Customer Service Crucial for Subscription Businesses During the Holiday Season

9 min read
Interface of video distribution service. Subscription service. Streaming video. communication network.

Customer service can be a challenge in any type of business, but the last two years have created unprecedented obstacles and shifting circumstances across industries around the world. In order to deal with the highest stakes we’ve seen in a lifetime, businesses have been innovating the ways in which they engage with and sell to consumers. While popular before the pandemic, subscription-based businesses in particular have been enjoying accelerated growth within this transformed shopping culture. 

With choices and a customer-centric view not available with traditional, non-subscription models, thanks to brands such as Spotify and Netflix, we are now seeing this model in unexpected spaces such as car buying. The Swiss financial company UBS anticipates subscription businesses will grow to be worth $1.5 trillion by 2025. With a current estimated value of $650 million, not only is this model a star player on the court, customers are sharing the love and gifting subscriptions to their nearest and dearest with increasing frequency. 

With ongoing supply chain issues and persistent shipping delays, gifting a subscription is an effective and ideal way to counter the disruptions consumers are currently experiencing when buying goods. Considering the worldwide status and worth of subscription-based companies, providing optimal CX throughout the holiday season and beyond will prove to be a critical game changer. It’s truly a package deal, requiring a strategic approach as well as a unified and streamlined internal protocol. 

The Subscription-Based Model is Here to Stay

The subscription-based business model has actually been around since the 1770s. It was originally pioneered in London as a way to increase newspaper sales and has now grown to encompass most sections of consumer consumption. Food, film, fashion, automotive, athletics, spirits, software, wellness and much more have all found a space to thrive within this model. Benefiting both brands and customers, the implementation of this model has proven to be a major disrupter, completely innovating how we listen, watch, eat, drink, dress and exercise. 

What Is the Subscription-Based Business Model?

In a subscription-based business model, subscription companies, customers pay a membership fee which in turns provides recurring revenue for the business and a hassle-free, personalized experience for the customer.because it’s a curated, immersive brand experience, this model places focus on service in addition to simply the product. It’s a fantastic marriage of product and service; especially poignant within the e-commerce landscape where consumers want a personalized, human touch to their shopping or streaming experience. 

Between “goods” (i.e. food, pet supplies, jewelry) and “content” (i.e. video and music streaming), the average American household is spending upwards of $273 per month on subscriptions. And with safety concerns still very much in the foreground of day-to-day life, the subscription model won’t slow down anytime soon. 

Why Customer Service for Subscription-Based Business Is Crucial

With the extraordinary subscription value coupled with customer expectations, exceptional customer service is of the utmost importance for subscription brands. In fact, beyond customer service, given the immersive nature of the subscription based model, customer experience (CX) is key to the long-term success of a brand. Whether goods or content, the subscription model is not a one-time purchase. It relies on renewals and repeat business. Therefore, ensuring each and every customer interaction is positive, no matter the point in the customer journey or the channel on which they interact, is critical. In fact, it’s paramount to the survival of the brand — particularly during the holiday shopping season.

Sounds overwhelming but really it’s about effectively scaling, communication, and unifying channels. Let’s take a look at some steps that will help solidify your brand’s efforts to keep customers happy and returning for more. 

The Holiday CX Breakdown for the Longview

Let’s quickly sketch out a picture. A new customer receives the gift of your brand for one year. They are excited to finally try the goods or service their friend, colleague, or family member has been raving about. They sit down at their computer or with their handheld device and head to your website or app. Already, they have at least one expectation just based on the fact that a friend, colleague or family member has gifted them with your brand for either a month or a full year. They are presuming you’re awesome, that you will delight them with your wares, offers, shipping, and quality. Their life will be easier, not harder, because of your brand. You don’t have a year to provide a positive first or even second impression, you have the “here and now” to deliver; especially when your brand has been given as a gift by a loyal customer. 

In this scenario, you’re not just delivering to the new customer, you are retaining an existing customer based on the new customer’s experience. Therefore your company needs to be reflective of the experience that the gift giver has presumably enjoyed. Additionally, you’ve been given the gift of new business. In the spirit of reciprocity, of respectfully and successfully capturing that opportunity, ensuring an impeccable customer journey through your brand’s CX is critical.

