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Overview 3
Customer Intelligence 7
Strategic Alignment 11
Lifecycle Marketing 14
Conclusions 20
Appendix 23
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Digital content subscriptions and SaaS present an exciting opportunity to build lasting, profitable relationships with consumers
But the business model has inherent challenges:
◦ Fast changing, competitive environment
◦ Easy come, easy go nature of digital relationships
◦ Lack of communication reach and frequency
Lower customer engagement, loyalty and lifetime value are often a strategic problem
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Alignm
ent •Conflicting
objectives,
e.g. customer
acquisition impact
on churn
•Insight is gathered
but not leveraged
•Extraordinary
investments may
be needed
Measure
ment •Difficulty
benchmarking or
testing
•Limited access to
product usage data
•Time lag between
execution and
measurable results
Assum
pti
ons
•Service is
accessible and
performing well
•Service has high
mind-share or
engagement
•Low usage is just a
feature awareness
issue
To maximize customer LTV, digital subscription businesses need a comprehensive loyalty strategy encompassing:
1. Customer Intelligence = Behavior, Attitude, Demographics
2. Strategic Alignment = Right Customer, Right Product
3. Lifecycle Marketing = Execution of Customer Treatment Strategy
The good news is that these essential components can be managed in parallel, and frequently there are quick wins to be found
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Customer value should drive priority, while all metrics should inform
product planning and customer treatment
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Metric Description and Examples
Customer Value
Define customer worth in terms of estimated profits or revenue. The customer base is your most valuable asset, what is the asset worth?
Behavior • Buying: Purchasing additional products, subscription renewals • Use: Range and frequency of product feature and content use • Advocacy: Sharing/recommending to friends and colleagues
Attitude/ Perception
• What features and product attributes matter the most? • Would they recommend to a friend? • Why do they stop buying?
Performance Service delivery. Uptime, outages, support, etc.
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Attrition by Cohorts Average Lifetime by Sales
Source
6 6.5 7 7.5 8 8.5 9
Referrals
Website
Paid Search
Affiliates
Average Lifetime Duration (subscription in months)
0
10
20
30
40
50
60
70
80
90
100
1 2 3 4 5 6 7
Subscriber Attrition by
Tenure (subscription in months)
Jan Sign-ups
Feb Sign-ups
March Sign-ups
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Interactions Profile Update Communication
- Membership Log-ins
- Content Use
- Feature Use
- Purchases
- Campaign Response
- Customer Support
- Record at Individual-Level
- Enhance with Predictive
Modeling, Segmentation, etc.
- Event-Based Messages
- Alerts
- Offers
- Recommendations
- Customized UI
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Customer loyalty and the
resulting profitable
relationships are all
about delivering great fit
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Understand the
profile and needs of
loyal, high-value
customers
Relevant to
high-value
prospects and
customers
Match the
needs of high-
value
customers
Right Customer
Right Product Right Message
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Executive: Oversight and Shared Goals
Marketing:
Acquire the right customer
Build the right product
Technology:
Integrate customer data with
tools that enable analysis and
personalized treatment
Support:
Prioritized service based on
customer value
Finance:
Most valuable asset = Customer
Customer LTV drives decisions
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Management of the customer relationship should be needs-based, and oriented around lifecycle phases
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Onboarding
Habituate &
Expand
Relationship
Advocacy
Customer Engagement & Profitability
Customer Tenure
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Save/ Win-Back
Objectives: Deliver the product, maintain excitement,
provide orientation
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Event Description and Notes
Purchase Flow Easy, quick, and reinforce the sale
Order Confirmation and Welcome
Single, comprehensive message confirming status and providing recommendations on what to do next
Product Delivery and Access
User’s first engagement with product. Track “conversion” from sale to first use, performance perceptions
User Guide, Tutorials and Support
Make support easy to find. Show user how to get the best value, even if UI is highly intuitive
Free Trial Conversion Timely and relevant upsell for free trial users. Test to determine optimum timing, message, and medium
Objectives: Make product part of customer’s routine and
expand use. Facilitate loyalty and up-sell or cross-sell
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Event/Touch Point Description and Notes
Updates, News, Alerts
Maximize awareness of new features, content or other “news”. Communicate with targeted, relevant message based on explicit or implicit interests
Tips and Recommendations
Increase user’s perceived value of the product by introducing/promoting features they haven’t used
X-Sell, Up-Sell Once value has been established at initial service bundle, encourage expanded relationship with relevant offer
Objectives: Develop a universe of vocal fans and help them
tell your story
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Event/Touch Point Description and Notes
Measure Use Net Promoter or similar study to track progress - How likely are you to recommend to a friend?
