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Recurring Revenue Sales

Where subscribers hide: Pt 2

We talked last week about the benefit of being a little flexible with subscription offerings. The payoff is adding subscribers who might otherwise fall into the gaps between your offers. A key to increasing your subscribers are making it easy to buy. 

You want to make it super easy to buy. I mean E-A-S-Y. An example would help. Let’s talk about the wine store I mentioned last week. 

When resubscribing to the monthly wine selection, we had to re-enter every bit of personal info and card info. It’s tedious. It’s annoying when you know that info is already in their system. It isn’t E-A-S-Y.

How would you improve the process? Examine each step.

Re-entering the email address should have given us the opportunity to restart the subscription, or at least avoid re-entering a bunch of info. It’s possible the system was capable of this, but the salesperson pressed us to fill out the whole thing again. Thanks to a prompt on the screen, my wife asked about logging into an existing account in their system. She was told to ignore the prompt. Unfortunately, the CRM allowed her to create a new account with the same email address – without any warning like “we found an account for this email”.

Sidebar: Credit card data is very rarely stored locally in small retail these days, so re-entering that info isn’t terribly surprising. It should have been swiped or inserted into a chip reader – but that wasn’t an option. That there are still businesses taking cards without chip readers is disappointing – particularly given that this business has a reasonably new CRM / POS system. Security is important. Think about how you feel every time you hear of another credit card data breach. Now think about how you’d feel if the next breach happened at your business. Finally, consider how your customers would feel about you and your business after that event. 

The pause that refreshes 

One key to retaining subscribers is making it easy to resume. Resume? You can’t resume without the ability to pause. Few subscription plans have a pause button. 

A limited number of subscription plans provide the ability to pause your subscription. In plans where there is a consumable and/or deliverable product, like wine plans or subscription boxes, having a pause button can prevent losing a subscriber. Once you lose one, getting them back is real work. 

As an example, Audible (the audio book division of Amazon) allows you to pause your subscription. Sometimes, life doesn’t let you consume all the audio that your subscription provides each month (sounds like wine, eh?). Even before Amazon bought them, Audible recognized this and allowed you to temporarily pause your account. They understand that life happens or that their plans may not fit every person’s consumption model all the time.  

Don’t sell junk subscriptions

While not every business can be focused on subscriptions as their primary revenue source / sales mechanism – quite a few can be. Even if you sell something that doesn’t lend itself to a subscription model, it’s pretty likely that there is some component of the business that is ideal for subscriptions.

Subscriptions are great for businesses for a number of reasons. One of the best reasons is that they fill in the dips caused by things like seasonal markets & unexpected dips in sales. They add a certainty component to cash flow that many businesses have never had.

I’ve never met anyone who didn’t like the idea of stable / consistent /  dependable / predictable cash flow. Most folks are keen to the idea of subscriptions when discussed in that context.

The thing is, they have to mean something to your customer. Watch a few commercials over the weekend and you’ll be inundated with offers for frivolous “monthly boxes of stuff”. Most of it is, quite frankly, crap no one needs. 

That’s what I mean by “don’t sell junk subscriptions”.  Sure, many of these companies are making big money selling them right now. Will they be around in five or ten years? Doubtful. Are they essential to their subscribers? No, they’re frivolous luxury purchases. They have many thousands of subscribers but their subscription base is fragile because of the nature of the product.

Make it meaningful & simplifying

Create your subscriptions from something your customers already need or want from you. A subscription should simplify their life, whether you sell to consumers or businesses. Sell them something they don’t want to forget, or that they should keep up with – but it’s tedious or a hassle to do so. It may not make sense for yours to be weekly, monthly, etc – but it may. Figure out what works and make becoming a subscriber a no-brainer purchase. 

Categories
Employee Training Recurring Revenue Sales

Where subscribers hide: Pt 1

Watching my wife shop / interact with salespeople is always a refresher course. Gaps in customer service & sales training / tactics always reveal themselves. This is the missing piece of “Secret Shopper” type services – no audio / video. The report is fine, but you don’t get to see and hear what happened – that’s where the gold lies. We’re going to go over an experience we had while shopping in a local retail business that has a subscription model. Yes, a local retail business (a wine store) with subscribers. All too rare, but I see more of them than I used to. Bear in mind that there have been wine subscriptions by mail / via internet for decades. 

My wife is an intermittent repeat shopper at this store. They have a good selection. The sales people know their wines – and at least one of them is a standout in that department. She’s the one who really knows their point of sale / CRM (customer relationship manager) system. Isn’t it interesting that the product expert also happens to be the CRM expert – and she isn’t the owner. She’s “just an employee”, right? 

