With continued growth and competition among subscription services, particularly in video, study reveals strategies for customer acquisition and retention.
SAN FRANCISCO, CA – MAY 8, 2019 – Fetch, the global mobile-first agency, part of Dentsu Aegis Network, today released the findings of a study called “Customer Retention in the Subscription Economy,” which shows that there is still sustained interest in subscribing to more paid subscription-based services, albeit slightly less than in 2018. The findings reveal how to retain valuable subscribers among increasing competition and subscriber churn – in categories like streaming video (i.e. Netflix, Hulu, Amazon Prime) – through key mobile marketing and customer service strategies. The mobile research study was fielded to a nationally-representative sample of 1,500 U.S. subscribers of paid subscription services via the Pollfish mobile survey platform and sheds a light on the significance of mobile along the path to subscription and ultimately retention.
Differentiation is Key as Competition Rises:
Streaming video saw the most growth amongst all categories surveyed (music, gaming, news, etc.) with 90% of respondents subscribing to at least one streaming video service. The streaming video category is already highly competitive with multiple service options and even more from Apple and Disney still to debut this year. Video subscription services also lead in subscriber volatility. Potential churn for this category is up a staggering 10% YOY, signifying the importance for marketers to develop strategies to retain subscribers for the long term.
With so many paid subscription services today, 75% of respondents say it makes it harder to choose which to subscribe to. Consumers are also getting more price-sensitive, which in part is causing subscribers to get proactive in evaluating their total subscription portfolio – 40% intend to look into how many paid subscriptions they have in order to cancel some of them. This indicates that marketers should be on the lookout for signals that suggest potential churn in order to get ahead of it.
In the study, price was the top factor for potential subscriber churn followed by frequency of use. Price discounts as such are the most effective means of preventing subscriber churn, but marketers can also demonstrate value without sacrificing long term profitability. Marketers should proactively reach out to customers who are not frequent users or whose usage has lapsed and are therefore more likely to churn. 71% are less likely to cancel when their paid subscription service consistently recommends new content or functionality that they might enjoy.
The best retention strategies can begin during acquisition. Marketers should analyze their most loyal and high-value subscribers and pull out key identifiers for acquisition efforts. In addition, there are other signals that can suggest the likelihood of a prospect becoming a loyal high-value customer. One such signal is the willingness to sign up for an annual plan. 58% are less likely to cancel if they’re on an annual plan versus a monthly one. Another signal is shared accounts or logins where 65% are less likely to cancel a service if they share it with other people (friends and family).
The Importance of Mobile Touch-points in Customer Retention:
Whether acquiring or retaining customers, the study found that from research and signing-up to actually using the subscription service, mobile is key – in fact in every category surveyed, the smartphone beat out the PC, Tablet, Connected TV, Smart speaker and all other digital devices. With mobile being at the core of the customer journey, a disappointing mobile experience could lead to service cancellations (which 52% of respondents are also more likely to do on their mobile devices).
“Mobile has become the most important channel for acquiring, engaging, and retaining subscribers,” said Jonathan Liew, Strategy Director at Fetch. “As marketers, we need to reduce potential friction. That starts with a delightful mobile experience that keeps subscribers engaged again and again.”
Strong Acquisition Practices are the Best Retention:
As the subscription economy becomes increasingly competitive, retaining subscribers is imperative since it is much more costly to win over new or lapsed customers. [The Value of Keeping the Right Customers – Harvard Business Review] “This subscription economy is rapidly evolving.” said Jonathan Liew, Strategy Director at Fetch. “Today’s Chief Revenue Officer knows that the best retention strategy begins at acquisition and involves acquiring loyal customers up front.”
Fetch is a global agency born for the digital economy, with offices in London, New York, San Francisco, Los Angeles, Tokyo and Hong Kong. Part of the Dentsu Aegis Network, Fetch has been delivering advertising and digital media services since 2009, Fetch has found over 390 million new customers and driven 46 billion engagements for its clients. Its aim is to understand the mobile consumer better than any other. Working with some of the world’s most pioneering brands including Facebook, Twitch, Mozilla, EPIX, AEG Presents, Hulu, and The Telegraph, Fetch has won numerous awards for its campaigns for clients in disciplines which include digital and mobile video, paid social, display, search, creative and mobile marketing. As well as being listed as top 30 digital agency by Econsultancy, Fetch was named mobile agency of the year in three consecutive years and voted fastest growing mobile marketing agency in Europe by Media Momentum Awards.