The very nature of the subscription-based business is in a make or break position. The renewal rate metric indicates the current and potential brand health of the subscription business. Typically a renewal rate of 75% or higher is considered to be ideal for longevity. Keep in mind that this model is uniquely poised to build a community of like-minded customers, who receive the same products or services on a regular basis, but that rarely give a second chance. When something goes wrong, and a customer’s issues are not immediately resolved, they will likely cancel their subscription.

Let’s take a look at six strategies that can facilitate and support success for the longview. 

  • Building strong customer relationships – Establishing and maintaining consistent communication with customers is the most effective way to build a strong rapport with your customers. Not nurturing customer relationships because of a guaranteed monthly or annual charge is going to result in canceled subscriptions. Prompt, transparent communication addressing key issues (product, fulfillment, delivery, questions and feedback), will foster loyalty even in the event something goes wrong. 
  • AI for ultimate CX– Incorporating AI technology is paramount to delivering optimal CX, and should be considered a member of the workforce. And, as AI is data-driven, it’s perfect for subscription models since the customer relationship and engagement is ongoing.This consistent gathering of customer data via AI technology can assist in not only personalizing the CX journey but also mitigating churn through analysis based on previous orders. Employing the power of chatbots is not only a timely solution for customers seeking quick answers, this technology can absorb some of the burden human support teams carry during high-volume shopping seasons. 
  • Effectively scaling CS teams – Ensure you have the proper tools and technology to scale customer service without sacrificing effectiveness with an influx of new subscribers. Expanding your knowledge base and making your self-service tools and content easily accessible are key steps to help augment human team members. Real human support that can address challenging problems and build relationships should not be sacrificed as volume increases, so be strategic about where you can automate and how best to achieve efficiency. Consider accounting not just for new sales but for the majority of customer transactions consisting of changes to existing subscriptions: renewals, suspensions, add-ons, upgrades, and terminations.
  • Geographic personalization Applying this kind of segmentation via AI software means that a subscription-based brand can tailor to a consumer based on the nuances of their locale (i.e. climate, country, time zone, language, rural environment versus metro). Also, this kind of geographical data can provide valuable insights as to stock availability in a given region which is especially key as supply chain and shipping delays remain ongoing obstacles to surmount.
  • Employ Value Adds – Taking simple steps to add value to the subscription increases the likelihood of renewals and repeat spending. You can add value to the subscription for the customer with initiatives like subscriber-only discounts, product giveaways, access to limited edition products, increasing customer touchpoints and publishing relevant content and tips. Value adds help ensure subscribers know what they will be getting and when, in addition to any perks not available to non-subscribers. 
  • Distinguishing the CS and CX details Customer service and the customer experience can be the differentiator between losing a gifted subscriber and ensuring they want to continue with your subscription post-gift. Unifying your customer channels — aka providing a true omnichannel experience — means that all customer interactions are consistent through the customer journey, and all their information will be readily available across any brand channel. So if you can scale your support via efficiency tools and technology, as customer volume increases around the holiday season, you can ensure exceptional customer support having created that immersive customer experience. 

The Customer Service Bow on Top

Positioning your brand with consistent customer care, streamlined software and tools, as well as effective communication, can transform the performance and health of your company. In the tradition of hardcopy magazines, “TV Guides” or newspapers of the past, subscriptions to brands are proving to be popular gifts for friends, family and colleagues. Easy yet specific, the subscription gift is definitely more personal than a dollar amount attached to the average gift card. You can’t just arbitrarily sign someone up for goods they will never use. I mean, you can, but what’s the point? 

As subscription-brands provide curated goods or content, gifting in this way imparts thought, consideration and real understanding of the recipient. It’s gracious, personal, precise yet uncomplicated; with top customer service, the gift of subscription is the shopper’s solution and the company’s gain.

Empower your brand to reach its full potential and transform that first impression into a lasting love story with an excellent customer experience. Kustomer is here to help unlock the full potential of your subscription-based brand today.

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