7 Responses to COVID-19: Doubling Down on Relationships

April 24, 2020

If you’re a subscription business that has avoided the worst of the crisis so far, the two most important assets you have right now are resilience and empathy. Things are undoubtedly hectic, but you’re not in a tailspin. You’re not wrapped up in an ugly knife fight for immediate revenue. You have the ability to not just empathize with your partners and customers, but also act on that empathy. You have a number of levers at your disposal. Because your finances are nice and stable and boring, your services can get creative and interesting.

Your main goal right now should be to double down on your subscriber relationships, but depending upon how this current crisis is affecting your company, tactics can vary widely. D2C companies might want to open their services to help out more people at home. B2B companies working with vendors who are struggling may want to offer discounts or credits. There are lots of different ways to help.

But guess what? You will benefit in the long run! Remember, it’s all about building lifetime customer value: if you help your customers now, build loyalty, and keep them longer, your value will rise as well. It all comes around. But let’s focus on what we can do right now. Here are some of the ways we’re seeing Subscription Economy Leaders do this.


The Guitar Maker

If you’re lucky enough to be seeing a surge in new demand for your service, your first instinct might be to capitalize on it. To ask for money. Don’t! Instead, embrace that new audience with a warm hug. Everyone knows Fender. They make amazing guitars and amplifiers. They also have a hugely popular video learning program called Fender Play. Last month, their management was brainstorming ways to help out folks stuck at home, and decided to offer a free 3-month subscription to their Fender Play tuition app to 100,000 people. The immediate demand was so high that they upped the quota to 500,000. And now, after reaching the half-million mark, the company has extended this offer to 1,000,000 learners! Today they’ve got a huge new cohort of new members that didn’t exist 6 weeks ago, and a significant percentage of them will turn into loyal subscribers for years to come. Win win.


The Gym Chain 

What is a gym supposed to do in a lock-down? Just hunker down and hope that not too many people will cancel? One national chain took the opposite route. They decided to proactively suspend all of their memberships. It was a smart move that instantly freed them from having to field lots of cancellation requests, and kept their membership base intact until their facilities can open up again. Giving your customers the flexibility to suspend and later renew their subscriptions is always a good strategy. In fact, even during good times, we’ve seen that companies offering the option to suspend and resume have an average churn rate of 25%, compared to 30% churn rate for those that do not.


The Restaurant Reservation Service

With restaurants taking a serious hit these days, the back-end reservation service Resy decided not to charge any fees to their restaurants or consumers for a couple of months and refund the restaurants they already charged (and they made this decision early, way back on March 9th).  Not only that, but they switched their service from handling reservations to handling take-out and delivery. Talk about pivoting on a dime! They’ve also got a great blog promoting great take-out options as well as restaurants that also sell groceries. Consider giving your subscribers a free pass for a few months by issuing credits or term extensions. If your finance department can issue these balance adjustments without spending time manually processing each one, this should be a pretty straightforward effort.


The Meditation App

Many subscription companies are taking the opportunity to extend free offers to populations that are being particularly affected by the crisis. The wildly popular meditation app Headspace, for example, is offering free access to all US healthcare professionals working in public spaces through 2020. All you need is a National Provider Identifier (NPI) and an email address. They’ve also opened up a number of guided meditations to everyone called “Weathering the Storm.”  Being a good corporate citizen doesn’t just mean volunteering and making donations to worthy causes. If you have a service that you think people on the front lines of this crisis will find worthwhile, give it away, give it away, give it away now!


The Online Learning Company

Every sector of our economy is hurting right now, and the technology industry is no exception (that grim spreadsheet of startup layoffs is now at 30K and climbing). Now might be a good time for IT folks, developers, and data professionals to brush up on a skill set, or pick up a new coding language. That’s why the online tech education company Pluralsight is offering free access to its entire Skills platform this month: over 7,000 technology courses available for free, with no credit cards required, and no watch limits. They’ve essentially suspended their entire business model for a month! Imagine Netflix trying something like that. It’s pretty amazing. The idea is to stay home, stay safe, and skill up.


The Developer Platform

Particularly in the B2B space, we’re seeing a lot more need for service bundles that can accommodate bigger teams of remote workers. And now GitHub, which currently has over 40 million developers on its platform, is absolutely free for teams. The company had been planning a freemium option for some time, but the crisis made it a priority. They also lowered the prices of their enterprise services across their entire customer base. Existing customers will have their bills automatically reduced going forward. Make it easier for bigger teams to take advantage of your service. Be like GitHub. Be a good host.


The Car Marketplace

CarGurus is a research and shopping resource that lets you compare local listings for new and used cars, and puts you in touch with a dealer if you find a car you like. They work with thousands of dealerships across the country, who are obviously being affected by the crisis right now. So what did CarGurus do? They immediately issued a blanket 50% discount to all of their automotive partners in March, and then extended that offer through May. “We are doing everything we can to continue helping our customers manage through this period,” said President and COO Sam Zales, “including connecting dealers to shoppers so they can hit the ground running when the situation settles and shopper behavior returns to normal.” Amen to that.

Got any examples of other subscription businesses that are being creative with payments and service offers? Feel free to share. We’d love to tell the story!


For more insights from Zuora CEO Tien Tzuo, sign up to receive the Subscribed Weekly here. The opinions expressed in the Subscribed Weekly are his own, not those of the company. The companies mentioned in this newsletter are not necessarily Zuora customers.

And check out his book SUBSCRIBED: Why the Subscription Model Will be Your Company’s Future – and What to Do About It.