Is your business on track for subscriptions success? Answer these questions to find out

Is your product or service meeting a clearly defined user need?

Start with your user and what they need, not with what you can provide. Too many subscription products consist of a motley collection of jumbled-together “benefits”. These benefits may seem valuable to you, but check with your prospects and never make assumptions. Everything included in your offer should be valuable in the customer’s eyes and not an add-on. 

Do you think it is valuable, or do you know it is?

“We think people will like this…” No, talk to them, find out what they really want. Even if they can’t express what that is, try to get insights into what their unmet needs are. A design thinking course at Stanford’s d.school taught me the value of spending a long time with customers to draw out these issues. 

Can you sum up your proposition in a single sentence with no sub-clauses?

The best subscription services are really easy to understand. Netflix is “Unlimited films, TV programmes and more”. You know immediately what you’re signing up for. If you can’t simply express what your subscription offer is, you will have trouble selling it (to investors and customers).

Are any competitors offering the same or similar products or services?

There are two ways of looking at this. One is that the market is crowded. Second is that other smart people have spotted the same opportunity as you. If there’s nobody offering the service, then be doubly sure to test out your proposition on potential customers.

What is your “unfair advantage”? What makes your offer distinctive?

A very clear lesson from my time in the news business was that people will not pay for a commodity product but they will pay, in their droves, for distinctiveness. A great advantage is to have a product or service that users cannot get elsewhere. Equally it might be your existing customer database or, less so now than a decade ago, your technology that makes you stand apart.

How do your prices compare with the market?

I’m not just talking about your immediate competitors but the entire subscription ecosystem, if you can call it that. There’s definitely a case that users are assessing their overall subscription spend and making tough choices to ditch even subscriptions they find valuable. This has been dubbed “the subscription apocalypse”. So how does what you offer compare to Spotify at $9.99 or £9.99?

What incentives do your customers have to interact with you on a regular basis?

Habit is the best driver of retention. Keep your customers visiting your product or using your service every day and you are onto a winner. For some products – eg news apps – that’s easier than for others, but there are many engagement techniques that can keep nudging your customers to come back.

Will customers lose anything if they give up their subscription? (aka the problem with Netflix)

This is best illustrated by an example. If you decide to cancel your subscription to Netflix it is as easy as it was to sign up in the first place. This is good for the customer but bad for Netflix as the user doesn’t lose anything by churning. There are no saved movies or TV programmes, no playlists. They can just pick up again whenever they want. Or, alternatively, sign up for another subscription service offering a better deal. Make sure that when people leave you they feel a loss.

Is your business model two-way – just you and the customers – or multi-sided?

A subscription offer where you are laser-like in serving your primary customers is good, but one where more than one set of people is connected is golden. This is the multi-sided model beloved of business schools, where the value created by the members of an ecosystem are multiplied by being in one place. If you are selling dog grooming products by subscription, why not allow a pet insurer into the mix? Everyone gains: the customer, you and the insurer.

Are your products one-size-fits-all or can users customise them to their preference? Are you able to personalise their experience?

I am indebted to my business partner, Michael Brunt, former general manager of Times Newspapers and former publisher of The Economist for this one. Subscribers to content businesses appreciate your expertise in curating their experience, but increasingly they would like to customise it so that they can pick what they want to see and do. And, ultimately, if you have the technology, they really appreciate your being able to personalise it for them too. So curation, customisation and personalisation should be your watchwords. Subscribers are most likely to keep paying if you offer all three.

Is the customer’s experience of signing up for a subscription quick and intuitive?

The first experience your customer will have of your subscription is the sign-up process. Have you honed it to within an inch of its life, making it as simple and hassle-free as possible? A good trick is to try to get the number of fields into which users must input data to fewer than a handful. If a data point is nice-to-have, then it’s invariably not nice for a customer to provide.

Is logging in to your product friction free?

By far the largest number of complaints I received as Head of Digital at The Times of London were concerning difficulties in logging in. It annoys the hell out of people. They don’t care that a link from social media is as much the platform’s issue as yours. Remove as many barriers to entry as you can.

Do you have a plan for the first few days and weeks of your customer’s subscription?

Research has shown that early engagement is crucial to gain customers’ long-term loyalty for subscription products. So how do you plan to onboard them to your product or service? What does your communication with them look like in the first days? Are you emphasising the valuable and unique aspects of what you are offering? In my experience, businesses don’t spend enough time on these crucial early days.

What rates of churn do you expect?

Early stage subscription businesses are rightly focused on the acquisition of customers. However, they soon get their heads turned towards retention or, rather, the dreaded spectre of churn. Ultimately controlling this number will be the determinant of whether they are successful, as usually the cost of keeping customers is lower than the cost of acquiring them. Find out as early as you can what your underlying churn rate is, and fight like crazy to bring it down

Have you started thinking about higher-value subscriptions? 

You’ll soon find that you have some subscribers who are superfans. They use your product all the time, are definitely not a churn risk and would probably pay more if asked. So what are you going to do for them? They are clearly in tune with what you are offering. What more is there you can give them? In thinking about what a higher-value sub might consist of, remember that this also serves to make your standard product look cheap by comparison.

Do you have a team dedicated to all aspects of the subscription business?

If you are a new business set up around subscriptions, then this is unlikely to be an issue. But for established businesses that are turning to subs, it can be a real problem if the subscription side is just part of people’s jobs. It needs to be all of their jobs, or they won’t devote the time, thinking or energy necessary to make subs work. You need people to wake up every day and be obsessed with increasing subs acquisitions, with driving engagement, with reducing the friction in the customer journey. These are full-time jobs, that’s for sure. The rewards are there for those that do it properly.

Still unsure? At HBM Advisory we help our clients guide their way through the business of subscriptions, starting with our proprietary Subscription Fitness Assessment. Contact us today to book yours