8 Tips for Managing a Subscription Business

By Eman Azzoz - July 15, 2020

When we talk about subscription businesses model pros, that doesn’t mean it has no cons or works for everybody; on the contract, it may be hard to manage a subscription business and make money fast and steady. So, in this article, we tell you eight tips to manage your subscription business effectively.

The 8 tips to manage your subscription business

1. Pricing is your double-edged sword

Pricing can bring you customers, or make them leave you instantly. How to price your service or product is a very challenging task. It's about balancing between your product's or service's value and consumer's buying power.

You have to know that pricing affects CAC (Customer acquisition cost), LTV (Customer Lifetime Value), and churn.

Here are some ideas that will help you define your pricing strategy:

  • Go for plans strategy!

In plans strategy, customers pay for only what they need because each one's needs are different. Thus don't make someone pay for something that he/she doesn't benefit from; it's simply a waste.

That's a way of respecting customer's resources such as you respect yours; you only pay for what you need when needed.

  • Watch out for your competitor's pricing!

If your competitors provide the same value you provide at a lower price, you should define the difference; is it your user experience that makes your price higher, for example?

Different things may lead to the difference in prices for the same service/product, but you have to define these things because you may be trapped losing your customers for the other side if you don't.

  • Start simple then grow up!

Everything in the subscription business updates, including your pricing system. That's why it's okay to start simple, track your strategy, and update it later.

How you price? Or according to what do you price is the question you got to answer. According to quantity, time, way of use, place, and the list go on.

2. Customer loyalty guarantees growth

We know that loyal customers guarantee growth. If your customers become part of your business's family, you gain money!

In the subscription model, you don't only generate leads and nurture them till they reach the purchase stage; instead, you nurture them to the loyalty stage.

In that business model, the customer success department may be more important than sales. And an overall customer success strategy should be holding the space. Customer churn and customer retention are related to how you treat your customers and how you help them reach their goals.
A final quick hint, your pricing strategy should prefer loyal customers ;)

3. Scale wisely

How to scale up without losing customers is a critical issue in the subscription model, while scaling up, everything in your business changes; customer service, customer relationship, churn, and various things.

If you don't watch up, you may lose your customer base while scaling, which is (if you didn't change your customer persona) is a bad sign for your current and future customers.

4. Keep the demand

The subscription model's central concept is that as long as there is a need, the business keeps going. That's why keeping the demand of your customers is your way to keep your business.

Some businesses can't go for a subscription model because it can't keep the demand for a long time, even if it kept it for a year or so it can't go further.

5. Simplify the onboarding process

Simplify the process of welcoming new customers, make it easy, simple, and provide it through different channels. If a rock blocked the way when customers are doing their first register, they might simply stop the process :)

6. Keep up to date

As a subscription business, you know that updates control your business. Customers change, you change, and competitors change. If you aren't following up, you may be out of the stage.

You got to know the prices and features of competitors all the time. How do they deal with their customers? What are the customers saying about them? And so on.

7. Track for success

You have to track everything, from your billing system to customer success KPIs, such as churn, retention, revenue, CAC, etc.

Tracking customer success metrics along the way, is your only way to keep up and grow. If you stopped figuring out what customers think of your product/service, you would stop following your success.

8. Keep in contact

Just because the customer registered for an annual program, it doesn't mean that's it; no connection, no emails, no hi there, how are you doing!
Keep asking and checking out how things are going with customers with long deals to keep them active and subscribe for the next year!