Subscription lifecycle management is the process of overseeing a customer’s journey with a subscription service. It involves understanding and optimizing the following key stages:
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Acquisition: Attracting new customers through strategies like free trials, promotions, upsells, and gift subscriptions.
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Onboarding: Welcoming new subscribers with engaging emails, smooth onboarding, and easy sign-up processes.
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Engagement: Keeping subscribers interested by understanding why they leave, personalizing experiences, communicating effectively, and providing ongoing value.
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Billing and Payments: Offering flexible subscription options, integrating with payment gateways, handling failed payments, supporting multiple currencies, and automating revenue recognition.
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Retention: Retaining subscribers by allowing flexible adjustments, detecting potential cancellations early, and making cancellations easy.
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Expansion: Increasing subscriber value through customized offerings, additional products/services, and clearly communicating added value.
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Advocacy: Turning satisfied subscribers into promoters by building a community, empowering them with incentives, and measuring success through metrics like referral rates.
Properly managing the subscription lifecycle is crucial for businesses with recurring revenue models. It helps build strong customer relationships, reduce cancellations, and increase revenue.
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1. Getting New Subscribers
Attracting new subscribers is the first stage of the subscription lifecycle. This stage is crucial as it lays the foundation for a successful customer relationship. The main goal is to get potential customers to sign up for your subscription service.
Here are some effective strategies to achieve this:
1. Offer Free Trials
Allowing potential customers to try your service for free can increase the chances of them subscribing. They get to experience the value firsthand before committing.
2. Provide Promotions and Discounts
Offering coupons, discounts, or special deals can drive awareness, adoption, and revenue. For example, U.S. subscribers redeemed 18.8 million coupons in 2021.
3. Suggest Upsells and Cross-sells
When customers are signing up, suggest additional plan options or add-ons. This can increase the average order value and customer satisfaction.
4. Offer Gift Subscriptions
Gift subscription plans and cards are popular, especially during holidays. They can expose your company to potential new subscribers.
To maximize the effectiveness of these strategies, test different messaging, discount amounts, or terms. This helps you better understand your audience and optimize your approach.
| Strategy | Description |
|---|---|
| Free Trials | Allow potential customers to try the service for free |
| Promotions and Discounts | Offer coupons, deals, or special pricing |
| Upsells and Cross-sells | Suggest additional plan options or add-ons |
| Gift Subscriptions | Offer gift subscription plans and cards |
2. Welcoming New Subscribers
Crafting a Great Welcome Email
A welcome email is the first message new subscribers receive from your company. It’s crucial to create an engaging subject line and make new subscribers feel valued. The open rate measures how many subscribers open a given email. To calculate an open rate, divide the number of unique opens by the total emails sent.
Personalized messaging drives higher open rates. You can also test different subject lines to see which ones encourage your audience to open your emails. A/B testing, or split testing, compares two variables — in this case, subject lines — to determine which performs better.
Onboarding Process
The onboarding process sets subscriber expectations and creates a strong first impression. It’s during this initial period that subscriber expectations are formed, immediate product engagement can be encouraged, and powerful value perceptions are built.
An effective onboarding experience is crucial because it can significantly impact a subscriber’s long-term value perception, likelihood to renew, and ultimately, revenues. A poor onboarding process can leave subscribers feeling confused, underwhelmed, or even misled.
Sign-up Process Best Practices
Keep your sign-up process as short as possible, and ask for only essential information. You can split the sign-up information across multiple pages rather than asking for everything on one page. Make it easy to sign up with a service they already use, like Google, Slack, or social media.
| Strategy | Description |
|---|---|
| Great Welcome Email | Create an engaging subject line and make new subscribers feel valued |
| Onboarding Process | Set subscriber expectations and create a strong first impression |
| Sign-up Process Best Practices | Keep the sign-up process short and ask for only essential information |
3. Keeping Subscribers Interested
Keeping subscribers engaged is a crucial stage in managing the subscription lifecycle. This stage focuses on maintaining a strong connection with your subscribers, ensuring they continue to find value in your product or service, and preventing them from canceling their subscriptions.
Understand Why Subscribers Leave
To keep subscribers interested, you need to understand why they might be leaving. Analyze your cancellation rates and trends to identify patterns and areas for improvement. This will help you develop targeted strategies to reduce cancellations and increase customer retention.
