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, they will have lost the trust that makes customer loyalty possible in the first place.
In times of crisis, relationships become much more volatile — people can quickly move from love to hate with a company that lets them down. In these times, customers are quicker to connect, let their guards down, and trust. But these same customers are also quicker to permanently end their relationship with a company that violates their trust. Reputations that took years to build can be destroyed in two weeks. Relationships that used to take years to unravel can unravel in days.
Customers will remember which hotels and theaters offered a refund on unusable reservations, which newspapers dropped their paywall and provided free content, and which gyms quickly mobilized to send out daily video fitness classes. They will also remember the companies that took advantage of the crisis by gouging prices. Or those that laid off employees with little to no notice, leaving these formerly loyal workers to fend for themselves when their rents and mortgage payments came due.
Meanwhile, companies that have a long-term focus and take good care of their customers and employees during a crisis win lasting loyalty. This phenomenon is especially powerful for any business — subscription or not — that adopts a true “membership mindset.” For example, many CrossFit studios are reporting that 90%+ of their members are continuing to pay their monthly fees, even though the gyms are closed. Part of that might be because the gyms are letting members take equipment home and are streaming workouts. But the bigger driver is the loyalty members feel for their studio owners and the community at large.
Companies with a membership mindset do everything they do with the objective of creating long-term value for each and every customer. Their businesses are not sustained by anonymous transactions, and their customers are not just an account number or the next person in line. Every customer is a unique person, with distinct needs, who is a pleasure to serve.
During this unprecedented mass shutdown, some businesses have seen a massive spike in demand: headset manufacturers; delivery services; and manufacturers of cleaning supplies, face masks, and toilet paper. For these organizations, the question is how to turn this spike into an ongoing relationship. Hint: It’s not by price gouging — it’s by onboarding these new members to stay for the long term.
Here are eight things you can do right now to build and maintain strong customer relationships during this crisis.
- Focus on your “forever promise.” Consider the bigger commitment you’re making to your best customers. What problem are you going to solve for them, or what goal are you going to help them achieve for the long term? Step back from your products and services and just think about your customer’s situation and how you can help them succeed in meeting their objectives.
- Determine who your best members are and who they aren’t. Be very specific about who you serve and why. You should double down on ensuring that your best members continue to get the best experience. These are the ones who will likely stay with you through and beyond this moment of crisis.
- Invest in tomorrow’s best members as well. In times of uncertainty, people look for new ways to handle emerging challenges. Many people are redefining their routines and are open to new services right now. If you have the bandwidth and resources, now is the time to invest, by relaxing your paywalls or extending your free trials. Media organizations like Bloomberg and The Atlantic have done this, and are seeing bumps in new members spike by 50% and more.
- Identify the biggest challenges that are preventing your best members from achieving the goal you promised to help them with. And determine if this crisis requires a different, short-term solution to take better care of current and future members.
- Expand “customer success” beyond your support teams. It’s all hands on deck right now. Everyone in the business should be working together to make sure that customer needs are met and communications with customers are clear.
- Include members of your frontline team in the brainstorming discussion. These individuals have a much clearer line of sight to the customer and the problems those customers face.
- Make your customers’ presence felt wherever decisions are being made. You want to feel as if your customers are watching you, eager to see how you are leading, and hoping you’re worthy of their trust. Amazon leaves an “empty seat for the customer” in meetings to ensure customer-aware decisions.
- Take care of your community. When business is down and cash is tight, it can be tempting to pull back. But that exacerbates the crisis. Companies like Microsoft and Google are providing for hourly and temporary workers who are temporarily unable to work. Loom, Zoom, and other subscription services are offering their services free for educators. Such generosity builds brand and awareness, but more importantly, it’s good karma.
The crisis is going to be a long and difficult period for most businesses. But the organizations best positioned to survive this turmoil and seize the advantage when the economy reopens are the ones that treat their customers and employees as long-term partners.
Robbie Kellman Baxter’s new book on the subscription model, The Forever Transaction: How to Build a Subscription Model So Compelling, Your Customers Will Never Want to Leave, is out April 7.