AI, the New Frontier for Subscription Businesses

AI, the New Frontier for Subscription Businesses

Zuora’s “Subscribed Connect London” event united subscription industry innovators to discuss dynamic sustainable growth and modern business strategies.

One of the highlights of the event was our breakout session on Artificial Intelligence (AI), led by Felix Danczak, VP, GTM Subscriber Experience at Zuora. In this session, we explored how AI can empower subscription businesses to create personalized experiences, optimize conversion rates, and improve customer retention.

This discussion is particularly timely, given that a rising number of consumers are actively seeking personalized brand experiences, prompting businesses to turn to AI to harness unparalleled data insights and analytical capabilities. Yet, AI implementation can be tricky, and many are hesitant to take the plunge. In this session, we explore best practices and pitfalls in market segmentation, personalization, and crafting subscriber journeys with AI.

Let’s explore the key takeaways and insights from the session…

AI – Why Does It Matter for Subscription Businesses?

Julian Thorn, COO of Sub(x), shared his definition of AI. Put simply, Julian emphasized that AI, or advanced intelligence, allows computers to think, learn, and perform tasks typically done by humans. This includes processing language, problem-solving, and learning. But with that said, many subscription businesses still struggle to see how exactly they could incorporate AI into their business.

Enter Katrina Broster to our discussion, Marketing Performance and Technology Director at the Financial Times, who provided practical insights into AI’s role in her organization. She highlighted that AI should be seen as a tool to enhance business operations rather than something mystical. AI has the potential to optimize marketing efforts by harnessing evolving technologies and data management practices. She stated that AI’s ability to process vast amounts of data and learn from it is invaluable to businesses today.

Katrina further stressed that AI is positioned as the future of personalization, and this perspective is particularly relevant for the subscription industry. Katrina highlighted the importance of showing the right offer to the right person at the right time, and how, in the context of acquisition and retention, personalization is a game-changer. Leveraging data attributes, such as browsing history, demographic data, and transactional history, AI can help in these efforts to create personalized experiences that significantly impact conversion rates.

Julian explained how the idea of using AI to help with personalization efforts is no longer a far off concept for businesses:

 “In the past, it was direct mail and A/B testing. And people still do A/B testing on websites. All of this has been essentially manual. But now we’ve got an enormous amount of data available on every website visit. And crucially, the cost of processing that data has come down. So all of a sudden the AI functionality which requires an enormous amount of computing power and a lot of data becomes achievable for smaller businesses.Julian Thorn, COO, Sub(x)

As well as personalization, the panel discussed how AI can enhance processes such as testing, predictive analysis, propensity modeling, and streamlining community management more efficiently. This shift from manual, labor-intensive processes to AI-driven solutions highlights the power of AI and its potential to contribute to both customer acquisition and retention.

How does AI work in practice?

Julian Thorn shed light on his organization’s role in the AI-driven landscape of acquisition and retention. The goal of Sub(x) is to harness machine learning (ML) to boost revenue and acquire customers for digital subscription businesses. To do this, the technology empowers organizations to deliver precisely timed offerings, enhance customer experiences, and retain valuable subscribers.

The discussion took an intriguing turn as the speakers unveiled a significant integration between Sub(x) and Zephr, emphasizing the importance of this collaboration in the context of conversion rate optimization. They underscored that the optimization of conversion rates, a task historically driven by humans, could now evolve with AI.

Julian Thorn explained that Sub(x) leverages approximately 50 data points, working in tandem with algorithms to enhance the effectiveness of conversion rate optimization:

We only work with consented user data [first party data from Zephr], and the algorithm looks at those 50 data points. It will then look at the various offers that are available for the audience, and then by a process of randomization it will work out which offer to present to which user, in what order and at what time. It’s even able to do this at an individual level, rather than a cohort level or a propensity model level.Julian Thorn, COO, Sub(x)

AI algorithms working in this way analyze data attributes such as user behavior and transaction history to personalize the right product offer to the right user at the right time. In the past, this sort of testing would take months to produce results, but now Zephr and Sub(x)’s collaboration accelerates this process, making it more efficient and effective. 

