10 Best Practices for a Successful Subscription Business
As the publishing industry seeks to reduce its reliance on advertising, the industry has seen even more publishers turn to paywalls. Indeed, according to The Reuters Institute for the Study of Journalism, 79% of publishers placed ‘revenue subscription as their main focus for 2022’, a 5% increase from last year.
However, in order to build and scale subscription revenue, it’s not enough to simply build a paywall around your content. Publishers must proactively and continually refine their customer acquisition and retention strategies in order to scale their subscription business, rolling out an emphatically data-driven business model with a user-centric approach. It is even more essential to rethink certain approaches given the cost of living crisis that is having a tangible impact on the subscription economy at large.
Though there is no fix-all formula for a successful subscription business, there are a few best practices that will help publishers scale and grow their subscription revenue. This article explores ten actionable strategies that publishers can implement to set their subscription business up for success.
1. Create a Data-Driven Subscription Business
The key to building a successful subscription business model is to understand the importance of first-party data. Centering data within the subscription business model is fundamental to helping publishers gain a deep understanding of their audience, segmenting their readership, converting unknown customers into paying subscribers, and ultimately, achieving a higher ROI.
First-party data feeds into every stage of the customer’s life cycle, from conversion and acquisition, through to retention. Dynamic paywalls draw on data-driven propensity modeling to prime customers for conversion. This means drawing on data about existing readers’ demographic profiles and preferences, and extrapolating this information to match unknown users with suggested content and experiences that they’re likely to enjoy.
Meanwhile, publishers must also leverage their first-party data to continually enhance the experience of existing subscribers. One example is by surfacing personalized content suggestions that align with individual interests and preferences.
2. Choose the right paywall
Choosing the right kind of paywall is a critical strategic decision. Publishers should assess their audience profile to determine whether a soft, freemium, hard or dynamic paywall would be most appropriate for their business.
Looking forward, dynamic paywalls are likely to have the longest life span as third-party cookies are phased out. This is due to a number of key reasons. Firstly, they will become an invaluable source of first-party data that integrates directly into a publisher’s overarching data-driven strategy. Secondly, publishers will gain the highest chance of conversion because these intelligent paywalls examine each ‘individual’s propensity to subscribe.’ This propensity modeling approach ensures each reader has a personalized experience, surfacing content that aligns with their interests and only prompting them to become a paying subscriber when they are ready.
3. Communicate value exchange clearly
Another aspect of building a successful subscription business is ensuring that readers are fully informed of the value exchange publishers are proposing. This is a crucial aspect of achieving desirable ROI, with 62% of subscribers citing ‘good perceived value’, meaning ‘the right combination of offerings and pricing’ as the strongest incentive for signing up.
This means clearly communicating the benefits of becoming a paid subscriber, what premium features will become available to them, and what kind of exclusive content they will gain access to. This communication is part of a publisher’s broader marketing ecosystem and should filter down into all customer communications.
4. Provide Personalized Subscription Journeys
The importance of creating a subscription business based on personalized customer journeys cannot be understated. Now that 71% of customers expect companies to deliver personalized interactions, publishers who don’t offer custom experiences risk losing out to competition.
As Mckinsey’s research shows, ‘personalization drives performance and better customer outcomes’. Indeed, companies that understand the importance of personalization see 40% more revenue than competitors.
Personalizing customer journeys not only secures a higher likelihood of conversion, but in the long-term, helps to retain subscribers by boosting their satisfaction, loyalty and overall engagement with content.
Part of an effective customer-first approach also lies in listening to reader preferences and forming a robust feedback loop to ensure that publishers are producing content that readers actually want to see.
5. Look at the competition
Examining the industry landscape and understanding what similar publishers are offering is critical to developing a subscription business that maintains a competitive edge. Publishers should keep a tab on wider-industry trends, how competitors are choosing to price their subscription packages, and the way in which they’re marketing.
For example, publishers looking to up their game can take inspiration from trends such as in-article checkout, micro-subscription packages, and individual content creator platforms that have begun to gain traction across the industry.
However, this should always be balanced with a publisher’s specific audience preferences to build a sustainable subscription business that will cater to their readers in the long run.
6. Invest in Customer Relationships
In order to build a future-proof subscription business, publishers need to shift away from viewing customer relationships as transactional and instead enter into long-term partnerships with each reader. Not only does this maximize the overall lifetime value of each customer by extending retention rates, but also creates organic opportunities for genuine brand advocates who promote publishers’ content through word of mouth, for example.
Building trust is essential for supporting other parts of a successful subscription strategy. Indeed, there is a ‘clear link between general trust and people’s willingness to trust publishers with their data.’ As such, any publisher that wants to build a deep and engaged connection with readers on a long-term basis must invest in cultivating trust.
In the same vein, readers nowadays want to feel empowered by their subscriptions, and therefore, publishers must make room for them to build a relationship on their own terms.
7. Focus on customer retention
It can be tempting to invest more in customer acquisition, focusing on attracting new customers, rather than dedicating effort to retaining existing ones. However, since it is far more expensive to acquire new sales, let alone convert them at a fast rate, the value of investing in repeat business from existing customers should not be underestimated.
Additionally, as subscription fatigue threatens to increase and the cost of living crisis prompts lower-income customers to unsubscribe, publishers who want to continue to scale and grow their subscription business must focus on their customer retention strategies.
Without a robust retention strategy in place, publishers are unlikely to see success in the long term. Retaining customers ensures that publishers draw the maximum CLV out of all of their readers.
This includes addressing involuntary churn to mitigate against inadvertent subscription lapses, as well as investing efforts in re-engaging subscribers who have a reduced engagement rate. Additionally, focusing on smooth and comprehensive subscriber onboarding is key to securing a long-term relationship.
8. Utilise Strategic Pricing & Subscription Bundles
How publishers price and package their subscriptions is an important factor in the success of their business. This has become an even more relevant concern in the context of the cost of living crisis. Inaccessible pricing and reductions in disposable income have triggered concerns that publishers will see elevated subscriber churn in the coming year.
In order to activate economically diverse readers and create a ‘churn-resistant’ subscription business, publishers could consider discounted pricing or unbundled subscription products to adapt to the competitive landscape.
It’s also advisable to take cues from churn rates, customer feedback, and how similar publishers are choosing to price their content. Publishers should treat customer feedback about why they have chosen to terminate their subscription as rich resources that can help them to refine their pricing and overall subscriber acquisition and retention strategy.
9. Stay adaptable & agile
As the subscription economy scales and grows, it’s also sure to change. This requires publishers to retain a certain level of agility and the ability (and willingness) to adapt their subscription business model to meet changing expectations. A flexible approach is what will dictate how versatile and future-proof a publisher’s subscription business will be.
In the short-term, this translates to continual iteration through testing, learning, and changing current approaches. Publishers can, for example, split test paywalls, trial new offers or pricing, to see what is effective and what is not.
10. Invest in your tech
Finally, publishers looking to maximize the success of their subscription business can consider investing in best-of-breed software that supports, and actively enhances, their journey as they scale and accelerate their subscription revenue.
Subscription experience software should allow publishers to gain granular data insights into their subscription business, offer their audiences a personalized user journey, and ultimately, optimize their returns. Employing this kind of publisher-oriented tech ties into building a future-proof and adaptable business, supporting publishers in iterating and quick-testing changes to their business as they scale and grow.