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Hope your week is going well!
A subscription business with recurring revenue is a dream and a very resilient business model. That's the way our business is structured and although it was a challenge getting started (perseverance being key in the early years), we managed to build a sustainable subscription model.
The biggest challenge on a subscription model business is customer retention. You want customers to renew. Our founder just wrote on how we get and retain customers on yearly subscription services at our web services company.
The focus is on 3 main strategies:
1) Talking to customers (like a human)
2) Having an enticing landing page
3) Reviewing support data & customer outreach
Getting customers to open their wallets and pay you consistently year after year is tough but creates an extremely resilient business model.
If you have any stories, tips or feedback of your own, please share with us in the comments!
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Recurring subscriptions are the lifeblood of every single company. Even companies who sell only products, actually sell recurring services as well.
Think of your mobile phone. When you bought the phone, were you offered an upgrade program where you’d pay per month and allowed to upgrade to next year’s model when it came out? How about a warranty program paid monthly?
Or the more obvious examples like your monthly phone plan, or your streaming service, paid monthly, or slightly discounted with a yearly commitment?
Every business needs to setup a recurring revenue stream, not only just to stay afloat, but to grow as well.
Convincing customers to pay you on a recurring subscription is the tough part. And then asking them to renew with you is even harder. Here’s how we did it at Skystra.
- Talk to Customers
This is a frequently overlooked venue for client acquisition. Everything revolves around paid search, keywords, re-targeting and other data-based ideas, that the old art form of simply talking to people can and will turn them into customers.
In the last few years, our best converting rates came from talking to customers on social media. Reaching out to them, being a human being about it. It’s not always about the immediate sale. It’s about building long term brand awareness and having the patience to let things grow at their own pace.
- Have an Enticing Landing Page
The more automated client acquisition channels we have, like paid search, or influencer marketing, absolutely requires an enticing, easy-to-read and even easier to understand landing page. Most website visitors coming from these channels will not think twice about exiting your website, so you need to put the relevant information (per channel and campaign) that will make decisions much easier and faster.
- Review your Support Data and Reach Out to Customers
No service is perfect. We get support requests just like everyone else. What we do really well is reviewing every single request, look through them, why did they happen, what happened, how can we prevent it from even being a question in the future. The goal is to make things extremely seamless to the customer.
This in turn, will lead to higher renewals. We noticed if a customer has many problems, or they’ve recently had a problem, right before their renewal, when that email comes in with the renewal invoice, you are not looking at an automatic renewal.
However, when there are almost no problems, or ideally, no friction at all in using your service, renewal rates will go up dramatically. The less friction, the higher the renewal. You do not want to be the focus of your customer’s attention.
Those are the high level points on how we built a subscription based business. There’s a lot to digest here and we’ll go into more details in the future. We hope this information helps you on building a new business or improving your current one. We’re happy to share the lessons we learned along the way and hope we can pay it forward!
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