Hello everyone, I hope you guys have had a good day. It's been really interesting talking to some of you this afternoon and understanding a little bit more about your challenges and what your boxes do. For me, I work on both sides, acquisition and retention and it was really interesting when we did the poll just before the break to see how much of our focus is on acquisition - which of course, it has to be, as we have to grow our businesses.
How many of you have had a subscription box and cancelled it? Show of hands - there’s probably around 80% of us. For that reason it's really important that we also remember to gear our focus towards retention.
Since I've started working in the subscription landscape for many years now, there's been a real shift in how companies view retention. I started many moons ago and it was very much ‘hush-hush’ - don't talk to the consumer and don't remind them that we're taking money from their bank account every month. Thankfully times have changed and technology has changed massively as well as the consumer demographic. Today, it's really important to actually engage with the consumer and build a relationship with them in order to retain them. Why do we want to retain them? So that we can build profitable subscription bases.
A couple of key points to keep in mind about retention, firstly, it is far cheaper to retain a subscriber than it is to go and find a new one. You put loads and loads of effort into building your subscription base, learning about your customer profiles, trying to win them over and by the time you've done all of that work, why would you want to let them slip through the cracks? We don't, we want to keep them.
High retention rates increase the average revenue per user, which gives us a far more profitable subscription product and business, as well as forthcoming changes in data protection, so the GDRP is on the horizon. It's going to become a lot harder for us as businesses to contact lost customers - we need to be doing our best to maintain those relationships to justify having and using that data.
The key standpoints in terms of retention are having good quality products (as all of you do), having excellent customer service and building that relationship. Building the relationship means that we've got a two-way feedback process; we've got interaction with them and we know them, therefore, we can keep them happy.
Having heard from Hitwise and Brandwatch earlier today, I would like to reinforce the profile of the subscription audience. Loyalty, first and foremost is one, through interaction and two-way communication - it's really important in today's subscription landscape that we have genuine relationships with our subscribers as much as possible. Naturally, when scaling up our volumes we're not going to know all of our subscribers individually. However, it's really important that we understand the subscriber and give them what they want so that we can exceed their expectations. The job of marketing, after all, is to exceed expectations.
Consumers will be drawn into your subscriptions by your particular products, the quality of your service, the expertise of your customer care and they will also be very community minded. So as Brandwise showed earlier, they're very, very quick to be communicating in the social landscape and also, their local landscape. Those that subscribe we understand have a higher propensity to be loyal and obviously in the nature of what they're doing, they're repeat billing, that in turn breeds loyalty.
The difference with the subscriber these days versus a few years ago is that as consumers become more data minded and more commercially aware, they truly now understand the value of their data and of their business. As marketeers, it's our challenge to really make sure that we're doing what we can to keep them where they are, to make them feel valued and to create that genuine two-way relationship with that two-way feedback loop. If there is ever a problem, for example, a problem with delivery, they will feel comfortable to come and tell us about it rather than talking and keeping it within their community. It is really important as a business that we understand our subscribers lifestyles, life cycles even.
Subscribers go through different stages - if you've worked really, really hard on acquisition and have done a lot in terms of building traffic and converting it into subscription point where they then start to repeat bill, you might breathe a sigh of relief. But during that repeat bills phase, they will go through their own individual stages.
The first stage is the honeymoon period, where it is new and exciting. If you've ever subscribed to anything as a new subscriber, you want to tell everyone about it, you're really excited and engaged with what it is and there's a reason why you've handed over your payment details. At some point, dependent on your subscription product or service, you're going to hit a stage where you're mature and feeling happy - the magic may have worn off but you're still really happy with your choice and with what that subscription is providing you with.
