Subscription companies have seen unparalleled growth in recent years. Established brands enjoyed customer base expansion by nearly a third in 2021, and dozens of startups have carved out significant market space in years since. However, as companies begin rounding the corner into 2024, market saturation and economic uncertainty are pressing both new and veteran subscription businesses to create greater standout value for customers. For most, this will mean getting smarter about subscriber segmentation.
Smart subscriber segmentation powers all kinds of engagement, acquisition, and retention strategies. At its core, segmentation is about honing in on audience needs in order to create highly personalized experiences for a competitive edge.
Consumer research from McKinsey & Company reveals that faster-growing companies attain 40% more of their revenue from personalization. For consumers, personalization is a demand, not an option: “71% of consumers expect companies to deliver personalized interactions. And 76% get frustrated when this doesn’t happen…Personalization drives performance and better customer outcomes.” These tried-and-true tactics can take subscriber segmentation to the next level.
Beyond standard demographic information like age or occupation, there are other diverse segmentation criteria that companies can use to more clearly and uniquely define their audiences. Smart segmentation taps into more dynamic contextual insights – such as source of brand discovery, geographic changes, or product feedback. Technographic and behavioral criteria include things like how frequently consumers use their subscriptions, how long they have been subscribing, what devices they use to engage, or who is prone to interact with new products more quickly.
These are just a few examples of how diversifying segmentation criteria can help businesses understand their products’ precise place within various consumer ecosystems. This allows them to shape customer journeys with more precision and place product offers and messaging more persuasively – including cross-selling and up-selling.
Subscription companies that leverage a rich variety of segmentation criteria to shape their product offers and experiences also deliver greater value to customers and, in turn, enjoy more sustained, profitable engagement.
Of course, to power these personalized experiences, companies need to do more than just guess. Gone are the days of relying on gut or general audience research: today, subscription companies need dynamic, deep, and individualized data insights to predict, iterate, and adapt segmentation and engagement tactics throughout the customer lifetime.
This requires tools and automation to collect needed data in a continuous way. For example, to draw anonymous visitors on a news site towards becoming known readers, companies need the right kinds of digital forms and content offerings. These have to be leveraged in the right ways for the right audience segments. Digivate explains:
“Audience segmentation improves your content strategy – A landing page needs to highlight a series of questions that a visitor may be grappling with and should present a simple solution to their problem (with the solution only partially visible). If you are targeting more than two user segments, ask visitors to enter information [data] about themselves that can help you identify which segment they may fall into…That way you can put them on a more effective journey within your site.”
The right data collection tools can help shape more personalized products and experiences.
To effectively evolve alongside each individual subscriber, subscription companies need strong segmentation testing habits. Through regular iteration and analysis, subscription companies can determine which segments are most responsive and what kind of responsiveness they exhibit. Companies can identify changes over time and respond appropriately. For example, do certain segments engage more frequently with a particular registration form, product, or messaging, but not others? Do data trends indicate why?
Iterative testing drives measurable outcomes and optimizes marketing spend where increasingly granular segmentation may prove profitable. Tests can help companies determine which offers perform best for certain segments but not others, when to offer new products, or how and when to nudge key audiences towards subscription renewal. These tests boost engagement, reduce churn at problematic points, and enable subscription companies to prioritize high value customers.
While companies need data to segment audiences accurately and in diverse ways, most customers need to feel they can trust a company before they will share their personal data.
Trust is important for companies to prioritize throughout the entire subscriber lifetime, not just in the beginning. CPO Magazine notes: “65% [of customers] say they are more likely to be loyal to a company if they trust them to use personal data properly.”
Data privacy and compliance can be uniquely integrated into points all along segmented customer journeys by establishing a digital culture of trust. For example, transparent communication on forms can be used to explain why data is going to be used and how that will benefit the customer.
Subscriber segmentation that goes beyond simplistic demographic data empowers companies to understand their customers and pick the right channels, messages, and products to connect with them. Personalized experiences driven by diverse, dynamic segmentation can strengthen subscriber relationships for more contagious brand loyalty and optimize marketing opportunities across new and existing products.
Companies are most effective when they balance information, trust, and personalization – leveraging tactics that transparently collect data and diversify segmentation accurately. Subscription businesses that then test data-driven tactics will know how to connect with each of their key audiences in the right ways. While every subscription company is striving to segment their subscriber base, it’s tailoring and elevating these practices that leads to essential and profitable brand and product differentiation.