Shweiki Media teams up with Kathy Greenler Sexton, CEO and publisher for Subscription Insider, to present a two-part webinar on magazine subscription renewals. Part one is going to talk about why renewals and subscriptions are a “hot” business model.
Renewals increase profits, growth and brand relationships. For the subscription business, the key element of subscriptions is renewals. According to Fortune magazine, “It’s a subscription economy and you’re just living in it.”
Subscription businesses, such as publishers, have been around for years. Why is something that is so old, hot and new again? It is because subscriptions are profitable. Because subscription businesses focus on renewals, make sure that the cost of acquisition is covered and renewals are turned into profit.
Benchmarks for Subscription Rates
For monthly renewal rates, the majority of them have a lifetime of six to nine months. Most businesses that offer annual subscription rates try to stay above 70%. B2C companies tend to skew a little lower. 70% is a good range to strive for. Obviously, the higher the subscription rate, the more profitable the business is.
Annual renewal rates that leverage sales teams for group and site licenses really want to be 90% or above for B2B and 80% or above for B2C.
Tips and Tricks for Improving Renewal Activities
There are tips and tricks that can be used to improve renewal activities that can be started right away. They can be divided into five areas.
- On Boarding
- Dedicated Marketing
- Customer Delight
- Payment Processing
On boarding is when you are welcoming customers and educating them about what your product is about. A good on boarding program that is well constructed will get you up to 20% higher retention rate. There are a few things you should think about in terms of on boarding. One thing is having a series of emails that bring that subscriber on and educate them about your brand, mission and how to use the product. It is very important to engage with the customer.
If you do not engage with the customers, then they are not going to use your product. If they do not use your product, then they will not renew with you.
Start with a welcome journey. This can include congratulating them, reminding them how to use the site, showing them top content, etc as long as you are interacting with them in some way. Your welcome journey must go beyond the first four to eight weeks and communicate with them one on one throughout the year, not just at renewal time.
Make sure you are engaging with subscribers on an ongoing basis by having dedicated marketing teams and programs geared toward retention marketing, not just acquisition. If you provide a great user experience, customers are more likely to renew with you.
Credit Card Processing and Fraud
Currently, the U.S. is in the midst of a major reassurance of credit and debit cards because of the new EMV chip credit cards. 100% of cards in customers’ wallets are in the process of being switched out and reissued. If you do not have a plan to manage that, then you are going to have a significant jump in churn rate because those cards will fail without updated information.
Those with a subscription business or any business that is in a Card Not Present (CNP) format, will see an increase in CNP fraud. While overall credit card fraud will be reduced, online fraud will increase. Therefore, if you are a subscription auto-renew business, you need to double down and make sure your fraud detection efforts are up to date.
How to protect against fraud:
- Require security code match
- Use fraud screening tools
- Leverage comprehensive decline prevention and recovery
- Visa, MasterCard, Discover account updates
- Amex card refresher
- Stale expiration date optimization
- Incisive decline recycling
- Business Intelligence reports
- Updates performance reports
- Recycle recover report
- Key performance indicator reports
Many of the platforms for subscription billing have tools built into it to help minimize credit card churn. It should be noted that not all gateways or platforms use these tools so it is important to ask smart questions about what your technology platform provides for you to minimize churn and fraud.
There are three critical reports that drive intelligence on what is happening in your subscription business, helps to recover credit cards that have been declined and lower the churn rate. They are the update a performance report, recycle recovery report and key performance indicator report.
This is all for Part One. Make sure to come back for Part Two of magazine subscription renewals where I will cover specific retention reports.