The Subscription Strategy Plan
Redifing busniess KPI's by understanding human behavoir
Many E-commerce companies, which own more than one product line, choose to analyze and strategize for each product individually. But what happens when an E-commerce company sells a device operated by an app? While a device requires various marketing efforts which conclude in a sole conversion, the app requires a long term b2c maintenance.
The need was obvious - the company was looking to create more revenue streams from existing customers and also make sure the retention rate is high with the current customers.
So how do you turn a business from focusing on "black box" product sales into a successful subscription-based business with a strong user stickiness?
There are many common ways to create a subscription model, with different approaches as to what could lead to a higher conversion rate. Some will put the emphasis on pricing, while others focus on the structure pricing tiers which can be adjusted over time keeping in mind the customer feedback. But before diving into the model itself, the core mission of Raven was to understand the user incentive - why do people purchase this product? , what counts as good user experience? and WHY do people stop using the product?
By reviewing the data and understanding the usage habits of the user it was clear to see that in order to create the key economic principles that will lead to a successful subscription model, the product required a personalized value proposition with aligned communication messaging.
In order to offer a solution with a personalized value proposition for the user, Raven needed to create a new definition of a 'churn user' based on the user activity interval. for that purpose, Raven constructed a data warehouse methodology by connecting the data of both the app and the physical product. The process led to establishing a unique user object that better reflects the motivation to the purchase of the physical product and the day to day metrics of the app usage. Within the data warehouse, Raven crafted clusters of user's data, providing solid information to create a new value proposition.
The 're-define user' methodology was integrated into all units of the company, originating a new type of relationship with a large portion of the company's client base. 33% of the users who were considered 'churned users', re-installed the app, and converted into subscription users.
Other implications of the new user definition concluded in a major cost reduction - specifically in the company's data infrastructure (databases, cloud cost, multiple dashboards, and of course manpower).