Personalize the Experience
Personalization is key to keeping subscribers engaged. Use data and analytics to offer tailored experiences, recommendations, and promotions that resonate with each individual subscriber. This will help build trust, increase loyalty, and reduce the likelihood of cancellations.
Communicate Effectively
Effective communication is critical to keeping subscribers interested. Regularly send targeted, relevant, and timely communications that inform and engage your subscribers. Use multiple channels, such as email, social media, and in-app notifications, to reach your subscribers where they are most active.
Provide Ongoing Value
Subscribers need to feel that they are getting ongoing value from your product or service. Continuously improve and expand your offerings to meet their evolving needs and expectations. This will help maintain their interest and loyalty over time.
| Strategy | Description |
|---|---|
| Analyze Cancellations | Understand why subscribers are leaving by analyzing cancellation rates and trends. |
| Personalize Experiences | Use data to offer tailored experiences, recommendations, and promotions for each subscriber. |
| Communicate Effectively | Send targeted, relevant, and timely communications through multiple channels. |
| Provide Ongoing Value | Continuously improve and expand your offerings to meet subscribers’ evolving needs. |
4. Billing and Payments
Managing billing and payments smoothly is vital for subscription services. This stage involves setting up billing processes, handling payments, and ensuring proper revenue recognition.
Flexible Subscription Options
Offer various pricing plans to meet different customer needs and budgets. This includes:
- Multiple pricing tiers (e.g., basic, premium)
- Add-ons or extras
- Discounts or promotions
The billing system should handle one-time and recurring payments.
Payment Integration
Integrate with popular payment gateways to provide customers with diverse payment options, such as:
The billing system should also integrate with other sales tools like CRM, ERP, and accounting software for a complete customer view.
Failed Payment Management
Handle failed payments efficiently with:
- Automatic retry mechanisms
- Customizable communication (e.g., email reminders)
This helps reduce churn due to payment issues.
Global Support
To serve a global customer base, the billing system should support:
| Feature | Description |
|---|---|
| Multi-Currency | Process transactions in various currencies |
| Multi-Language | Provide localized communication in different languages |
Revenue Recognition
Automate revenue deferral and recognition processes to ensure accurate accounting and compliance with standards.
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5. Keeping Subscribers Subscribed
Retaining subscribers is a crucial stage in subscription lifecycle management. It involves implementing strategies to prevent cancellations, keep customers engaged, and ensure they continue to find value in your service. In this stage, focus on building strong relationships with customers, understanding their needs, and providing personalized experiences.
Offer Flexible Subscription Options
Give subscribers control over their subscriptions, allowing them to adjust as their needs change. Provide options like:
- Skipping an order
- Gifting an order
- Swapping out items
- Editing subscription frequency
- Delaying an order
- Pausing a subscription
- Updating address and payment information
Clearly communicate these flexible options through various channels, such as social media, email, and SMS marketing. This empowers subscribers and reduces the likelihood of cancellations.
Detect Potential Cancellations Early
Identify early warning signs of potential cancellations, such as skipped orders or changes in payment behavior. Implement a system to detect these signs and respond promptly with personalized offers or incentives to retain the subscriber. This proactive approach can help minimize revenue loss and maintain a strong customer base.
Make Cancellations Easy
Provide clear instructions on how to cancel or pause a subscription. While it may seem counterintuitive, offering legitimate cancellation options builds trust and transparency. Ensure the process is hassle-free, which can improve customer satisfaction and reduce churn.
| Option | Description |
|---|---|
| Flexible Subscriptions | Allow subscribers to adjust their subscriptions as needed |
| Early Detection | Identify potential cancellations and respond with personalized offers |
| Easy Cancellations | Provide clear instructions for canceling or pausing subscriptions |
6. Increasing Subscriber Value
In this stage, the focus is on providing more value to subscribers to encourage them to continue their subscription. The goal is to make subscribers feel appreciated and valued.
Customize Your Subscription Offerings
One way to increase subscriber value is to customize your subscription program to meet their specific needs. You can offer:
- Customizable Bundles: Combine products or services into bundles tailored to a subscriber’s interests or preferences.
- Sequential Subscriptions: Allow subscribers to receive different products or services over time, based on their preferences.
- Anchor Dates: Let subscribers choose the start date for their subscription, aligning with their needs or schedule.
This personalized approach can lead to higher customer satisfaction and loyalty.
