Case Studies - Online Subscription

Leading Online Service Increases Member
Subscription Rates with Tiered Program

Client

A premier online service from a software, hardware and services vendor with more than $5.7 billion dollars in annual revenue.

Challenge

• The client risked losing a large number of subscribers when subscription fees increased at the each renewal cycle;
• The client needed to develop marketing messages and incentives to maximize retention of their fee-paying subscribers;
• The client also needed to ensure that the new fee structure would maximize the net present value of subscription revenue;
• The client lacked sufficient in-house technology infrastructure to conduct appropriate data consolidation and analysis on its five years of raw customer data.

Analysis

Loyalty Matrix identified the highest retention subscriber segments and recommended marketing campaigns to move fee-paying subscribers to these segments.

What we did:

• Mapped client’s subscriber data into MatrixOptimizer® suite.
• Performed segment-specific retention analysis to determine the most likely to renew subscriber groups;
• Determined sensitivity to renewal fee level by various segments;
• Recommended marketing messages and incentives to motivate subscribers to move to high-retention segments;
• Provided on-demand access to marketing optimization metrics via the MatrixOptimizer® portal for monitoring service usage, segment attrition and migration, and impact of marketing initiatives.

Results

• We determined that subscribers who use larger numbers of services have higher retention rate than subscribers who are satisfied with any one service.
• The client developed and implemented marketing messages and incentives designed to motivate customers to use more services and move to high-retention segments.
• The client formalized their retention program and infrastructure.
• As the result of these changes, the actual renewal rate was 28% higher than the predicted.