What Subscription Businesses Know About Keeping Customers Through a Crisis
Companies that adopt a ‘membership mindset’ are best-positioned to survive this downturn
In the last few years, subscriptions have become a ubiquitous part of the consumer landscape, whether it was Apple, Disney, and newcomer Quibi starting streaming services to compete with Netflix, or the wave of clothing and beauty companies that launched to sell people subscription boxes.
Now, the pandemic is testing how resilient the subscription business model really is — and signs look promising. Food subscriptions from Blue Apron — which was barely surviving before the crisis — to artisanal memberships like Cowgirl Creamery’s “Cheese of the Month” club, are suddenly thriving. Subscriptions for news, entertainment, education, and software are dealing with unprecedented demand. In a nutshell: If it’s a membership business that can deliver something useful or delightful to someone’s door or via your computer, that’s a very good business to be in right now.
With their predictable recurring revenue, subscription business models are seductive. It takes more energy for a customer to make an active decision to buy than to decide to stop paying for a product or service that has become habitual.
But it’s not simply that reliable revenue stream that gives them an advantage to withstand something as destructive as a pandemic. These businesses take the long view — they understand that their relationship with customers is not limited to one-off purchases, but is instead a relationship that they need to build and maintain. Whether you’re in the subscription business or not there’s a lesson to be learned by all: To hang onto customers during a crisis, you need to have an ongoing relationship with the people you serve.
Reputations that took years to build can be destroyed in two weeks. Relationships that used to take years to unravel can unravel in days.
Companies are making bad decisions right now for good reason. They are letting short-term financial objectives dominate, in order to keep the lights on. But if they are fortunate enough to survive…