For Starters #54: Monthly Subscribers are a Completely Different Customer Profile
Not everyone needs you all the time - and that's OK.
Your absolute best customers pay upfront for a multi-year subscription.
The next best is customers pay upfront for a one-year subscription.
In a distant third place: Customers paying a month at a time.
Also ran: Customers on post-paid usage plans.
Whether B2B or B2C, any monthly subscription is a trial program your savviest customers are using strategically.
Here’s a B2B and a B2C example from my own world.
B2B: Prospecting tools. Over the past two years prospecting tools have proliferated, to the point of commoditization. I’ve tried many of them - and every quarter or so I pay for 1-month for one. I do this for two reasons:
I’ve yet to find any of them amazing, as all of them fall down somewhere whether it be in search attributes, data quality, or just usability in general.
New business development is just one of my many JobsToBeDone and prospecting is just one subcomponent of that job. Since I only really want 5 customers a year, I don’t need a very long list to keep me occupied for a quarter.
B2C: I buy Ancestry.com a month at a time. I queue up all my research plans and then sprint through them over the course of that month. Then I take a month or two to digest what I learned, craft some new research plans, and repeat.
(Note: In writing this I realized I spend a lot of my time looking for people.)
I know some people do the same with streaming video services. Buy a month of AppleTV, HBOMax, which ever has an interesting show, mark the calendar 29 days from now, binge the show, and cancel.
You probably have some services you operate similarly whether in your personal or professional life.
It’s such an amazing world we live in - so much consumer surplus for $20-$70.
Yes, in B2B, companies of any size buying just a month of a service in the way I described likely doesn’t make any sense. It’s just too short a timeframe for multiple employees to get any value at dollar amounts so small as to raise eyebrows.
Related: One of my favorite questions to prospective clients is, “What’s your typical time-to-value?” and the chances of the answer being 90-180 days is, astoundingly, above 50%. Ugh.
This does bring up the question - how should larger companies (>3 people) get a feel for a new software tool.
Buy it and commit to it for just a year. And this is what you see. It starts in a single department or even a single team. A manager, or even senior independent contributor, with an expense account pays a couple thousand dollars for their team to try a new tool, and either adoption grows across the org….or not.
Of course, this presumes there’s a specific, deliberate, substantial outcome this new tool will provide. If successful - it’ll be a bargain. If not #unsubscribe and look elsewhere.
In the current zeitgeist, the only buyers reaching out are those desperately wanting help (HT Brad Farris). Thankfully, for both customer and vendor, almost any reasonable solution can provide substantial, immediate relief (typical time-to-value not withstanding). A year gives the team immediate relief and enough time to cross the trough of disillusionment.
During my short time in corporate, my larger team cycled through four(!) different internal chat tools (another highly commodified product segment). Some were purchased at the department level, others were bought at the corporate level, others were forced migrations from the vendor. While each chat service had internal advocates and detractors, it was ease of purchasing, ease of rollout, and security compliance won each deal.
If the ideal customer profile, purchasing a multi-year subscription is the bullseye of a target, monthly subscribers are on the far outer ring. I mean…they’ve signaled as much by signing up for the monthly plan. If you’d have offered a daily plan - they probably would have signed up for that. The question is, how to consider them?
Rather than consider them a smaller, commitment-adverse version of annual subscribers, perhaps consider them a completely distinct customer segment. One where the success isn’t a subsequent monthly renewal - but conversion to an annual subscription..or churned out.
For these monthly sign-ups, I’d offer a single monthly subscription option. One with all the bells and whistles of the fullest plan and an obvious daily countdown timer. When the timer reaches zero, we archive the account and proactively send them all their data to download.
No more auto-renewal dark patterns. They’ve had plenty of time to switch over to an annual subscription of they found it valuable. They didn’t.
Instead, let’s treat them super nice, be straightforward, and trust they’ll absolutely be back next quarter.
It’s ARR that matters most anyway, right?