By Morten Suhr Hansen
Fifteen years ago, I started Subscrybe with a simple idea: subscription would become one of the most important business models in our part of the world. I would like to claim I was right. The honest answer is probably that I underestimated it.
Try rewinding to 2011. Neither Netflix nor Spotify were available in Denmark when we held our first client meetings. A subscription was something you had with your newspaper, your gym and your landline. Today we stream films, music, audiobooks and workouts. We get meal kits delivered to the door, wash the car on subscription and rent software from the cloud where we once bought it in a box. Most households have long since lost track of how many subscriptions they are paying for.
The biggest change, however, has happened inside companies. Back then, we spent most of our time explaining why recurring revenue was worth pursuing. Today, nobody asks why. They ask how. And that is a much better question, because the answer is harder than most people expect.
Along the way, I have learned quite a bit. Some of it from the most sophisticated subscription businesses in the world, some of it from the costly mistakes I have watched up close. Here are 15 of the most important things I have learned about subscriptions over 15 years:
1. The best subscription model solves a problem the customer has every week, not one they have once a year.
2. A discount can buy you a customer, but never a relationship.
3. If the customer needs a calculator to understand your pricing, you have already lost.
4. The first 30 days determine the next three years.
5. Nobody cancels a subscription they actually use.
6. Habit beats enthusiasm. The customer who uses you every Tuesday stays longer than the one who loved you in January.
7. Churn rarely happens on the day the customer cancels. It happens three months earlier, when nobody noticed.
8. Price is rarely the real reason for cancellation, but it is almost always the excuse.
9. Customers who complain are a gift. The ones who say nothing are already on their way out.
10. A pause button has saved more subscriptions than any campaign.
11. Make it easy to cancel, because customers who are kept against their will say unpleasant things about you afterwards.
12. Everyone knows it is cheaper to retain a subscriber than to acquire a new one. Yet 90 per cent of the budget goes to the latter.
13. The biggest growth opportunity is usually hiding among the subscribers you already have.
14. A former subscriber is often your best new customer, if you ask nicely.
15. Subscription is about earning the customer’s business next month, again and again. After 15 years, that applies to us as advisers too.
What the next 15 years will bring, I would not dare predict. But one thing I am fairly confident about: the companies that win will be the ones that can answer three questions every month. Why should the subscriber sign up? Why should the subscriber stay? And how do we develop the relationship with the customer over time?
Thank you to all the clients, partners and colleagues who have been part of the first 15 years. We are only just getting started.
