When creating content for your subscription business, your focus should be on building lasting customer relationships that continue to drive revenue. To do this, you need to understand what data analytics are telling you about your retention and conversion rates and Customer Lifetime Value (LTV).
According to Walter Long, VP of Business Development at Sublytics — an e-commerce platform with enhanced analytics features that connect your marketing spend to deep lifetime value and retention insights to ensure scalable growth — subscription businesses use specific and insightful data metrics “to create the highest scale and profits for their business.”
For example, while a merchant can track LTV across their company, revenue-performance metrics are more valuable when broken down by marketing source, campaign, and ad group.
Read on to learn what data analytics can tell you about supporting conversion and retention with your content-marketing campaign strategy.
Use Purchase Data to Build Your Customer Journey
Take a look at what data analytics are telling you about your customers’ purchasing behaviors. Is there a consistent pattern between the initial and most recent products purchased?
By analyzing data showing the most common order in which products are purchased, you can determine a clear pathway of calls-to-action (CTA) and features to include in your content.
For example, knowing that your six-month box with three items is typically followed by a particular add-on will tell you exactly which product to promote in your email nurture sequence following a new sign up for that particular box.
Knowing the funnel path that creates the greatest average order value (AOV) and LTV can help you curate the perfect subscription box and allow you to introduce that next purchase to your customers sooner in the buyer journey.
Optimize Ads to Build a Subscription Relationship
Advertising is one of the biggest marketing expenditures for businesses. A big downside to ads is that you pay once for something to live briefly online. So you need to be sure you optimize that brief lifetime.
The benefit of ads is that you can target very specific new potential customers to grow your brand awareness and subscriber base. By tracking LTV at the source, campaign, and ad levels, you can best determine what your cost per click should be at each level, rather than just going for the cheapest ad inventory that may not be backing out at all.
By examining the data, you can clearly understand the true return of your marketing spend, and at a granular level. Additionally, by using first- and last-click attribution modeling, you can identify and set up the pathway from ad click to landing-page opt in or conversion.
Your most popular first-click product can tell you a lot about the type of lead magnet you may need to create to attract customers. Don’t worry if the product is a low-ticket or one-time offer — the goal is to get your customers onto your email list and into a subscription relationship.
Analyze the Types & Rates of Subscription Churn
Once you’ve finally enticed a potential customer to click “subscribe,” your focus will shift to customer retention and avoiding subscription churn. There are two types of churn: Active churn happens when a customer chooses to cancel their subscription; passive churn is when a customer’s credit card is repeatedly declined.
Compare your passive-churn to your active-churn rates to prioritize your next campaign strategy and content creation options.
For example, if your active churn is low but your passive churn is high, you likely need to revise your dunning practices to better inform customers of upcoming deliveries and remind them to update or verify their billing information while they are in that heightened state of excitement.
If, on the other hand, your active churn rate is higher, you might need to create more content showcasing the value of your product, other available options, and the benefits of the subscription relationship.
Pay special attention to cancellations within the first 24 to 72 hours, as well as the first renewal rate. A high active churn rate that early in the subscription relationship indicates low-quality traffic. Thus, you’ll need to optimize your content to retain customers beyond that first stage of the relationship.
What Data Analytics Say About Acquisition & Retention
In a subscription business, growth strategies often rely on an initial discounted offer that leads the customer into recurring, high-value purchases. The money spent on marketing or lost by offering a discount to gain a new customer is called the customer acquisition cost (CAC).
Without taking CAC into account, you risk seeing a positive return on investment where there actually isn’t one. The key lies in the LTV:CAC ratio. If this ratio is 1:1, you’re merely breaking even on the customer’s cost versus their overall value. Instead, a 3:1 ratio is ideal, and 4:1 or higher means you can afford to spend more on marketing efforts.
You’ll also want to keep an eye on retention rate by product. If a particular product constantly drives retention, you know to continue promoting it to your target audience. On the other hand, if a particular product’s retention rate is low, you may need to reassess its promotion and target it toward a different or expanded audience.
What data analytics should ultimately give you is a clear picture of which avenues are producing the greatest retention and active revenue — and where they are lacking. From there, you can create content that bridges those gaps and strengthens your relationship with your customers.
To learn more about leveraging your data for effective content marketing, contact Sublytics.