With AI, it’s not about choosing a single “winner” offer; instead, AI ensures the right offer is presented to each user at the right time. As a result, AI-driven teams can optimize customer conversion rates swiftly, ensuring a more streamlined process.

Katrina Broster revealed that the Zephr Sub(x) partnership has enabled the Financial Times to build a Subscription Experience Platform. This platform serves as the infrastructure for personalizing “subscription storefronts.” The idea behind this transformation is to make the subscription process personalized and seamless for customers across different platforms such as and apps. The goal is to offer the best product recommendations and pricing to each user based on their willingness to pay, demographic data, user engagement, and user consent. This way, the FT hopes to improve the user experience and increase customer retention.

Both Julian and Katrina agreed that AI has transitioned from a futuristic concept to a practical asset with tangible benefits. Understanding its real-world applications and how it enhances business efficiency is crucial in today’s fast-paced landscape.

Challenges and Strategies in AI Implementation

Along their journey of implementation at the Financial Times, Katrina also discussed the challenges. Primarily, trusting AI to make decisions for the business!

 “I’d say the biggest challenge is actually getting comfortable with outsourcing that capability, and being comfortable that machines are going to make decisions. These are decisions that we’ve been making manually for many, many years. But I think there’s just been a realization, like, probably a lot of businesses… that the market is different now.Katrina Broster, Marketing Performance and Technology Director, The Financial Times

Both Katrina and Julian agreed that implementing AI was not only a technological challenge but also a cultural and organizational one. They agreed that the FT’s approach to democratizing AI across the organization and integrating Zephr with SubX was an example of how subscription businesses could use AI effectively to create more personalized solutions for their customers. To do so efficiently requires cross-team collaboration, clear governance and principles, and control and explainability. 

Julian also stressed that subscription businesses should not compromise their proprietary data when using AI. These tools don’t need access to everything a company has on their unique audience, and caution should be taken to share only the necessary information needed to do the task well.

The Future of AI in Business

After outlining how exactly AI can work in the context of personalization, the speakers then shared their vision for the future of AI and how it can transform subscription models and customer-centric approaches. Katrina said that the FT is experimenting with concepts like “laddering”, which allows customers to upgrade or downgrade their subscriptions according to their needs. This reflects the changing preferences and expectations of customers in the subscription economy. She also said that the FT is consistent with its core metrics and KPIs when using AI, as this is important for measuring future performance and results.

Katrina and Julian both further highlighted the importance of cross-functional collaboration when using AI. 

Cross functional working will be integral to all of this. A lot of what I’ve talked about is product and technology, it’s commercial, marketing teams, it’s legal, it’s compliance, it’s our data function. Every conversation we (The Financial Times) had when we were making the vendor selections (Zephr and Sub(x)) was a completely united decision and everybody came armed with their questions.Katrina Broster, Marketing Performance and Technology Director, The Financial Times

This way of working creates a unified vision, ensuring any future AI projects are focused on holistic business objectives for optimizing customer experiences and subscription rates.

When asked about how businesses can prepare for AI in the near future, both Katrina and Julian advised that subscription businesses should take incremental steps to integrate AI into their processes and be proactive in investing in AI tools that can provide improvements in various areas.

We don’t have a silver bullet (for success) at the FT. We’re not doing something differently to any other publisher. It’s really just investing the time and money that we need to in the right product development.Katrina Broster, Marketing Performance and Technology Director, The Financial Times

Julian further emphasized the need to be proactive to stay ahead:

It’s a bit of work, but ultimately, as Katrina said a couple of times throughout this discussion, really we haven’t got any choice because everyone else is going to be doing it. And it works. This is the next step in the consideration of ‘how can we make what we currently do work better’. Don’t put off until tomorrow what you can do today.Julian Thorn, COO, Sub(x)

Want to Learn More?

The breakout session on AI shed light on the transformative potential of AI in the business world. It’s no longer a distant concept but a practical tool that can enhance various aspects of operations. As businesses navigate the AI landscape, demystifying it and harnessing its capabilities will be the keys to success. 

Stay tuned for more updates and join us in our mission to redefine modern business in the era of recurring growth. Watch and share recordings of all the Subscribed Live keynotes, customer stories, and product demos from Subscribed Connect London here

To discover how Zuora can help your business thrive, connect with one of our experts today.


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