Stealing from the best: How to build an amazing subscription business

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Bigger, better, faster subscription commerce growth

Hi VB Reader,

Up-front, reliably recurring revenue is probably the shiny, candy-red apple that tempts you into developing a subscription model, but it’s the long-term advantages that pack the most punch for business growth, says Emma Clark, senior product manager at subscription platform Recurly.

“The benefit of moving to a subscription model is that you’re able to develop a relationship with the customer,” Clark explains. “You’re able to learn more about the customer that you wouldn’t be able to through a one-time transaction — and really maximize the value of that relationship.”

But the biggest mistake a subscription business can make is underestimating the complexity of payments and billing, which directly impacts customer retention.

“Companies think about churn traditionally as the customer not wanting to use their service anymore, but they forget about what we call involuntary churn,” Clark says. And that happens when a customer’s credit card payments fail and the customer drops your service, either because they don’t notice or because it’s not convenient to update their info.

“You put a lot of investment up front to acquire customers, so the value you get from them is the most important revenue driver,” Clark says. “Over the lifetime of the subscriber, if you’re not managing your churn, then your LTV or your subscriber lifetime value is always going to be lower than you want, and that costs a lot to the business. You may not even get a payback on that customer.”

Hear more from Clark when she sits down with VentureBeat's own Stewart Rogers to talk subscription management ROI in a live exec roundtable. Admission is absolutely free -- get your burning questions answered live by this talented expert who will also share subscription benchmarking research as well. Register today for free.

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