An interesting piece by Willard Foxton in the Telegraph about how retailers use loyalty cards – and how they’re much more useful for tracking disloyal customers than rewarding the most loyal.
Foxton has a Starbucks’ example – you’re more likely to receive vouchers offering you freebies if you’re buy there irregularly than you are if you go in every day – but the same is true of most major retailers who run these schemes; the data allow segmentation of customer bases and targeting of promotions. And why bother giving the best deals to people who are going to buy from you anyway?
Subscription marketers have done this sort of thing for years of course. We do ridiculously cheap trial offers to lure in new customers, offer better renewal prices to first-time renewers than we do to our most longstanding subscribers and, if you should allow your subscription to lapse, you’ll get discounted offers galore thrown at you.
And of course it seems to make sense; loyal customers (repeat renewers) will pay more, so why shouldn’t a publisher exploit this fact to raise the subs yield and boost the lifetime value? It subsidises the acquisition efforts and helps attract new subscribers. The subs director’s happy, the finance director’s happy, the new subscriber is happy. The only person being stiffed is the long term subscriber.
This is becoming less and less sustainable. In olden days (say 10 years ago) you could keep the best subs offers more or less hidden – insert cards in newsstand copies only, say, or harsh dedupe rules to make sure your direct mail didn’t go near existing subscribers – but that’s not the case online. If I shop around for the best renewal quote for my house insurance, why wouldn’t I do the same when the magazine subscription renewal arrives in my inbox?
And once I do this there’s a chance you’ll lose me through your direct renewal channel; I’ll see a better deal on your main website, or visit a third party vendor, or go through a cash back site.
Or, because I think you’re ripping me off by trying to charge me a higher price than everyone else, the loyalty I feel to your magazine will disappear and I won’t bother renewing at all.
What are your renewal rates by age of sub? What’s your subs churn? How many ‘new’ subscribers are really existing ones coming through different channels? How have these figures changed over the past few years?
And the most important question: what are you going to do about it?