Subscriptions Drive Social Marketing

The subscription business model is essentially social; it begs for social marketing approaches that rely on capturing and analyzing data to drive better decisions. With subscriptions every “thing” becomes a service and subscription business models are hugely attractive to businesses and customers because they reduce every purchase to its fundamentals.

Rather than buying whole solutions, customers can purchase just enough to satisfy a specific need. For instance, renting a ZipCar by the hour delivers transportation services and enables customers to avoid the upfront costs of a car purchase, insurance, garaging, and maintenance. It may not be an ideal situation for everyone, but it can be appealing to people who live in cities and have limited need for personal transportation.

Much the same can be said of ubiquitous software services. We subscribe to software over the Internet rather than buying servers, operating systems, databases, middleware, and applications or hiring the people needed to make it all work. We also avoid the costs of real estate and energy and other overhead by paying a single monthly subscription fee.

You can even subscribe to clothing and accessories that run the gamut from everyday wear to high-end fashions and accessories that most people could never afford to buy.

I can go on. So hurray for the subscription customer, we’ve hit pay dirt. But what about the subscription vendor?

Subscriptions turn a vendor’s life upside down. Nowhere is this truer than in marketing. Subscriptions change what had been a reasonable mix of interactions across channels that include face-to-face, phone, and Web interactions into purely digital communication devoid of nuance and body language.

When was the last time you spoke with a company representative about your email account? Exactly. Email suppliers try to make their products as intuitive and sticky as possible, but users still walk away from their accounts every day no matter how easy they are to use.

Now, imagine that your company sells paid subscriptions and that your job is to ensure that you sell more, and retain customers better than ever, without much direct customer contact.

That’s the reality for subscription marketers today and they are learning that succeeding is a new art form based on social media and marketing concepts pioneered in retail. Subscriptions and retail have a lot in common. Both attempt to sell huge volumes of products at thin margins, and when that happens, some personalized trappings—like sales associates or a live person on the phone—get left in the dust.

Retailers have been great at figuring out ways to divine customer intent and motivation by analyzing the data they leave behind. Retailers take careful measures of local demographics, what has sold before, how to present it, and many other things they can measure from aggregate market activity. In other words, retailers provided an early model for social marketing.

Just as in retail, a subscription company makes small margins on each transaction, so it can’t rely on traditional, expensive approaches to reach customers and collect data. And because a typical subscription must be renewed frequently, the whole process of data capture and analysis has to be as fast as possible. All this points to a change in the marketer’s job.

The subscription marketer has to devise outreach programs designed to capture customer data about need, attitude, and behavior in large quantities (a.k.a. Big Data) using social media. The marketer then has to leverage other tools like business intelligence and predictive modeling to sift through the data to discover who bought what when and to predict who will buy what next. This can be tricky, but in an era when subscriptions are becoming a preferred business model, the rule is, adapt or perish.

It’s still important to do traditional marketing, but marketing is becoming increasingly quantifiable and marketers have to adapt. Many of the early measures like click-through rates are being replaced by more sophisticated metrics calculated off raw customer data to provide scores that can forecast things like propensity to churn, lifetime value, best offer, and next-best offer and to determine who, of all customers, are the “best” and most important for a company to keep.

The best metrics are being used as key performance indicators to help everyone in the organization to manage the business better. One of the great challenges for all marketers today, then, is to don a new hat, one that can turn qualitative data harvested from sophisticated new social campaigns into quantitative knowledge that all members of the enterprise can use like radar to steer the business. Company executives love data and marketers who can deliver it find that they have more clout around the conference table. Maybe that’s why Gartner has forecasted that by 2015 the CMO will spend more on technology than the CIO.