At some point, you’ll move into a less happy phase, you might get a bit bored or your needs as a consumer might change and you might feel that there's been a dip in quality from the subscription that you’ve subscribed to. If this is not addressed, then what will happen is that the subscriber's going to become a churn risk and will potentially cancel and leave. If we can understand these cycles, then we have the chance to intervene and to tailor our marketing to encourage them into certain actions that promote retention. While they're in that honeymoon stage, we have this great opportunity to strengthen the bond with them and in turn, will result in a much higher likelihood of them recommending to a friend - free marketing, use that.
If they do become bored and unhappy or in a stage where they’re thinking, "I'm not sure if I want this product, yeah, might cancel," then we've still got a chance. If we are aware of when that's going to happen and spot it quickly, then we can reinvigorate them and exceed their expectations at that point. We can find a way to re-engage them and get them back to that happy and excited stage again. But, if we miss that point, then what we will need to make sure that we work very closely with our customer services and that we have an excellent channel for them to come and tell us that they're bored or unhappy, which leaves us with the chance to win them back over. At this point, really and truly, we need to inject a bit of FOMO and give them a bit of fear of missing out if they cancel - we need to remind them why is it that they subscribed to us in the first place.
The way that we keep them from churning is by keeping them engaged. We know from our customer engagement point of view how essential it is, because a highly engaged customer is five times more likely to be brand loyal. If you're working in a competitive market space with your boxes, you need to really make sure that they're going to stick with you rather than disappearing off to a competitor. If you're not in a competitive box space at the moment, be aware that if a competitor launches with something a bit fresher or a bit newer, then that is a massive risk to your business.
We know from recent studies, that highly engaged customers spend 60% more per transaction and highly engaged customers transact 90% more often. With a highly engaged audience, you have a much better opportunity (if you have a tiered product system), to upgrade them into a higher paid subscription. If they're really engaged with their monthly subscription and they're happy, maybe that's the opportunity and the time where you try and convert them from a monthly to an annual subscriber. Alternatively, maybe you might have additional products and services that you're also working on or that go hand-in-hand with your subscription that you can cross-sell to them. Therefore, it's always much more profitable to have an engaged customer base.
Content is absolutely king for engagement and essential because it helps us to maintain the customer but also form that relationship and drive the loyalty. We can use content to build excitement for upcoming boxes, for example, if you're a monthly, “what's coming up in next month's box?” or a review on what's going to be in there like a “sneak peek”. We can use content to reinforce belonging in a community, as we know, subscribers like to feel part of a community and be a part of an immersive experience. We can use content to promote the reinforcement of being a part of that set and we can provide added value for our subscription products. We can also use content to encourage word of mouth, particularly when they're in that early new honeymoon period, what they're going to do is hopefully share our content for us and give us that word of mouth as a free marketing option.
I've got some examples of content. Now, despite this looking like a Chelsea football site, it's not, it's actually the BT Sport Hub. As a case study, when BT launched BT Sport, they had a bit of an issue because their content was locked behind a paid subscription wall. They didn't want to use any of that content that people were paying for to promote to new subscribers, and they needed to make sure that they retained the subscribers that were paying for their subscription service. So what they did was they created BT Sport Hub and they made themselves a destination for content that was related to the subscription product. I know in the room, most of us, we're box companies, essentially you might be sitting there thinking, "Well, how is this relevant to me?" The relevancy is that actually, you might not be able to promote content around your box, you might not want to give away what the contents of your box is. But have a think about what you can do around the contents of that box to promote usage, excitement, and engagement.
Another example, anyone a Netflix subscriber? Show of hands. Yeah, quite a lot of us in the room. So Netflix, one of the most successful subscription companies in the world, they are really, really successful at using content to retain their subscription base. The way that they do that is they create bespoke content to promote inclusion and create that fear of missing out. If you're a subscriber and you enjoyed the last series of "Black Mirror," which is a Netflix original created series now, used to be on a different channel, but if you know that you enjoyed this kind of programming, what Netflix does is bridge the gap between one series ending and the next series ending - they create a lot of content around the next series. This particular snippet is an example of a behind-the-scenes documentary that they put on their Facebook page. It builds excitement about what's coming up even though people can't see what's coming up yet and that's really important for engagement.
