Burts AIS, osCommerce & More Blog
New URL: www.osworld.biz

Friday, December 30, 2005

Subscription Thoughts/Meanderings

I've been thinking in the last few weeks about setting up some sort of a subscription based AIS (or Semi-AIS if there is such a thing). I know what I want to do, and I know it'll be workable. I tested it out by adding a subscription package on one of my template websites, and have around 20 live subscribers. Anyway, I was wondering how to keep subscribers "live" - would it be best to let subscribers unsubscribe and only target new subscribers (thus the churn rate would be quite high) or is it best to do everything possible to keep the subscriber once they've signed up. So I joined a Forum to test it out... To test this I recently joined a Marketing Forum which is run by someone who is renowned as one of the better marketers...the forum in question is one which supposedly mentors people into achieving their aims. Anyway, I signed up and stayed for the first few weeks; I made a few good posts and offered some advice to other Forum members. In other words, I did what I could to get my name onto this marketers radar... And then I cancelled... I then cancelled the Paypal subscription simply to see what the marketer would do. ~ Would he email me to ask why? ~ Would he simply ignore me? ~ Would he try to entice me back at a lower cost? ~ Would he offer me something free of charge to get me back on board? The answer... I was never contacted. Conclusion As an ex-salesman this seems anathema to me - I think I'd do all I could to retain subscribers. After all, they have already made a buying decision, and should therefore be treated with a little bit of respect for that. Perhaps I need to test this again with a different marketer and see what reaction they have to a subscriber who leaves. It may be that I chose a marketer who does not care about his churn rate. But this leads onto something else;

Is this particular marketer really in it to help people out on his mentoring forum? Or is he just in it to have the subscription money coming in each month?
I'm not going to divulge which Marketer or Forum this happened with, that would not be fair. I will test out someone elses subscription offering though, and see what reaction they have, it'll be interesting to see if there is a difference. What will I do? When I have a subscription based site, I know for a cast-iron certainty that once a person has made a decision to buy, I'll do everything possible to keep them as a customer for as long as possible.

New URL: www.osworld.biz - thanks!


At 12/30/2005 03:34:00 PM, Anonymous Chance said...

This is something that has been poking at my mind too Gary. You know I am in the works of developing a subscription based service, and I pay great attention to customer retention as well as acquisition. The only way I will make "real money" at my service is if my subscriber count gets high, and so attrition is a real issue.

From a business standpoint, it much cheaper to focus on only the customer acquisition standpoint- churn them through, get their money, and "move on to the next sucker" seems to be the theme I have been noticing from most online services. This may work for a physical product or even a downloadable program, but it seems to me to be a poor business model for a subscription based service.

I liken this to the adult content industry- They have a real issue with people signing up once every six months or so, downloading all the new content, and then canceling. They know that in six months they can sign up again, download just whats new, and start the six month cycle all over without paying for the months in between. How do you retain customers though? With a forum its tough, no doubt. Users sign up, read their fill, and cancel when they have scraped the information they want. Just like the adult sites, they know they can sign up again later and get the new stuff.

Subscriptions like KA and a few others have it easier- Subscribers know that if they cancel then it will be difficult (or sometimes impossible) to get back in. KA also mixes a service with a forum so that people get a product along with a valuable information resource, which I am sure helps their attrition rate.

I think the easiest way to run a subscription based business is not to focus on the information resource (the forum), and more on making the product or service you are giving access to more attractive. Sure, the value of the forum may one day outweigh the value of the actual service 10 fold, but its never going to seem that way in the eyes of most new customers.

For example, on my "super secret service" this is how I intend to retain customers:

1. Regular, monthly updated content for the service, be it a new integration method or style or anything. (There is always something new!)

2. Regular, monthly give-away products like guides, scripts, or ebooks. (There is always something free!)

3. The design of the service allows customers to customize their interface and archive their work and use it again later- if they quit the service they would of course lose their saved information and customizations. (invested interest on the part of the user)

4. The use of a setup fee, even if its something low, I believe will act as a deterrent to the "churn and burn" user as they will not want to pay another hefty setup fee to restart their service in 3 months. (Cheaper to stay a subscriber!)

As for bringing customers back that quit, you can approach that a few ways. I intend to give them a 60-90 day grace period where their settings and archive will be retained, and waive the setup fee if they sign back up. People who fail to renew will get an email asking why they quit, what we can do to help them with their issues, and letting them know about the 90 day settings retention / no setup fee offer.

Better yet, in a year or so, after your service is hopping, the information and services available have greatly grown, you send out another email to former subscribers saying "We have grown 500% for the same low price! We want you back, so for former subscribers we are waving the setup fee if you sign up again!"

I intentionally made the "cancellation" functions manual so that I must personally process each cancellation- paypal IPN and other payment systems have the functionality to make this automatic, but I want to know when customers quit so I can find out why. If anything, customers who quit are you greatest resource on what you need to improve to make your service better. Thats just good business intelligence.

Gary you know as well as I do that the ability to sell online has no correlation to the ability to run a business. Most of these guys have no idea what they are doing, and as most of their advertising methods focus on making the quick buck thats also how they run their business. They have no concept of customer service- after all, ads don't worry about after the sale, they only worry about getting the clicks and who cares after that. The subscription based services out there are just another reason I say this business is screaming for professional, well run solutions that treat their customers like people, not dollar bills :)

At 1/02/2006 10:59:00 PM, Anonymous boo said...

My (very limited) experience bears out what you say Gary. As you know, a while back I got all fired up about AIS, invested in certain software and signed up to a particular forum.

As you also know, for whatever reason, the whole AIS thing didn't take off for me. I was losing money by keeping my subscription to the forum up-to-date and wasn't re-couping my costs, hence I couldn't justify continuing to pay out when I wasn't seeing any return. So, I cancelled.

What happened? Nothing really. No-one contacted me, but oddly, I do still get regular emails (even now) telling me that new stuff is available for me to download (though obviously the links in the email don't work).

Maybe I'm being overly-cynical, but this has led me to believe that the the owners of these subscription sites don't really give a stuff whether their subscribers make money and succeed, all they are interested in is making their money. I'll take alot of convincing before I sign up to any more subscription based sites.


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