Working with the expert

A couple of weeks ago, the Mrs. sent me to pick up a white wine to go with some smoked fish sent to us by a friend in Michigan. She didn’t remember the brand name, but she did say that it was the white she thought she’d bought most often. So, being the CRM nerd that I am, I asked the salesperson “My wife wants a white wine but I don’t know the name. Can you tell me which one she’s bought most often?

In some stores, I might get a shrug or a “We don’t collect that info.” In this store, I got exactly what I came for.

Turns out that I was fortunate to be working with the standout salesperson there. She knew their CRM like a pro. She quickly found my wife’s purchase history, identified the most frequently purchased item, grabbed a bottle, and I was out the door in less than five minutes. That’s my kind of shopping.

Not working with the expert

Yesterday, we went back to this store. The expert had moved out of state, apparently for a new opportunity. My wife asked basically the same question I had asked two weeks earlier. Our salesperson, who was in the store when I was there two weeks ago, didn’t know how to find purchase history.

A promo sheet at the checkout counter mentions their monthly subscription program. Two bottles, four bottles, etc. My wife was in the four a month program a year or so ago. She quit because bottles were piling up. Four a month is too many for her.

The selection in the four month program fits her tastes better than the two month program, so backing off to two per month didn’t work. The promo sheet prompted her to ask if she could get the four bottle program every other month. 

The response: “No.”

There are plenty of possible answers to that – and most of them are questions. “No” ends the sales conversation. 

The owner questions

The owner overheard the conversation from the backroom. He steps out asks why the four per month every other month works better than the two per month. The point of curiosity is obvious – it’s the same number of bottles. She explained that high tannin wines make her feel bad, so she likes the four-per-month subscription’s selections. 

The owner says “We can handle that. Let us know when you pick up your monthly selection. We’ll be happy to swap out wines that’ll bother you.” He continues, saying that they can do an every other month plan, but will need to look into the details to make sure she isn’t charged every month.

This flexibility matters because it gets them a subscriber. She liked the previous plan she was on, but it wasn’t clear there were substitution options. Result: She cancelled. There was no follow up to ask why. Knowing why helps you keep more subscribers longer and learn about gaps in your plans.

Obvious reminder: Subscribers are sales you make every month, often with little sales / marketing effort. You have to fulfill well, regardless of tannin, to keep them. More next week. 

Categories
Advertising Business model Competition Customer relationships customer retention Improvement Leadership Recurring Revenue Small Business Software business strategic planning Strategy

Make an offer that makes sense

zipper
Creative Commons License photo credit: gagilas

Yesterday, an email from WinZip arrived in my inbox.

I’ve used and liked WinZip for at least a decade. Not many pieces of software can make that claim.

Lately, they’ve been emailing me pretty frequently. This particular email offered a free copy of the latest WinZip if I used their affiliate link to sign up for a free trial with Netflix’s online movie service.

Whaaaa?

Ok, maybe that’s not such a bad deal if I’m not already a Netflix user, but the offer may not make sense depending on what kind of WinZip customer I am.

When I got the email, I wondered “Why Netflix?”

It might make perfect sense if WinZip knows their customer base well. Perhaps they’re sure that a majority of their users are home users, student/teacher users or small business/corporate users. If that were so, it would’ve been best to segment their email list and mail this offer only to their home users. And perhaps I’m somehow on that home list, rather than on their “business customer” list.

Even if all that is true, is this a service that most WinZip users can take advantage of? Does it help their users get more out of their WinZip? Or did they send it because Netflix is a really good affiliate deal for the makers of WinZip?

The offer just doesn’t make sense from a “How can we help you get more out of our software?” perspective – something you should *always* be thinking about, whether you sell software or transmission oil coolers.

In fact, some will see that message – especially at multi-per-week frequencies – as spam.

I’m not convinced that WinZip segmented their email list before sending this out. If they had, it might make sense.

Leverage

In your case, it’s essential to avoid being “one of those people” and eventually ending up on a spam blacklist.

If you’re going to send 3rd party offers to your customers, make absolutely sure they make sense by giving your customer an opportunity to leverage the investment they’ve already made in your products and services.

Whaaaa? Part 2

When you build a commodity (mostly) utility, even one as good as WinZip as been, at some point your business model is going to flatten out. With no recurring revenue, you start doing things like emailing your customers offers to purchase a movie service. Even your business customers.

Think deep and long about that business model. What happens after 100 customers? What happens after 500 or 50,000? What happens 10 years from now?

The more thought you invest in that stuff now, even while building the next-big-thing, the less likely you’ll need to make choices that would never cross your mind otherwise.