them well ahead of time.
It's not only subscription sales that might be at risk if customers dislike the lack of control they have over their subscriptions; repeat business from existing customers could be affected as well. Keeping your pricing system flexible and transparent encourages customers to stay with your brand and spend more.
Furthermore, you should make sure that your pricing tiers are based on a thorough analysis of the different price points at which your customers are willing to buy. You can always conduct a survey asking them for feedback before committing to a new price structure.
6. Deliver more value with add-ons
Offering exciting add-ons provides a steady flow of income from satisfied repeat customers. Add-ons allow members to cherry-pick the things they care about most without having to commit to a higher subscription tier. This shows customers that your brand is committed to providing value beyond competitive pricing alone.
Extras provide a degree of personalisation that is appreciated by modern consumers. Expansion MRR is a subset of MRR (monthly recurring revenue) that can be accessed through a combination of upselling and add-ons. With this revenue model, you can drive growth and reduce your customer churn rates.
Conclusion
Subscription-based business models have the potential to generate substantial revenue and are rapidly gaining traction. However, you can only maximise subscription sales if you have a solid understanding of what drives customer behaviour. The most successful businesses are founded on solid, ongoing customer connections.
Use the points listed above to increase your chances of success, whether you're using this service for the first time or modifying an existing model. Proven strategies like reward programmes can be the missing puzzle piece you need to stand out in a saturated marketplace.
Want more information or guidance for building loyalty and retention for your own subscription based business? Give us a call or drop a line today for a free consultation.
FAQs
What are the most effective strategies to increase subscription sales?
Effective strategies include personalising customer experience, optimising pricing, implementing loyalty programmes, and leveraging email marketing and marketing automation. Focus on customer onboarding, addressing pain points, and creating compelling subscription offers. Regularly analyse customer journeys to improve retention and increase conversion rates.
How can upselling and cross-selling boost subscription revenue?
Upselling encourages customers to upgrade their subscriptions, while cross-selling promotes complementary products. Both strategies increase average customer value and revenue. Use customer data to personalise recommendations, timing offers strategically. This approach can significantly boost repeat purchases and overall subscription revenue.
What role does pricing play in subscription sales, and how can I optimise it?
Pricing plays a crucial role in attracting and retaining subscribers. Implement a flexible pricing strategy that aligns with your target market's expectations. Offer tiered options to cater to different customer segments. Regularly review and adjust pricing based on customer feedback and market trends.
How can I improve customer retention in a subscription-based business?
Improve retention by focusing on customer experience, addressing pain points, and consistently delivering value. Implement a robust onboarding process and maintain regular customer interactions. Use subscription software to track user behaviour and personalise offerings. Develop loyalty programmes that reward long-term subscribers and encourage repeat purchases.
What are the best practices for simplifying the subscription sign-up process?
Simplify sign-up by minimising form fields and offering social media login options. Clearly communicate the subscription offer's value proposition. Implement a user-friendly interface and provide multiple payment options. Use A/B testing to optimise the process and increase conversion rates.
How can I reduce churn and win back inactive subscribers?
Reduce churn by identifying at-risk subscribers through data analysis. Implement targeted retention campaigns using email marketing and personalised offers. Re-engage inactive users with special promotions or content. Address common reasons why customers cancel their subscriptions and proactively solve issues to build trust.
What types of loyalty programmes are effective for subscription models?
Effective loyalty programmes for subscription models include , always on (aka instant rewards) and tiered rewards. Offer early access to new features, partner discounts, or subscription box upgrades for example. Personalise rewards based on customer preferences and usage patterns. Regularly communicate programme benefits to drive engagement.
How important is personalised communication to increasing subscription sales?
Personalised communication is crucial for increasing subscription sales. Tailor messages based on customer journeys, preferences, and behaviour. Use marketing automation to deliver relevant content and offers at the right time. This approach improves the customer experience, builds trust, and encourages long-term loyalty.
What are the key challenges faced by subscription-based businesses, and how can they be overcome?
Key challenges include customer churn, pricing pressure, and increasing customer acquisition costs. Overcome these by continually improving your product, personalising the user experience, and optimising your pricing strategy. Focus on customer retention and leverage existing subscribers for referrals to reduce acquisition costs.
How can I leverage customer feedback to enhance my subscription offerings?
Leverage customer feedback by implementing regular surveys and monitoring user behaviour. Analyse this data to identify improvement areas in your subscription offer. Use feedback to refine features, adjust pricing, and enhance customer support. Actively involve customers in product development to ensure your service meets their expectations.
Author Bio, Written By:
Mark Camp | CEO & Founder at PropelloCloud.com | LinkedIn
Mark is the Founder and CEO of Propello Cloud, an innovative SaaS platform for loyalty and customer engagement. With over 20 years of marketing experience, he is passionate about helping brands boost retention and acquisition with scalable loyalty solutions.
Mark is an expert in loyalty and engagement strategy, having worked with major enterprise clients across industries to drive growth through rewards programmes. He leads Propello Cloud's mission to deliver versatile platforms that help organisations attract, engage and retain customers.
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