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When and how can you best leverage your data?
In 2017, Vindicia introduced the Subscription Lifecycle to describe the five phases common to every subscription businesses. This lifecycle provides a framework to categorize and track the interfaces and interactions of subscription businesses with their customers and company processes. The phases of the lifecycle pertain to any subscription-based business, whether it provides over-the-top (OTT) content, software as a service (SaaS), news and media, physical goods or another product.
Here, we’ll explore each phase of the lifecycle and demonstrate how smart use of data that you probably are already accumulating can help subscription businesses enhance performance. Because subscription success requires intelligence at all phases of the lifecycle.
Convincing a single customer to subscribe to your service is one of the more expensive aspects of operating a subscription business. It costs significantly more to find a new customer than it does to retain an old one.
Businesses have used a variety of strategies to acquire customers, including deploying attractive offers and discounts, personalized marketing, segmented audiences and expertly designed product bundles to attract their target markets. But how do they create these offers? How do they know how much of a discount is too much? What tells them which bundles will attract the most subscriptions?
The answer, of course, has moved over the years from hunch to data – if you have the right information and intelligence to analyze it, that is. For example, by analyzing data that draws from compatible businesses, products and populations, businesses can tailor and fine-tune their pricing and packaging strategies to optimize sales. They can see how many items to differentiate between packages compared to what should remain the same, how much to increase the cost of each tier and much more.
“The Bill phase relates to all financial processes.”
In terms of the subscription lifecycle, the Bill phase relates to all financial processes, including billing and payments, collection, taxation, currencies, revenue recognition, financial reporting and more.
In these areas, and especially with respect to billing, failures are not an option. An incorrect bill impairs customer satisfaction, creates a churn risk, induces additional overhead and revenue loss, and delivers a mortal blow to brand value.
How can businesses best ensure a faultless and frictionless billing experience? Part of the answer is selecting a reliable proven billing vendor. But part is also the sophisticated use of data. Leveraging data in a smart way can ensure subscription businesses offer the right payment methods, smoothly handle financial reporting and revenue recognition, identify fraud threats and so on.
For example, years of monitoring fraudulent transactions has helped Vindicia notice similarities between such payments. With our fraud identification system, we help our customers identify possible fake payments so they don’t suffer the blow of chargebacks.
Subscription businesses know they need to prevent both active and passive churn. The former is caused by declining customer satisfaction, changing competitive circumstances and so on, while the latter often stems from payment issues that the subscriber may not even aware of.
Data plays a role in solving both concerns.
Active churn can be diminished by using data to analyze prior customer touchpoints, predilection to churn, changes in consumption habits, trending and dramatic changes in consumer behavior and so forth. For example, many prior customers might have had issues with a specific interface, leading them to cancel their subscription. Data can highlight which elements may cause problems (and what to avoid from the outset) to help you design an optimal customer experience.
Combating passive churn is an area that can put you at an advantage over your competitors. With unique retention capabilities that let you recover revenue from failed payment card transactions, you can automate your anti-churn processes and retain a greater number of clients. Vindicia Select analyzes each and every failed payment (monitoring the error code, card type, currency and more) to see why the process wasn’t completed, then automatically reprocesses the transaction with an applicable technique to recover the payment.
Subscription businesses that wish to thrive need constantly to be looking to enter new markets, find new audiences and spread to new locations and geographies. In order to expand successfully, they need products that are attractive to and can adapt to new cultures as well as the technical infrastructure in their payments and billing capabilities to support that expansion, e.g., scalability, support for international currencies, taxes, languages and payment preferences.
Subscription businesses can leverage data analytics to pinpoint where to expand, what offers to construct and whom to target.
In many cases, subscription businesses live on the edge, fearing the quarter where revenues or memberships drop. Ensuring the ongoing continuous growth and success of a subscription business is a heavy burden to bear.
Vindicia uniquely ties our fate to the success of our clients. Years after our clients enter production, Vindicia experts and consultants are deeply engaged with their businesses, leveraging the power of the Network Effect of our data to help them build and fine tune strategies, pricing, competitive positioning through business reviews that offer consultative support, and identify opportunities for improvement. That’s what we mean by “Subscription Intelligence.”
Subscription businesses must excel across all phases of the lifecycle.
Vindicia offers both the data and business model capabilities to help companies excel at every step. That’s why they call us the Subscription People.
For more information about the subscription lifecycle, download our complimentary Subscription Lifecycle ebook.