Growth November 5, 2019

Increase retention by ditching monthly subscriptions in favor of yearly

Growth Bites @growthbites

Maura Vella of 105F replaced month-to-month subscription plans with year-long memberships and saw a 34% rise in membership. Now that clients are no longer able to pause or cancel at any time, retention is at an all-time high. Revenue also spiked and is much more steady. After trying "everything" to attract new clients and keep old ones, she says this small tweak has been a "game-changer."

Want us to keep you in the loop with these bite-sized growth examples?

👉 Click here to subscribe

  1. 2

    "Now that clients are no longer able to pause or cancel at any time, retention is at an all-time high. "

    How are they measuring retention if they switched to yearly membership in January which means that their customers haven't had an opportunity to renew it?

    1. 1

      Good question. They aren't experiencing any churn from month to month. From what I understand, the fact that they won't experience churn for a year is a win in itself when compared to what they were dealing with before, even if people opt out in the future.

      1. 1

        I question the ethics of this.

        They struggled with customer retention, which indicates that their offer wasn't that great, at least compared to what's on the market.

        This means that the owners of the studio are encouraging people to sign a yearly contract despite knowing that those people might end up unhappy with the service.

        I imagine that if I owned a yoga studio, I would not be comfortable with doing that, no matter how profitable it was.

        1. 1

          Year long subscriptions will force the users to provide feedback if indeed the product is not up to standard. The guys who pay monthly seem not to feel any obligation to do so and yet some of this feedback they're withholding is important to the long-term survival of the app.
          It's about getting one's users involved in the process.

          1. 1

            You seem to have a bizarre attitude towards your users judging from "force the users to provide feedback", "seem not to feel any obligation to" and "feedback they are withholding".

            Your users don't have any obligation to provide feedback and they are not withholding it from you since you are not entitled to it in the first place.

            I doubt that trying to force them into it will help.

            I don't think such attitude is a viable approach to building a sustainable business.

            1. 1

              As with all areas in life, context is key.
              The user is not forced by the developer; the user is forced by the length of commitment. I think it sends a message that "this is important" to the psyche.
              As for the "withholding" bit, I guess we shall just agree to disagree there.
              You might think users have no obligation to provide feedback and you could be right in most cases. However, I view/treat my users as partners and partners are interested in seeing the product or business develop. Therefore, "bizarre" is hardly the way I would describe my attitude.
              Anyway, I'm here to learn more than anything so I'm sure there are a few more changes coming to my business strategy by and by. So far, things are looking up.

        2. 1

          Fair point, it could totally be the case that they know it's a bad offering and are trying to lock people in. I hope not. But I would guess that it's a seasonal business and they think that getting people to commit to a year of yoga is good for them - less likely that they'll get distracted by life and lose track of their wellness goals (I know I've done that a thousand times and wished I hadn't). Who knows?

          TLDR: I don't think this is an inherently unethical tactic - but it certainly can be used unethically.

  2. 1

    I did this just yesterday... it is definitely the way to go!

Recommended Posts