In my reading of The Automatic Customer today, I learned what was important in scaling up my subscription business. There are two focuses for building your subscription business: 1) acquiring new customers and 2) reducing churn. The chapter focused on eliminating churn, but only the “avoidable” churn. Some churn is unavoidable and therefore cost more to eliminate than it is worth. To eliminate churn you must first understand why people are leaving. It is critical for your business to make a point of collecting actionable data. The Automatic Customer gives ten basic tips for eliminating churn. I’ll focus on the first five I learned today.
Idea One is to disrupt your customer’s normal routines. The stickiest products or services are the ones that insert themselves into peoples’ daily lives. If someone can get their job done without using your service, then it will be very hard to get them to stay with you; however, if you insert yourself into your customers daily tasks, then they have to stay with your company.
Idea Two is to focus on on-boarding in the first 90 days. In the first 90 days, customers have higher expectations for higher levels of interaction, they expect to be asked for personal information, they are open to new offers, and they are much more likely to defect before “bedding in.” One of the biggest reasons why people don’t subscribe is the perception that they are paying for something they are not using. This reason is a critical point to understand because most people feel that their rivals are their competitors, when in reality, it is their customer’s inertia in not using the service or product.
Idea Three is to reduce your customer’s “time to wow.” One of the main contributors to getting your customers to adopt your product or service in the first 90 days is to give them a quick win that provides the motivation for them to learn more. The first experience they have with your company should “blow them away.”
Idea Four is charging upfront for the subscription. The reason for charging upfront is intuitive: the more your customers pay up front, the more motivated they are to make the behavioral change needed to “get their money’s worth.” The more they adopt your service into their daily lives, the stickier they become down the road. The biggest objection people have with charging upfront is the idea that the one-year renewal will be more difficult. The truth is actually that it becomes easier. When a customer adopts your service quickly and fully in the beginning, they use the service more throughout the year, and a deeper commitment is created.