Have you ever opened a present and discovered something that you never thought to ask for but is quintessentially you? Those gifts are so special and memorable because they feel like the giver peered into your soulThe ultimate goal of a subscription service is to recreate that magical feeling for each customer.

Today, subscription marketers are able to gather more personalized information on customers than ever before. This data gold allows subscription services to develop customized experiences for each customer and build a highly personalized relationship that may last a lifetime.

The Difference Between Subscription and Retail Marketing

Subscription services must cultivate a different relationship with customers than that of a traditional retailer. When a customer swipes her credit card at a retailer, her relationship ends. All of the retailer’s marketing efforts were focused on getting her into the store and to that register.

In contrast, when a customer signs up for a subscription service and inputs her credit card information, she just took the first step in her relationship with the company. Subscription marketers must now work hard to develop the customer’s trust by giving her repeated good experiences.

For a company like Netflix, that means providing excellent media content and making spot-on suggestions so the customer always has something new to watch. For a company like Birchbox, that means turning a customer who pays $10 a month to receive a box filled with samples into a customer who regularly shops on the Birchbox website for the face cream she can no longer live without.

A grocery store doesn’t need to make every customer feel special; it needs to keep the milk stocked. A subscription service depends on turning each customer into a recurring revenue stream in order to survive.

Retaining Customers

Subscription services must bow to the three laws of their business model: acquire, retain, and nurture. Customer relationships are critical to the second and third laws.

Retaining customers is all about delighting them over and over again. When a customer signs up for BarkBox, the service asks for information about the dog — including breed, size, and age. After all, a proud Chihuahua pet parent won’t be pleased to receive a box that contains an extra-large bone meant for a Great Pyrenees. With each transaction, the subscription marketer needs to get smarter and more customized.

Retaining customers also means focusing on reactivating dormant customers. Non-active customers may be only a step away from canceling their subscriptions, so work hard to save those relationships. That may mean putting an extra surprise in their next box, giving them access to a higher level of service for a limited time, or even just letting them know about a current promotion.

Nurturing Customers

Many subscription models include several layers of participation. Birchbox, for example, provides customers with sample skin, hair, and makeup products in hopes that they will purchase larger quantities from the online Birchbox store. Nurturing customers is all about moving them from the lower (less profitable) tiers of service up to the more active and valuable tiers. The ramp up to the higher tiers is paved with trust and connection.

For example, a customer who falls in love with a new lip gloss she received in her most recent Birchbox can easily buy the same thing on Amazon or directly from the manufacturer. However, if she feels a strong connection with Birchbox and looks forward to her monthly boxes, she’s far more likely to buy the lip gloss through the company’s online store.

Birchbox also provides incentives to ensure that happens. A reward system gives customers points for each product review they give for items in their boxes. Those points equal dollars to be spent in the Birchbox store.

Even companies like Netflix gain a lot by nurturing customers, even though a customer might hit the premium subscription level and have nowhere else to go. If customers start gushing on social networks about how addicted they are to Netflix’s new original show “Daredevil,” they could recruit new subscribers for the service.

Surviving Cancellation

A cancellation is a painful outcome for any subscription service, but it doesn’t have to be the end of a customer relationship. In fact, a cancellation can actually provide subscription marketers with one more opportunity to strengthen the customer relationship.

It may seem counterintuitive, but I counsel my subscription marketing clients to make cancellation easy for customers. If a customer has to spend 10 minutes digging into a company’s website only to learn they have to call a hotline to cancel, that company is going to earn quite a few social media rants.

Instead, I encourage my clients to optimize their online cancellation pages and train their customer service reps. An optimized cancellation page may say, “We’re sorry you’re thinking of cancelling your service. Have you considered these new features?” This is an opportunity to highlight lower tiers of participation, current promotions, or popular services and products.

Train customer service reps to ask questions about why the customer is considering cancellation. This is a chance to gain important data and provide alternative options that could save the subscription. For instance, if a customer wants to cancel because she’s going on vacation, the customer service rep can offer to put her account on hold.

Finally, cancellation doesn’t have to be goodbye forever. Subscription services should develop a re-contact strategy. After a period of time, send a personalized communication to cancelled customers. This could include a new promotion or content specific to the customer’s reason for cancellation. For example, a company could send a customer an email that says, “We now have new service levels that better fit your budget.”

Whether you’re currently involved with a subscription service model or have considered adding one to your company, zero in on your customer relationships. Learn everything you can about your customers, and never stop thinking of new ways you can customize their experiences. It may be weird for customers to admit that Netflix is better at guessing their movie habits than their spouses, but when they sit back to watch that perfect pick, they won’t even think about switching services.

Peter Figueredo

Peter Figueredo


Peter Figueredo is Head of Client Services at House of Kaizen.