This is our new ‘HEART Truths’ blog series designed for senior growth and insights leaders at subscription and digital services brands. HEART by MTM is a proprietary growth framework for healthy acquisition and retention across entertainment, Telco, FoodTech, TravelTech and FinTech sectors.
Growth in digital services and subscriptions is all about relationships. When going well, the relationship should be a two-way engagement in which customers find meaning in the brand’s offer, personality and values and so become loyal advocates, happy to recommend the brand and without reason to switch to a competitor.
A healthy digital service or subscription relationship is like a healthy romance. From the moment the customer spots the brand and finds it attractive enough to do the equivalent of ‘swipe right’ and engage, the relationship should have value and meaning for both parties. But just like a romance, things can go wrong and that once loyal customer can start to consider whether there’s a future in the relationship and start to look for another brand to love.
Why do people switch brands?
People are inherently resistant to change and will typically only do so if they have good reason. There are both push and pull factors at play:
- Push factors: these involve the customer feeling pushed away by the service and are typically the result of dissatisfaction with product quality or service, a catastrophic failure, a slow drip-feed of issues or a triggering lack of professionalism.
- Pull factors: these are external to the brand such as the customer being drawn in by a competitor’s offer, advertising or word of mouth about other brands.
Leveraging the psychology of switching
Humans typically operate in system 1 mode. Our lives continue, in the main, reliably and predictably. We are subject to biases such status quo (preferring the comfort of the familiar, even if change may be beneficial) and the sunk cost fallacy (an irrational commitment to past investment and decisions). Change means effort, risk, uncertainty, and can be an unwanted distraction from the day-to-day.
But when we do make a decision to switch, we enter system 2 mode, which involves conscious discovery and exploration, comparison and evaluation. It is stressful and effortful, but it can also be exciting. And just like when we make the painful decision to end a romantic relationship, we can enjoy the anticipation and the ‘chase’ and dream of how much better things will be with the new relationship – be that with a person or a digital service.
How to make customers swipe right
Brands can work on the motivational pull factors to encourage customers to swipe right on their services. Motivation can come from the anticipation of the pleasure that the new product or service will bring, or of the pain of missing out; it can come from hope about what we will gain or fear about what might have passed us by; or it can relate to a desire for social acceptance, buying into something that is popular that other people enjoy, or it can come from avoiding social rejection by not being part of the ‘gang’. This means making sure that the service offers something new, desirable and exciting, that brand presence and positioning is well defined so customers can easily understand the benefits, and that the service also addresses category pain points.
But motivation is not enough on its own. The BJ Fogg Behaviour Model shows that people will change their behaviour with the right combination of motivation, ability and a trigger. Brands can help customers to make the choice by reducing the physical and mental effort that it takes to switch or start a new service and eliminating friction throughout the journey. This means providing great information to help customers understand the proposition, making it easy to sign up and then onboarding customers effectively with welcoming messaging and support.
If motivation and ability are high enough, the third element in the BJ Fogg model is the trigger – the moment that incites someone to act. Brands can create these moments by thinking about when customers might be particularly receptive to an offer. For example, having a stand at a fair or festival where consumers are in a ‘hot’ emotional state and more likely to sign up. Another option to find customers who are already bought in to the concept of delivery services by putting a flyer for, say, a flower delivery service into a meal box. Brands can also use incentives such as a free month or a reduced cost, but this must be done carefully to attract customers who are likely to stay. Incentives that are too generous at the start can be manipulative and convince the wrong people to sign up – a form of ‘love bombing’ that doesn’t create healthy acquisitions.
And how to stop customers switching
In established, well-functioning romantic relationships, if the basics are right, people will forgive the odd transgression. Similarly, customers don’t really want to switch unless they have to. The most important things a brand can do to retain customers are to get the basics right – provide quality and range and make information easy to find, be easy to do business with and provide a fast, efficient and easy-to-use service. But the relationship also must have elements that feel fresh and exciting to prevent customers itching to stray. This requires regular attention to the health of the ongoing relationship.
This plays out differently across different sectors. For example, if your meal box service never updated the recipe options, you would start to feel as if you were stuck in a boring and loveless marriage. However, you are more likely to want stability and trustworthiness from your FinTech service, with occasional meaningful product innovations. It is critical to understand the type of relationship your customers want to have.
Help your customers swipe right
HEART by MTM helps senior growth and insights leaders at subscription and digital services across entertainment, Telco, Food-, Travel- and FinTech sectors profitably grow their business by driving better acquisition and retention outcomes.
Our HEART framework is based on structural equation modelling and regression analysis of 5,000 quantitative interviews covering 50 brands in eight categories: gaming, travel, finance, music, food, sport, video on demand and telecoms.
To find out more about HEART or to take the temperature of your brand’s subscription or membership model, and diagnose a course of action, sign up here to receive HEART Truths right to your inbox or to have a chat about HEART.
If you enjoyed this instalment of HEARTtruths, read the first blog in the series here.