Offer Additional Products or Services
You can also increase subscriber value by offering additional products or services that complement their existing subscription. For example:
- If a subscriber has a monthly fitness program subscription, offer a discounted rate on a fitness tracker or nutrition plan.
- If a subscriber has a streaming service subscription, offer a discounted rate on a premium channel or bundle.
| Approach | Description |
|---|---|
| Customizable Bundles | Combine products or services into tailored bundles |
| Sequential Subscriptions | Receive different products or services over time |
| Anchor Dates | Choose the start date for the subscription |
| Additional Products/Services | Offer complementary products or services at a discount |
Communicate Value Clearly
It’s important to communicate the added value to subscribers clearly and transparently. Use various channels like email, social media, and in-app notifications to:
- Inform subscribers about new offerings or benefits
- Explain how the additional value enhances their subscription
- Highlight any discounts or special offers
Keeping subscribers informed about the benefits they receive can build trust and loyalty.
7. Turning Subscribers into Promoters
The final stage of subscription lifecycle management aims to encourage satisfied subscribers to become brand advocates, sharing their positive experiences and driving growth through word-of-mouth marketing.
Building a Community
To turn subscribers into promoters, you need to build a community around your brand:
- Create a sense of belonging through exclusive content, events, or offers
- Encourage engagement through social media, forums, or in-app feedback
- Recognize and reward loyal subscribers through loyalty programs or special perks
Building a community fosters loyalty and appreciation among subscribers, making them more likely to promote your brand.
Empowering Promoters
Empower promoters by giving them tools and incentives to share their positive experiences:
- Provide referral incentives or rewards for successful referrals
- Offer exclusive content or early access to new features
- Create a sense of ownership through user-generated content or feedback mechanisms
By empowering promoters, you encourage them to share their positive experiences, driving growth and increasing brand awareness.
Measuring Success
Track key metrics to measure the success of your promoter strategy:
| Metric | Description |
|---|---|
| Referral Rate | Number of referrals generated by promoters |
| Conversion Rate | Number of successful referrals resulting in new subscriptions |
| Customer Satisfaction | Measure of subscriber happiness and loyalty |
| Net Promoter Score (NPS) | A measure of customer loyalty |
| Social Media Engagement | Measure of social media activity and brand mentions |
Wrapping Up
Managing the subscription lifecycle is vital for businesses with recurring revenue models. This guide covered the 7 key stages:
1. Acquiring New Subscribers
Attract new customers through strategies like free trials, promotions, upsells, and gift subscriptions.
2. Welcoming New Subscribers
Create engaging welcome emails, provide a smooth onboarding process, and follow sign-up best practices.
3. Keeping Subscribers Interested
Understand why subscribers leave, personalize experiences, communicate effectively, and provide ongoing value.
4. Billing and Payments
Offer flexible subscription options, integrate with payment gateways, handle failed payments, support multiple currencies, and automate revenue recognition.
5. Retaining Subscribers
Allow flexible subscription adjustments, detect potential cancellations early, and make cancellations easy.
6. Increasing Subscriber Value
Customize offerings, provide additional products or services, and clearly communicate added value.
7. Turning Subscribers into Promoters
Build a community, empower promoters with incentives, and measure success through metrics like referral rates and social media engagement.
FAQs
What are the different states of a subscription?
A subscription can have several states during its lifecycle, including:
| State | Description |
|---|---|
| Active | The subscription is currently active and being paid for. |
| Canceled | The subscriber has chosen to end the subscription. |
| Suspended | The subscription has been temporarily paused, often due to payment issues. |
| Expired | The subscription has reached its end date and is no longer active. |
| Disabled | The subscription has been deactivated, usually by the service provider. |
| Deleted | The subscription has been permanently removed from the system. |
Understanding these states helps manage subscriptions effectively.
What are the key stages of a subscription?
A subscription typically goes through these stages:
1. Research
The potential subscriber explores and evaluates different subscription options.
2. Decision
The subscriber chooses a subscription plan and signs up.
3. Subscribe
The subscription is activated, and the subscriber starts using the service.
4. Relationship
The subscriber engages with the service, and the provider works to retain them.
5. Loyalty
The satisfied subscriber continues the subscription and may become a promoter.
Each stage presents opportunities for businesses to engage with customers, provide value, and build long-term relationships.
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