For many subscription-based businesses, success depends on two things: getting people to sign up for the service and making sure the subscriptions last long enough to maximize profits. Back then, when competition wasn’t as intense as it is today, companies could afford to set things such as payment rates and other subscription options according to their own preferences. However, the business landscape has changed drastically over the last decade. Because customers now have more options to choose from, companies also have to be more competitive when it comes to what they can offer.
If you’re running a subscription-based business, you might be tempted to cater to a wider audience by having loads of subscription options. You can have subscription options that provide better customizability and ultra-flexible payment dates that some customers may find attractive, but are these really the most practical approaches to improving customer acquisition and retention?
The Science of “What Works”
According to a report by the Harvard Business Review, the number of options available isn’t even a top priority for most customers. Instead of variety, customers favor businesses that tend to keep options simple and convenient. In other words: they just want what works. To understand why simplicity trumps variety, you have to take a look at things from a consumer’s perspective.
For example, if you’re a customer looking for a reliable internet connection, the first thing that would likely come to mind is just that: a consistent connection with decent enough speed to let you browse or download on a regular basis, plus a fair price tag for the service. That’s all they need, and that’s all they would care about.
Now, imagine that you talk to an Internet service provider that sells subscription plans sorted according to so many different bandwidths, data limits, price rates, and special promo bundles. Chances are, you’ll probably feel overwhelmed by so many choices. Each option is designed for you to get the most value for a given price, but now you have to go through the ordeal of figuring out what is actually your ideal price point based on your current budget limits and your internet needs.
The previous situation is similar to what most people think when presented with too many options. Instead of feeling a sense of freedom with the sheer number of choices, it can actually confuse a would-be subscriber, discourage them, and cause them to look for a different option offered by another company.
The same thing can be said about the subscription payment system you offer. Convoluted payment methods can be quite the hassle and could even discourage customers from making payments on a regular and timely basis. What businesses can do instead is to employ a smart subscription billing and payment platform that provides frictionless payment facilities and automatically resolves failed payment transactions.
The Benefits of Keeping Options Simple
Why do more simple options have a better appeal to customers compared to others? It’s likely because of the following advantages they have over more complicated subscription options.
- Faster Transactions – Most customers don’t want to spend too much time weighing their options. The sooner they can pick something that works, the sooner they can use the service.
- Easier to Understand – Because customers get a clearer picture of what they are getting from simple subscription options, it’s easier for them to understand the true value of the subscription and to set realistic expectations about the subscription plan.
- Easier to Decide If They Want to Keep Their Subscription – By being able to set proper expectations and reducing the hassle of having to sift through an exhaustive list of options, satisfied customers are more likely to keep their subscription.
- Improvements Have More Meaningful Impact – Most customers are already fine with a simple subscription plan, but an improvement in an existing subscription plan like an increase in quality or a price adjustment would easily exceed current expectations, creating a more significant positive impact.
Staying competitive with a subscription-based business doesn’t have to be about offering the most fabulous deals. By putting the needs of the customer before everything else, it’s easy to understand why, in the face of competition, keeping things simple works best.