Audience segmentation offers data, churn management for subscription businesses

By Chris Petitt


London, United Kingdom


In the dynamic and ever-evolving business landscape of today, the days of relying on one-size-fits-all solutions are behind us.

Customer expectations are in a constant state of flux, demanding personalised, data-driven strategies that resonate with their unique needs and preferences. In this changing landscape, it has become increasingly clear that understanding the intricacies of each subscriber’s journey is the cornerstone of success.

Understanding the nuances of customer needs and behaviours allows companies to better anticipate and address their potential actions.
Understanding the nuances of customer needs and behaviours allows companies to better anticipate and address their potential actions.

To navigate this new terrain effectively, subscription businesses must embrace the power of audience segmentation as a fundamental strategy for staying at the forefront of their industry.

Why audience segmentation matters

Utilising generic messaging and offers can prove detrimental to a business’s relationship with its subscribers. In fiercely competitive markets, like the streaming industry, where numerous providers offer near-identical content libraries, it’s imperative for businesses to consistently deliver content and offers that deeply resonate with their customers.

This is where audience segmentation comes into play, allowing businesses to craft tailored packages, offers, and messaging that are finely tuned to individual subscriber preferences. By leveraging data derived from subscription records, payment histories, consumption patterns, and engagement metrics, businesses can gain a comprehensive understanding of their subscribers, enabling them to provide precisely what their customers value most.

However, audience segmentation extends far beyond the simple creation of segmented lists. It goes a step further by offering insights that can significantly impact a business’s financial performance.

For instance, a business can pinpoint a segment of deeply engaged subscribers and, armed with this knowledge, can target them with personalised upsell opportunities catering to their specific interests and needs. This strategic use of segmentation ensures businesses can maximise their revenues while simultaneously enhancing their subscribers’ experiences.

Let’s explore three ways in which accurate audience segments enhance subscriber relationships:

1. Proactive churn management

Accurate segments help identify subscribers at risk of churning. By monitoring different segments’ behaviour and engagement levels, businesses can detect signs of disengagement early on. This enables proactive intervention with retention strategies, like targeted re-engagement campaigns or personalised incentives to retain at-risk customers.

2. Data-backed experimentation

Dynamic experimentation with offers is a game-changer for subscription businesses. It allows them to refine offers for different audience segments to increase customer retention and conversion. Businesses can experiment with discount opportunities, test pricing strategies for different demographics, and create customised trial periods. Tests can be run on small-scale segments to gauge their effectiveness before rolling them out to a larger audience.

3. Lifelong customer value

Retaining subscribers through accurate audience segments not only maintains existing revenue but can also increase customer lifetime value. Loyal, long-term subscribers are more likely to explore additional products and become brand advocates, contributing to overall business growth.

Taking segmentation to the next level

Truly effective data collection and audience segmentation extends beyond the basics of user demographics. They involve constructing a holistic understanding of subscribers spanning their entire journey, including transaction history, product usage, demographics, and more.

Subscription businesses with robust data insight and segmentation will delve into payment histories, consumption patterns, decisions to upgrade or downgrade, and even subtle indicators like visits to a cancellation page or credit card renewal dates.

With this data comes an unparalleled understanding of each subscriber. It serves as the foundation for crafting highly personalised offers, a crucial element in achieving success in a subscription business.

Historically, obtaining high-quality insights like these presented a formidable challenge. Subscribers often remained mysterious, resembling a “black box” with hard-to-read motivations, consumption patterns, and reasons for churn. Even for subscription businesses capable of collecting this data, extracting actionable insights from it was a Herculean task.

The real challenge lay in translating this wealth of data into practical, real-world actions. Businesses had to undergo time-consuming and resource-intensive technical overhauls to craft offers that would drive customer growth and retention at every stage of the subscriber journey.

However, with the advent of first-party data collection and AI-driven analysis, businesses can now attain a higher level of personalisation. These innovations enable a more precise understanding of user behaviour and facilitate more effective audience segmentation, simplifying the process of tailoring offerings to individual preferences.

The significance of data-driven, personalised engagement cannot be overstated. It goes beyond merely offering choices to customers; it’s about comprehending their evolving needs and preferences, resulting in a more enriching and satisfying customer experience. In today’s fiercely competitive landscape, data-driven subscriber engagement and advanced segmentation have become the linchpins of success in the subscription business realm.

About Chris Petitt

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