How To Scale Your Subscription Business Effectively
The subscription business model is an exciting one. If operated properly, these businesses can provide you with predictable revenue month after month. If you’ve run a business like this for a while, you may be wondering how to scale a subscription business.
As with any business, scaling a subscription model comes with some unique challenges. On the other hand, when you overcome those challenges, you and your business will be better as a result of your efforts.
Understanding the Subscription Product Business Model
The subscription-based business model is like no other model around. The concept is relatively simple:
- You provide a product or service at regular intervals. For example, you may have an education subscription through which you sell monthly science project boxes. You may also offer a service, like weekly stock picks.
- In exchange for the product or service you offer, your customers make monthly, quarterly, or annual payments, providing you with recurring revenue.
The key to any subscription business is keeping your customers happy. The longer your customers stay with you, the more money you earn for each one that signs up. But how do you go about scaling a subscription model?
5 Tips for Scaling Your Subscription Business
Subscription companies face unique challenges when it’s time to scale. As you scale, you have to think about things like:
- Logistics: Do you have the bandwidth to provide more products or services to a larger group of customers?
- Customer life cycle: A core part of scaling a subscription model is making changes that are likely to extend the customer life cycle. Keep in mind, the longer you keep your customers, the more money you stand to make.
- Payment solutions: As you scale up, it becomes more important than ever to use a quality payment processing solution. Look for solutions that actively work to reduce decline rates and minimize your cost of doing business.
- Offerings: You’ll need to carefully consider your offerings and what you can do to make them better.
Below, you’ll find five tips to help you effectively scale your subscription model.
Map Your Customer Journey To Maximize Touchpoints and Acquisitions
Customer acquisition costs are a crucial factor in your ability to scale. When you reduce your cost to acquire a customer, your marketing efforts become more efficient, allowing you to drive more customers through your doors.
To do so, think about the customer journey from beginning to end. Walk through that journey as if you were a customer to find specific touchpoints that typically lead to acquisitions.
When you find those touchpoints, think of what you can do to improve them. For example, if you realize a specific page on your website is a great tool for acquiring customers, optimize that page to move it higher up in the customer’s journey.
Make the process seamless. Customers want your product, now, in one click. If you don’t have a seamless checkout flow, look at options to reduce the time a consumer spends fumbling through the buying process. Some options for this are standardizing data fields like address and phone number, ensuring your checkout flow is auto-fill compatible, presenting preferred payment methods automatically, and removing the need to input information multiple times.
Spend More Time On Customer Retention
The customer experience is one of the most important aspects of operating subscription business models. If the customer experience is a positive one, your customers will stick around longer. If it’s negative, they’ll cancel their monthly subscriptions.
Work to improve the customer experience and your overall customer retention by considering what makes your product or service great and where it could use some help. Good measures of consumer opinion are Net Promoter Score (NPS). Other good metrics to trend for engagement are Daily Active Users, average frequency a user logs into your product/app/site, and most popular pages in a user session. While each business is different, tracking user behavior provides the most valuable data for where to improve your product.
Businesses don’t always nail it the first time. Don’t waste insight from customers who canceled. Consider sending an email to customers after they cancel to find out why they decided to do so. These emails could result in valuable insight that allows you to keep your customers longer. Moreover, you may have the opportunity to win these customers back by addressing their concerns.
Finally, consider special offers for users considering canceling. These flows can be automated in web, mobile, and app experiences and provide discount options for consumers. Some creative takes on this have evolved to ‘pausing’ the consumer’s subscription where they may be out of town, not need your product/service, or have a personal reason they don’t want to pay for a few billing cycles. Putting the control in the consumer’s hand leads to long-term trust and engagement for subscription businesses.
Optimize Payments To Reduce Customer Churn and Increase Approvals
Every subscription model needs a quality payment solution. After all, you charge your customers in regular intervals, resulting in recurring revenue. Your payment processor is at the forefront of that process. This means it should:
- Actively reduce declines: Solutions like Revolv3 use dynamic routing to help reduce declines, resulting in a lower customer churn rate.
- Offer reasonable pricing: Be careful with payment processors that charge high fees and attempt to nickel and dime you with fees for declines.
- Offer additional tools: The best subscription payment processing solutions offer a wide range of accounting and financial reporting tools, giving you a better understanding of your company’s financial well-being.
- Be scalable: A quality payment solution will scale with you as your business grows. Suppose you want to introduce new subscription plans that entices your existing customers to add new services or refer new business. Having a subscription billing solution that is easily configurable for any situation is key.
Expand Your Subscription Offerings
It’s also a good idea to consider expanding your offering. For example, if you offer coffee subscription boxes that subscribers receive once a month, consider offering multiple sizes. Maybe offer a small box for the lowest subscription fee, a medium box that caters perfectly to your general audience, and a large box for the real coffee lovers in your subscription ecosystem.
On the other hand, if your subscription is service-based rather than physical product-based, think about additional services you can offer. In the same coffee business you could offer a variety of mugs/cups, coffee makers, pods for popular machines, and apparel to build your brand. The coffee service might end up with tea or natural energy alternatives to monetize an entire family’s needs.
Make Cross-Selling and Upselling a Business Habit
Cross-selling and upselling are effective ways to quickly improve your subscription economy. After all, if your customers only subscribe to one service, your income is limited. On the other hand, if you can get them to subscribe to two or three services, you can greatly expand your recurring revenue.
Think about the different products and services you offer and how they relate to one another. In the coffee service example you can bundle these various products into monthly subscriptions or allow consumers to manage them ad-hoc either bundling or splitting the payment on multiple payment methods. Options are endless but with good consumer insights and reliable data you can be empowered to scale your business beyond your core offering.
Additionally, don’t be afraid to test marketing to your consumer base. After a subscriber signs up, or after a few shipments, send them an email letting them know about other services they’ll likely be interested in or that go well with their interaction as part of your business. Be careful here as people hate spam, your marketing needs to be personalized and specific to be most effective.
Invest in a Complete Subscription Management Solution To Grow Quickly
The subscription revenue model is an exciting one. It’s also a much more efficient one when you take advantage of a complete subscription management solution. That’s where Revolv3 comes in. Take advantage of:
- Quality payment processing with dynamic routing to actively reduce decline and churn rates
- The ability to build detailed financial reports with the click of a button
- Analytics that make it easy to pinpoint opportunities to increase your business profits
- No fees when a customer’s payment is declined
- A scalable subscription management system that is easily configured for your changing business requirements.
What are you waiting for? Find out how Revolv3 can help you scale today!
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