Online service providers have enjoyed a boom in sales over the past several months. Consumers have either increased their consumption or have been forced to try services ranging from media streaming and online subscriptions to food delivery apps.
As we gradually return to “normalcy,” many companies are wondering: which services will consumers continue to subscribe to, and which will be abandoned? Will these new habits stick?
Knowing how consumers value your service today and how that perception may have shifted will be key to ensure retention. Here we explore strategies online service providers can adopt to build customer loyalty and decrease churn.
Redefining “essential” online services and the challenge of customer retention
While low introductory rates and free trials during the stay-at-home period were enough to attract new customers, the new online behavior might not have become a habit.
According to Deloitte, “Pre-COVID-19,20% of subscribers cancelled at least one streaming video service over the course of a year. In just a few months since the current pandemic began, already 17% of subscribers cancelled such service.”
The context of the original decision to sign up has changed – e.g. when more entertainment options are available outside the home or when the full price charge goes into effect. Consumers are making more deliberate choices in this space and are asking: do I still consider this service valuable now?
As an individual’s immediate needs change (e.g. needs for entertainment and connection), so too does the value perception for online services.
Whether your company offers media, technology, subscription boxes or food services, you’ll need to plan your next steps considering these questions:
- How will the post-COVID recovery phase affect consumer perception in your industry?
- How likely is your brand to be affected by the next wave of disruption (e.g. in a recession?) Which customer segments will cut costs by dropping services they no longer consider essential?
- What is the impact of changes in value perception to my product assortment, features, pricing, and/or communications strategies?
5 insights approaches to identify changes in value perception
With pressure mounting to differentiate yourself online, you need to learn what is relevant to consumers or segments in your specific category today – and how that has shifted. As more consumers are facing economic hardship, this is especially important.
Here are 5 research approaches that can help uncover changes in the value perception of your service:
- Explore low-cost research options: Basic options include assessing the data that your company has gathered, investigating feedback received by customer service reps, and looking at your reviews to find out more about how and where consumer sentiment has changed.
- Re-run previous research: If additional budget is available, repeating either a whole or partial study (depending on your needs) can be cost-effective. You can compare pre- and post-COVID findings to adjust your marketing strategies accordingly.
- Integrate different data sources for a more holistic view: Take a data-fusion insights approach for more reliable predictions. Combining data sources can help improve accuracy more than individual sources alone, which don’t reflect real decision-making. For online service providers, consider combining survey data and database data for a more accurate and holistic view of what consumers may be willing to pay for your service.
- Move qualitative research online: Traditional qualitative research approaches such as focus groups and in-depth interviews still have a place in a socially distanced world, with the added benefit that you can reach a much wider geographical area and “hard to reach” consumer groups online. Other techniques like online bulletin boards allow for virtual conversations, and “smart” AI-powered qual solutions can be used to analyze consumer feedback videos and to unlock consumer emotions in voice messages.
- Dial up social listening efforts: The increase in social media usage during the COVID-19 pandemic adds even more value to social listening as a research tool. What consumers are saying about your service can affect perceived value:|
- 82% of consumers have been convinced to make a purchase by a review
- 68% of consumers are willing to pay up to 15% more for the same product with good reviews.
So, it’s vital to understand how your product, brand, and the purchasing context are being discussed online. Get creative about where you look for data on consumer perceptions, such as in online reviews.
Adapting to the new normal: Optimizing online services to build brand loyalty
Once you know if and how value perception of your services has changed, how can you adapt your offering to ensure brand loyalty and decrease churn? Consider these three interconnected strategies:
- Optimize online features for today’s emerging consumer needs
It is crucial to understand what’s changing for consumers, and to adapt specific features to those needs. Features which are more valuable in the post-COVID context can drive preference, affect how much consumers are willing to pay, and ensure repeat purchases or subscriptions. These features will also create differentiation, which is vital in today’s fiercely competitive online marketplace. Two examples for how you can adapt to emerging needs:
- Food delivery apps: Consider how health and safety precautions are perceived by consumers who order from restaurants now. Are “leave at door” delivery options “must-have” or “nice-to-have” features? What additional offers will maximize the guest check
- Media and entertainment services: Determine how you can differentiate to ensure loyalty and prevent churn. This could be through content (Spotify, for example, are investing heavily in podcasts) or adding features such as “shared” viewing. If you are considering offering add-ons with your subscription service and want to optimize both at the same time, we recommend a hybrid choice-based modeling solution. By measuring consumer reactions to trade-offs (e.g. between an add-on and its price) you may be surprised which features can unlock additional potential profit.
- Adapt online pricing and promotion strategy for sustainable growth
You may have experienced a surge in sales, but having the right pricing and promotions structure is key to drive customer retention. For example, do you know which techniques are proven to drive users to upgrade for more premium subscription plans? Or, which promotion format or fee structures are best suited for food delivery apps?
- Leverage “push” notifications and optimize messaging to drive loyalty
Shifting your messaging is one way to address changing value perceptions without changing product features. A leading streaming entertainment brand we work with is doing this by optimizing in-app communications. These communications can be effective, but it can also be a tricky balance to get them right. There are countless apps to contend with, and consumers can simply silence these alerts (which is why live A/B testing is no reliable approach for this). To ensure consumers remain in the habitual decision loop, you need to know which messages encourage loyalty and which could have the opposite effect. Using Unspoken, a mobile swiping-based research solution, we can quickly determine the right message and cadence of the push notifications. As consumer sentiment continues to evolve, this low-cost solution is ideal as it allows for A/B testing in a confidential, low-risk environment. In just a few days, the online service company receives specific insights on how to optimize communications to boost conversions and brand loyalty.
Working out how, and to what extent, consumer perceptions have altered in the past few months will guide your marketing strategies in the coming recession.
How you uncover these insights will depend on your specific needs, budget and timeline. We can work with you to define the best research approach for your business question and help your brand to thrive.