Email Marketing In The Subscription Economy

From music to meals, from razor blades to flowers, you can buy just about anything you want via a subscription. 

I drafted this column using my paid version of the subscription note-taking app Evernote. I have a monthly massage plan, and I watch movies on Netflix. 

New business models are shifting from purchase and ownership toward sharing or subscriptions. This has and will cause dramatic change in many industries that rely on traditional purchasing scenarios.

Two examples:

  • Membership car-sharing services like Zipcar are a blip on the auto industry radar today. In 20 years, they could be the dominant alternative to car ownership or leasing.
  • Cloud-based software services that set annual contracts paid through monthly subscription programs now dominate the technology space, including email marketing service providers.

Subscription Business Models Broadly Defined

Many consultants and technology businesses claim they invented the subscription model. But, of course, it has funded the publishing industry since the 1600s.



Here's how I define "subscription model:" paying for products or services on a recurring basis (e.g., monthly, annually) without retaining use when the contract or agreement ends.

This definition does NOT include leasing (e.g., cars) or rentals, like a chainsaw for backyard tree trimming.

These services share some general traits:

  • Customers often don't own the product/service (except for personal-use items).
  • They can cancel their service either at any time or at the end of a contract.
  • They pay for their subscriptions on a recurring basis.

Some examples:

  • Contract Subscriptions: Magazine subscriptions, wireless phone services, gym memberships, apartment rentals and software, all with defined service periods.
  • Month-to-month Subscriptions: Recurring fee services that you can cancel at any time. Although we don't think of them this way, home maintenance like pool care, pest control and lawn care follow a subscription model, too.
  • Freemium to Pay: A service that provides limited free capabilities and adds premium benefits for paid users.  
  • Membership: Services like Zipcar that require a monthly membership fee plus payment for each use.  
  • Replenishment: Services that supply consumable products such as toothpaste, razor blades or printer ink cartridges on a recurring basis until cancellation.

Service is the Product

The traditional purchase model focuses on the initial transaction and possibly add-ons like service or maintenance. If a customer is dissatisfied with the product or service, the company will likely lose a repeat customer, but probably still make a profit on the one-time buyer.

With the subscription model, the ongoing customer experience is paramount, giving subscribers much more power than the transactional buyer. If the value doesn't meet expectations – online services go down, massages disappoint, the dinner-in-a-box fails – users cancel their services, and the recurring payments end.  

7 Roles for Email Marketing

Below are seven key areas where email marketing can help convert and retain more subscription customers:

1. Acquisition: Content-based emails can educate and build brand trust and help convert prospects into customers. 

2. Onboard: Meal or floral services might be unfamiliar to many potential customers. Show them how the service works and how to get the most from it, using email content such as videos and testimonials.

3. Upsell/Convert: Nurture freemium customers on the benefits of upgrading. Use testimonials, case studies and ROI examples to show what they're missing or how much free usage they have left.

4. Customer Experience: The customer's experience drives the decision to keep or drop a subscription service.  Trigger a nurture email series reminding customers who don't log in or use key features within a set time about the benefits they're missing.

5. Renewal: Beyond a typical renewal series, leverage behavior to identify both active and inactive users. Nurture them early with upsell and special retention offers, content and tips to turn them into engaged users.

6. Transactional: Don't overlook transactional emails, which can give customers valuable details and usage information. 

7. Feedback: Although customer behavior usually trumps comments, use email to capture responses to surveys that can trigger follow-up email series with content and tips.

Until next time, take it up a notch.

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