By Theresa McEndree, CMO, Recurly, winner of Best Cloud Payment, Finance or Billing Solution category at The Cloud Awards 2022-2023.

Core to our job as marketers is a need to better understand our customers, in addition to expanding our customer base, driving sales and building deep-rooted loyalty. That hasn’t changed, despite ever-increasing customer expectations compounded by challenging economic situations, which means there’s often a need to do more with less. One thing subscription-based businesses have in check? They’ve got their customers on speed dial, and access to recurring revenue which can make future times feel a tad less scary.

In fact, there’s much to be gained from the successes of subscription-based businesses, especially around the tactics they employ toward customer retention. In fact, data shows that half of consumers feel more loyal (51%) and about the same typically spend more money (42%) with brands and businesses to which they subscribe[1]. They’ve built a relationship, such that means that when times get rocky, they’re more likely to think twice about leaving—making them as budget proof as you can get these days.

Furthermore, by dialing up loyalty strategies, businesses can foster stronger bonds with their customers as they ride out unpredictable fluctuations and create an infrastructure where commerce and loyalty converge. With that in mind, here are five takeaways marketers can employ to drive retention, scale and ultimately create powerful loyalty experiences.

Lesson #1: Explore complementary brand relationships

In the world of retail, things aren’t often as “either/or” as we’re led to believe. Lots of offerings complement—rather than compete—with one another, especially among B2C businesses. Consider teaming up with other companies to offer bundles that not only give your customers more bang for their buck, but also increase their stickiness. Disney, for instance, created The Disney Bundle, a single subscription offering that gives customers access to Disney+, Hulu and ESPN+. It isn’t just for streaming companies, either, as companies across sectors can come together to offer custom bundles aimed at a single, shared audience. Lastly, in times of economic uncertainty, bundled partnerships can help offset costs and resources, making it a more viable choice until the market stabilizes.

Lesson #2: Create an intentional journey to increase stickiness

The first 30-to-60 days of your customers’ experience with your brand and service are critical, so ensure you’ve mapped out what those multi-channel communications will look like. Combine physical and digital goods to create a comprehensive experience, such as a meal kit with ingredients and recipe cards, while supporting the organization of virtual dinner parties over video chat. Leverage virtual and physical events to both attract new customers as well as keep existing ones happy, all while keeping a portion exclusive to your subscriber base.

Overtime, get your consumers to think about the long-term value of what your brand offers. For example, movie theaters offering half-off for two months, instead of one free movie, tend to get customers in the habit of going to the movies regularly. Find out what the time-to-value is for your product or service and align your promotional strategy with this timeline. If you have an annual renewal cycle, consider shifting that same level of attention you’d put into an onboarding journey into a “renewal journey.”

Lesson #3: Utilize promotions, free trials and ramp pricing thoughtfully

While retailers continue to compete for share of wallet, business leaders have an opportunity to tap into unique pricing and promotional strategies to gain new customers and keep existing customers on board for a longer stretch. As with many things, choice is key. When looking at free trial or ramp pricing, test both. You will of course see higher adoption of free trial offers, but likely higher churn of these non-paying customers when conversion time comes. For ramp pricing, you will likely have lower initial acquisition, but higher conversion to paying customers. Define a testing framework where you can compare both and even offer the option of choice.

It deserves mentioning that ramp pricing models allow companies to attract new consumers to their program via a discounted point of entry that ramps up over time to the full cost. Additionally, companies are increasingly finding new ways to tap ramp pricing to maintain customer loyalty, offering discount pricing resets that ramp back up during key points in a subscription lifecycle. The flexibility to “ramp” up means brands can be fluid with their pricing as needed to offer deals aimed at retaining customers.

Lesson #4: Experiment with pricing, plans and payments

Flexible payment methods, pricing and promotions can unlock lifetime value. But remember, nailing pricing is more than getting packaging right; it also means lowering the barrier to entry by offering different payment options and cross-promoting to optimize your offerings. Always report on promotions at the point of acquisition and subscriber performance downstream—how long they stay, what they buy—to focus acquisition efforts and deliver long-term results. Embedded gifting options offered throughout the customer lifecycle build loyalty—like sending welcome gifts, celebrating milestones, or sending a free product on a customer’s birthday—go a long way.

Lesson #5: Don’t overlook the importance of re-marketing

Every business will experience churn, but that doesn’t always mean it’s the end of the road. Often, once a customer churns, many companies mistakenly assume that they are gone for good—and therefore overlook important opportunities to win them back, or simply deprioritize such efforts. Known as a re-marketing strategy, marketing to former customers is a key tactic which can help you reignite loyalty. Remember, because you’ve already engaged with them before you’re uniquely positioned to re-engage them with a tailored offer. By leveraging the intel you’ve gathered on your former customer throughout their lifecycle journey, you may just be able to boomerang them back.

Also, consider that consumer acquisition costs are usually much lower for these sorts of customers because they’ve previously engaged with your product, so putting money behind paid strategies is another sure-fire way to entice former customers to reconsider.

[1] The “Pandemic vs. Endemic Impacts and Trends on Subscription Services” survey is based on findings of an internet-based survey conducted by Recurly in March 2022. The sample size included 2,612 respondents 18+ that currently subscribe to one or more subscription services. 

About the Author: Theresa McEndree

Theresa McEndree, CMO, Recurly.