If you’re in a recurring-revenue business, you already know your customers can be fickle. They’ll subscribe, then not renew. Or they’ll just never use the service and walk away. Or they’ll take your free trial or sign up for your free service tier and use just a little, but never enough to pay.
Subscription businesses have been wrestling with how to get customers to buy and then keep them buying for as long as there have been subscription businesses.
If you’re in the tech business, your company has probably tried these tricks:
- Get customers/users to store more data in your product (“Then they can’t leave!”)
- Tie customers down to 2-, 3- or even 4-year contracts (“Well, we don’t make money until the third year, right?”)
- Build connections from your product to nearly every other popular product out there (“We integrate with everything! We’ll be the center of the universe!”)
- Make it impossible for your customers to cancel. You have listened to the infamous Comcast cancellation call, right?
Admit it: Your company has tried at least one. But they’re just tricks. Doing any of these misses the one and only thing you need to know to get and keep customers:
The more value your customer gets from you, the more likely they are to buy, and buy again.
Does that seem obvious? It is. And it’s pretty simple to make it work for you. Recently, I pointed out the one simple step you have to take to figure out what the customer values and how they value it. That one simple step is:
But that only gets you halfway there. Now that you know what your customer values, you need to figure out how to deliver it and, importantly, to which prospects and customers.
Let’s go back to that fickle customer.
In your effort to get your service in front of as many prospects as possible, you’ve made it really easy for anyone to sign up. So they do. In droves. You get thousands, maybe millions, of people signed up for your free level of service or your free trial.
But if they’re like me, they probably thought you might have something that fills a very specific need, but then quickly discover your service can’t quite do the particular thing they needed. So they move on. I’ve signed up for hundreds of services like this (apologies to all those companies, and you can stop emailing me now), but it takes a lot for me to want to pay for a service.
There’s an old adage in sales that says it’s more important to qualify out than to qualify in. This is how you’ll find the thing that will help you convert more prospects to paying customers and keep them. But every business is different: How you deliver value will depend on your business and your market.
Let’s look at two examples.
First, PopSurvey. A more complete story is in this article, but the gist is that they moved away from a freemium model to a paid-only model. This forced their prospects to do more research on their own needs and whether PopSurvey could meet them before the decision to sign up. Prospects who didn’t find enough value in the service never signed up. The result was far fewer sign-ups, but all of them were paying customers, and revenue increased 40%.
Second, WebEx. This story is from the growth era of web conferencing. Nearly half of WebEx’s customers told the company they discovered how valuable web meetings could be when they attended one. WebEx also asked paying customers how they found value, and many said that once they started holding web meetings, they were hooked. But some people never saw the point, and so never even tried to hold their own web meetings. WebEx’s amazing growth was, in large part, driven by offering limited-term free trials to people who attended web meetings. WebEx found the path by which their customers received value and led prospect after prospect down that path.
Different companies in different markets with different value propositions might find very different paths to delivering the value the customer needs. But instead of tricking your prospects into buying and your customers into staying, use the one most important way of finding the path to value — ask — and make it easy for those customers to whom you can and want to deliver value to find it from you for themselves.
Tell us how you deliver value and turn subscribers into paying customers.
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Photo credit: www.northeastern.edu