The power of an emotion-centric approach for scale-up businesses
In this guest article, Jess Burney, Managing Director of Subscriptions at Immediate Media, discusses how scale-up businesses can win long-term customer loyalty by building an emotion-centric approach.
In the ever-expanding landscape of subscription businesses, the recent high-profile “Great unsubscribe” has cast doubt on the potential success of this business model. As some Direct-to-Consumer (DTC) brands that once shone brightly now face decline, it begs the question: Is the subscription model doomed for scale-ups? Gartner predicts that only 20% of subscription businesses will succeed in increasing customer retention by 2023.
However, it is not the model but the activation that is flawed. To succeed with subscriptions requires a shift from purely transactional to an emotion-centric, human-focused approach to secure and retain customers. There are several key planks scale-ups should adopt to build a truly emotion-centric approach and thrive in the subscription market.
Offer a compelling value proposition To secure recurring revenue, businesses must provide genuine value that surprises and delights customers. Not just an initial offer to hook the interest of the consumer, but longer term. Carefully consider the packages offered and explore ways to exceed customer expectations. By consistently delivering exceptional value, businesses can forge long-term connections and foster loyalty.
Immediate Media’s recent acquisition, calorie counting subscription app, Nutracheck, is a brilliant example of a product that hones in on how the customers feels and how this drives behaviour around different cycles of weight and nutrition goals.
Developing a growth mindset
Cultivating a growth mindset is paramount for expanding your customer base. An analytical, organized, and creative approach to targeting and marketing to customers is essential. This mindset should permeate throughout the organisation, ensuring relevance and customer retention, especially in a more challenging economic climate where consumers have tighter budgets.
Everyone from marketing, to tech, CEO to creative should be laser-focused on the organisation’s key performance metrics and the direction in which they are moving!
Realise the power of first-party data
Correctly leveraging data insights can be the difference between success and failure in this marketplace. Analytics can enable you to gain valuable insights into customer behaviour and preferences.
This allows businesses to tailor their approaches based on accurate signals. In an era of increased anonymized third-party data, harnessing first-party data provides a competitive advantage in understanding and meeting customer needs effectively.
Building mutually beneficial partnerships can enhance the value proposition for customers. A deep understanding of your audience is crucial in identifying other brands or products that align with their interests.
By collaborating with compatible partners, businesses can create an even more compelling offering, strengthening customer engagement and loyalty.
Take a look at beauty boxes which exploded a few years ago, recently attracting established names like Liberty’s to follow new entrants like Glossybox. Working with the right brands for their target market is a win for both the subscription business and their product partners.
Maintain a flexible approach
In a dynamic marketplace, adaptability is key. Businesses should be prepared to pivot quickly, offering different types of subscription plans to cater to diverse audiences. Embracing a test-and-learn mindset allows for continuous optimisation and helps secure long-term commitments from customers.
A great example of quick-moving optimisation is Pret. Pret launched their coffee subscription to great success in the pandemic and recently introduced Club Pret to soften a price rise with food discounts that increase customer spending. Making customers feel special is the heart of their offer.
Adopting a membership mentality
Customers must feel valued and included as insiders in any new product development, launches, or exclusive offers. Shifting from a transactional mindset to an emotion-centric approach fosters a sense of community and belonging. This deep connection encourages long-term customer loyalty and advocacy.
While the subscription model faces challenges in the current economic climate, reports of its demise are premature. Scale-ups can succeed by embracing an emotion-centric approach and implementing the strategies outlined above.
By offering a compelling value proposition, nurturing a growth mindset, leveraging first-party data, forming compelling partnerships and adopting a membership mentality, businesses can build long-term customer loyalty and support sustainable growth.