Understand Motivation
Talk to your customers - What elements of your service deliver the greatest value? - Is this the kind of service you talk to your friends about? - When is a good time to ask for referrals? Track conversations and sentiment on social media
Facilitate Make sharing content and reviews highly visible and easy
Objectives: Re-engage customer, problem resolution, billing
optimization. Manage voluntary and involuntary churn
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Event/Touch Point
Description and Notes
Payment Processing
For auto-renewals, billing optimization can be an easier opportunity because it’s often just back-end processes changes
Customer Support
Could apply at any point in lifecycle, although most contacts occur when customer has an issue and is at-risk of cancelling
Proactive Outreach
Infrequent or dormant users are usually at-risk. Communicate high value features and relevant content
Cancellation Requests
“Save” customer by uncovering the issue and offering a solution. Manage through self-help or customer care agent
Renewal Notice Proactive reminder when customer must actively renew
Win-Back Targeted renewal offer to high-value, former customers
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Know customer value
Targeted acquisition
Product design
Meet performance expectation
Relevant communication and treatment
Test and learn
Measure behavior (what) and attitudes (why)
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Situation: To better understand the drivers of early subscriber churn at a digital content subscription provider, we examined account sign-in data. We discovered that many former customers had never signed-in to access their subscription during their entire tenure.
Treatment Strategy: Proactively contacted these “orphaned” customers via email and offered help with account access.
Execution: Designed a series of tests covering email subject line and content, and landing page content. Also presented alternative content and treatment if customer had installed software client or not. All tests were compared against control cell which received no treatment.
Results: Winning test combination increased first time sign-in by 46% and reduced 90 day attrition by 6% over control group.
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Situation: Using web surveys at a mobile navigation service provider, we identified key product features that were strong drivers of customer satisfaction, and that a large share of users were not aware of these features.
Treatment Strategy: In addition to increasing visibility of these features throughout the customer lifecycle, we initiated a monthly email newsletter focused on these satisfaction-drivers.
Execution: Each edition of the newsletter focused on a single feature, highlighting use cases and benefits. To determine any change in behavior, a series of four newsletters were sent to a test group, while a control group didn’t receive the recurring campaign.
Results: After 4 months, the test group receiving the monthly newsletter had 27% lower attrition than the control group.
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Situation: Significant churn at a digital music service was caused by subscriber's credit cards failing to authorize and settle during automated billing . While the billing success rate was already relatively high, we determined that even small improvements could yield meaningful revenue.
Treatment Strategy: Focused on testing and optimizing back-end billing processes.
Execution: Tested and carefully measured any lift from reconfiguring the timing and number of “recycling” attempts on failed credit cards. Applied several other process changes identified with the help of our payment processor, testing each in isolation.
Results: Reduced monthly customer churn by .5%, and yielded $600k/yr incremental lifetime revenue.
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Situation: Based on primary research and customer support feedback at a mobile GPS fleet management service, we identified issues with on-boarding, product feature awareness and on-going support for small and medium business customers.
Treatment Strategy: Created a more robust CRM program. Helped customers get needed support and maximum value.
Execution: Deployed a series of new treatments including website knowledge base, welcome email, new user activation guide, and tutorial videos. Initiated new order status reports to carrier partners, working with them to improve order processing success and expedite timing from order placement to fulfillment.
Results: Increased top-box customer satisfaction rating 32% yr/yr and reduced contact center call volume by 15%.
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Situation: At a digital music service, there were a broad set of factors influencing customer churn, as well as significant resource and organizational hurdles affecting our ability to better manage churn.
Treatment Strategy: Addressed customer churn as strategic problem.
Execution: Built a cross-functional team with performance goals tied to customer loyalty. Segmented customers by behavioral and attitudinal data, creating a profile of our high-value target customer. Used same data to identify satisfaction drivers.
Results: Delivered loyalty “blueprint” including a full-year budget recommendation for the team. Gained support for key initiatives including: email platform, data warehouse, music recommendation engine, revised acquisition strategy, shift to agile development and improved product performance, and range of relationship marketing programs.
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Situation: At a digital recipe provider there was an ongoing challenge to increase Website retention among program members and anonymous visitors. The goal was to increase advertising value to our partners, particularly with high-value sponsored video playback.
Treatment Strategy: Explore the of use banner ads on the web to invite new and previous visitors to return to the site.
Execution: Worked with Ad Ops Team to enable remarketing, including preference-based targeting using previous video playback history. Supplemented with less expensive content marketing for cost and performance comparison. Monitored and optimized campaign throughout testing period.
Results: Significantly increased site engagement among remarketing targets, including a 130% increase in page views. Achieved goal of increasing overall video playback 5% during test.
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Situation: At a travel network, a primary objective was to help member travel agencies become more effective in managing their clients and understand the value of mining customer data. The challenge was to make segments simple and actionable for hundreds of independent travel agencies and thousands of travel advisors.
Treatment Strategy: Create segmentation based on a client’s buying lifecycle, from prospect, to active to lapsed.
Execution: Worked with team of agency owner/managers to co-create a pilot program to test segment-based treatments using email and outbound calls. The goals were to increase client engagement and sales, and build agency advocacy for client segmentation.
Results: Increased client engagement with their travel advisors, highlighted by 74% increase in sales by former clients. Positive results let to network-wide adoption of targeted treatment program.
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Dave Ury is Marketing Director and Principal of Customer Insight & Lifecycle Marketing. He is an accomplished leader offering over 20 years of proven
success in relationship marketing including acquisition, CRM, and retention. Before starting his consulting practice, Dave successfully led national marketing programs and cross-functional teams for globally recognized brands including Cox Communications, AT&T Broadband and RealNetworks. He earned a B.A. in
Business Economics from the University of California, Santa Barbara, and a M.B.A. from the University of Colorado.
Dave can be reached at [email protected], or 425-999-7548
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