5/29/2023 0 Comments Blog myfitnesspalPYMNTS and Flexpay research found that only 17% of subscription firms are tracking failed payments - which average a 9% revenue loss - while nearly 60% measure churn and retention, which often comes too late to stop a subscriber from dropping out. When a subscriber calls to cancel, “what you want to do is move upstream and ask what things that customer experienced that motivated them to want to cancel,” he said, “and could you have done anything about it way earlier in their user journey?” Mindbody’s Apter sees the LTV issue as treating root causes versus symptoms. He said this is part of a rising “cultural mission” inside of subscription merchants, where the use of data to drive LTV and engagement is becoming more important than adding new subs. Hicks pointed to a Harvard Business School study showing that companies that increase retention by as little as 5% grow profitability by 45% to 95%, saying, “that might seem a little counterintuitive, but for those of us who are in the subscription space, we know that the customers you already have are much more profitable” than acquiring new ones. But soaring customer acquisition costs (CAC) drive more subscription businesses to focus on retention, which has sagged for lack of attention. While the panelists generally agreed that the pandemic had mixed impacts on subscription businesses depending on whether they were digital - in the case of MyFitnessPal - or supporting live interactions - in the case of Mindbody - those disruptions are settling down, improving the outlook in 2023. In a recent panel discussion for the “Tough Question’ Series,” PYMNTS’ Karen Webster was joined by Darryl Hicks, founder and CEO at FlexPay, Zach Apter, CMO at Mindbody, and Joe Settineri, CFO at MyFitnessPal, to discuss the new awareness around retention and tracking the metrics that help subscription firms keep hard-won customers in the fold at a delicate time. Still, PYMNTS research has revealed a gap in LTV tracking among subscription merchants that more companies are waking up to as retention moves to the forefront of subscription strategies. Tracking customer lifetime value (LTV) is common practice across many segments.
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