The “subscription” business model promises predictable recurring revenue and increased customer lifetime value so it’s no wonder that loyalty marketers around the world are increasingly looking to this concept to enhance their loyalty propositions.
With so much interest in the topic, I was delighted to interview two executives about it, one from Ipsos Denmark and one from their partners in management consulting firm Subscrybe.
Together they shared their insights on the principles of success in subscriptions – creating both “reasons to buy” and “reasons to stay”, to create the potential for extreme customer loyalty.
PAULA: Welcome to Let’s Talk Loyalty, an industry podcast for loyalty marketing professionals.
PAULA: I’m your host, Paula Thomas, and if you work in loyalty marketing, join me every week to learn the latest ideas for loyalty specialists around the world.
PAULA: This show is sponsored by Comark, a global provider of innovative software products and business services.
PAULA: Comark’s platform is used by leading brands across all industries to drive their customer loyalty.
PAULA: Powered by AI and machine learning, Comark technologies allow you to build, run, and manage personalized loyalty programs and product offers with ease.
PAULA: For more information, please visit comark.com.
PAULA: Hello, and welcome to episode 150 of Let’s Talk Loyalty, which is a summary of my discussion with two leading experts on the subject of subscription loyalty or paid loyalty.
PAULA: It’s a well-known business model, and in fact has become increasingly popular with loyalty marketeers in a variety of new categories.
PAULA: I was joined for the show by Gens Dupont, an associate director with Ipsos in Denmark, the global research agency who had recently run their own webinar on the topic of subscriptions because of such demand and interest from their customers and their clients.
PAULA: Together, we were also joined by Peter Jacobsen, a senior consultant from a Scandinavian management consulting firm called Subscrybe, who specialize in advising their clients on either creating or improving subscription programs within their businesses.
PAULA: Jens opened by sharing some research that Ipsos had done globally on the science of strong relationships, which is a comprehensive report which concluded how important it is for brands to focus on developing emotional loyalty.
PAULA: He told us it’s definitely no longer sufficient to ensure that your customers are just functionally satisfied.
PAULA: In the past, that was enough, but certainly now, brands need to build bonds if they want to break through and earn loyal behavior and of course, advocacy.
PAULA: Peter gave a great example of the popular trend in Denmark of subscription businesses for mobility.
PAULA: So instead of buying or owning a car, many customers are choosing to pay a fixed fee every month for access to a fleet of cars.
PAULA: They then choose which one they want to drive and for any length of time.
PAULA: For example, you have the flexibility to perhaps drive a family car on weekdays, then change to a sports car at the weekend, whatever suits your lifestyle or your mood at the time.
PAULA: A key point that Peter emphasized is that it’s rarely either one business model or changing to a subscription one.
PAULA: Most businesses can operate a subscription service alongside their traditional approach to business.
PAULA: We also talked about the importance of making it easy for customers to leave in order to gain their trust upfront, with Peter saying very clearly that a beautiful exit is very important.
PAULA: He even quoted an amazing example that Netflix had announced that they will be cancelling what they call zombie accounts, which basically means subscribers that are paying but haven’t used the service in more than a year.
PAULA: This group is less than half of 1% of their customer base, but cancelling their accounts from the business side is in fact a great PR story and shows lots of integrity by Netflix.
PAULA: Jens also shared with us then the key needs that Ipsos uncovered as important to consumers in advance of the pandemic.
PAULA: And all of these, I believe, are increasing continually in their importance.
PAULA: For example, increasingly, the businesses we buy from should truly enhance our lives and make us feel more confident.
PAULA: And with all of this research, this is what helped Ipsos to realize how well subscription businesses really fit as a great solution to address many contemporary consumer needs.
PAULA: He also shared with us the two main types of subscription services.
PAULA: Broadly, they are focused on replenishing what customers need, which saves them time.
PAULA: Or they can be designed to be more experiential, with the concept of box subscriptions, which are designed to be surprising and a moment of enjoyment every month.
PAULA: These are more common in the beauty industry, or lifestyle brands like beer or wine tasting, as well as subscriptions that create recipes with ingredients that you choose, and then these companies send both the recipe and the ingredients out to you.
PAULA: So this saves both time and of course the need to visit the supermarket so often, which really became a huge selling point for this category during the most severe lockdowns of the pandemic.
PAULA: Our final main point was the importance of nuancing your subscription model.
PAULA: What’s right for a coffee shop won’t be comparable with the approach that a giant manufacturer might take, like the Coca-Cola Club.
PAULA: Only when you ask your customers what success is for them, will you be able to launch, test and refine a subscription model that suits your business.
PAULA: But if you do get it right, you can create compelling reasons for customers to buy and compelling reasons for them to stay.
PAULA: Both of which are equally important to build a sustainable and profitable business.
PAULA: That’s it from this episode of Let’s Talk a Little Loyalty.
PAULA: If you’d like to hear more about the subscription model, just head over to letstalkloyalty.com and listen.
PAULA: It’s episode 44 featuring Ipsos Denmark and their partners in Subscrybe.
PAULA: And join me again this Thursday when I’ll be joined by Richard Jones, Chief Marketing Officer in Cheetah Digital, as we discuss their flagship virtual of rent, Signals 21.
PAULA: This show is sponsored by The Wise Marketeer, the world’s most popular source of loyalty marketing news, insights and research.
PAULA: The Wise Marketeer also offers loyalty marketing training through its Loyalty Academy, which has already certified over 170 executives in 20 countries as certified loyalty marketing professionals.
PAULA: For more information, check out the wisemarketeer.com and loyaltyacademy.org.
PAULA: Thanks so much for listening to this episode of Let’s Talk Loyalty.
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