Another example, HelloFresh, we talked a lot about those this afternoon. With HelloFresh, they are a box company and what they do very, very successfully is they create content around the contents of their box. And they use that in a social environment to invigorate and engage their audience and give them ideas about how they can use the contents of that box. It's not just a case of saying, "Here's your box, enjoy what's in it." It's, "Here's a box. Look at how this can add to your lifestyle."
This particular example they partnered with Match.com and they did a Valentines event. They made it seasonally relevant in February to promote the content of their box, to provide engagement with what happens. They created a nice little story around it, it's almost like a speed date box and what that does is it tells the subscriber ideas about what's going to be in the box and also what they can do with it. It helps the subscriber to stay happy because it reinforces the fact that "Yeah, I'm a part of that community, maybe not with Match.com, but I'm a part of that community that has access to that kind of product." So it gives us almost like a status lift to be a part of that - really, really important in terms of creating engagement.
So the golden question I get asked and just to kind of wrap up retention as a section is “How can I reduce churn?” The key answer really to reducing churn is planning for it. If you accept that churn is going to happen, if you plan for why and when it's going to happen, then you can also start to plan and engage strategies to prevent it. Knowing your subscription base is really important and being in touch with customer services and looking at those side by side is also really important. So some of the examples from the panel, they realized that maybe there was a cost problem, maybe the cost was too high or maybe there was a problem with the box, or maybe some of the content wasn't quite the expectation. Understanding those kinds of customer service issues and building that into your marketing strategy, you can answer those issues and address them before they become a churn issue - so you can stamp out churn that way.
The other thing to do is be aware of any payment issues. A lot of you have set up through various individual sites, so making sure that you're preventing any payment issues is a really big one. A huge volume of churn happens not because subscribers are unhappy with the service but it's because they've encountered a payment issue, they haven't been able to communicate with you about it or they haven't realized it's happened themselves. A Really big example of that is credit card failure, so if you've got a subscription product that's based on credit card purchases, if they change their card, they lose their card, or they cancel their credit card you're not going to be able to repeat bill them and you're not going to know that until they churn. So payment issues is another key reason why people leave and understanding that and checking for that means that you can do something about it.
Understanding when they churn - if you've got a product that is highly seasonal, sports-related products is an example, baby-related products is another one. Unfortunately, if you're going to be out of season at some point in the year you're going to experience key churn periods. So trying to see what else you can do to tide them over past that seasonal point or extend the usage of your subscription is really key.
Product lifecycle, really important as well because you might find...actually I think one of the guys in the panel mentioned it earlier, you might find that okay, maybe they stay for three months, but you've got a real issue with churn at month four. Well, understanding that, looking at the data, knowing that and getting to grips with reasons behind it, maybe you had an offer for the first three months and they didn't want to pay full price or maybe box four wasn't as good as the other boxes. There are any number of reasons why there might be a big churn hole, but finding it and again addressing it helps you to prevent the churn from happening in the first place.
And of course having a retention strategy, really, really key. So making sure that we can engage our audience, making sure that we encourage any feedback to come directly to us, rather than into social media or choosing to walk with their feet, and also rewarding loyalty. We know that the subscriber demographic responds really highly to reward. So if you've got a key churn period, maybe at month three or four, how about surprising and delighting them just before that period? Get them over the gap, distract them from the fact that actually, you know that a lot of subscribers leave at that point and help to extend your retention that way. By extending retention what we're doing is we're creating a much more profitable subscription base.
So just to end off if you wanted to know more about retention, as Karen said, I run the marketing training courses for Jellyfish training, our next retention marketing one day course is at the end of March. And we also run a range of other courses as well including subscription marketing. So if marketing is not quite your strength and you want to know more, then there is help available.
Thank you very much.
