Doing the right thing and helping customers get through the disruptions of the COVID-19 pandemic can help DTC retailers sustain their businesses.

Frank Ernst, vice president, Subscribed Strategy Group at Zuora

If you’re like me, you’re spending way more time with screens than usual. With no commute, school drop-offs, weekend games, or brunches to attend, we’re all spending more time online. What’s surprising is how we’re spending this time with our screens. It’s no longer just different streaming services battling for our attention. Today, there are several new entrants in the fray. Everyone from gym instructors to DJ Nice seems to want a slice of our time and attention.

So how should DTC retailers, particularly those offering digital subscriptions, navigate these unchartered waters? What should you be doing to fend off the competition and sustain your business during this period of uncertainty? Begin by asking yourself these two simple questions:

What’s the right thing to do?

I don’t mean to be preachy, but it’s not more complicated than that. Doing right by your customers is Subscription 101. Subscription businesses are built on long-term relationships, not one-time transactions. Your customers increasingly care about the values of the organizations they spend their dollars on. So, doing the right thing will also go a long way in building loyalty towards your brand.

Now, if you’re an existing digital subscription business, this might mean offering some services for free or at a discount. Take the media industry, for example. Publications such as The Wall Street Journal, The Atlantic, and The New Yorker have brought down their paywalls and made COVID-19 related content free. Another example is the NFL, which is offering fans complimentary access to NFL Game Pass so they can rewatch football games while they wait for the games to start.

As counterintuitive as it may seem, altruism can be good for business. Sure, many people will use these services now but won’t want to pay for them once we get past this crisis. But here’s the thing–if they see value in your service, chances are that some of them will convert into loyal customers. The Atlantic has seen a surge in visitors to its site since it brought down the paywall. More importantly, it has signed on 36,000 new subscribers over just four weeks. Similarly, The Financial Times saw a 600%  surge in digital subscription sales (compared to the average weekend) when it dropped its paywall over the Brexit weekend in 2016.

For some companies, doing the right thing might mean a loss of revenue in the short-term but increased customer lifetime value in the long-term. If your service is providing no value to your customers at the current moment, or if the crisis has severely impacted your customers, chances are you’ll see an increase in churn. But before that happens, you should consider offering your customers the flexibility to suspend their subscription or waiving their fees for this period. Companies like T-Mobile (temporarily waiving late fees and suspend and restore fees), OrangeTheory (membership dues automatically suspended), and The New York Times (suspend delivery of physical newspaper) are already doing this.

Why is this a smart move? Because in today’s as-a-service economy, it’s all about increasing lifetime customer value. Remember, it’s more efficient to retain and grow existing customers than acquire new customers. Do right by your customers now and they’ll stay with you once we get past this crisis.

How can I offer value to customers now?

It’s essential for DTC retailers to assess how to continue offering value to their customers in the current situation. This might require launching new services, new pricing models, or introducing new ways of accessing your service. The key question here is–how do I reach my customers now and provide them value?

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A great example is Headspace, the meditation app, which is customizing its offerings to meet the needs of its customers at the current moment. The app now offers a “Weathering the Storm” collection for its subscribers, and has free specialized offers for healthcare workers and educators. Fender and Peloton are other examples of companies trying to meet people where they are and offer value. Fender is offering 3 months of free online guitar (acoustic or electric), bass and ukulele lessons through “Fender Play,” its online teaching service, to help people pass time during the quarantine. Similarly, Peloton is offering a 90-day trial of its subscription workout app. The trial doesn’t require people to own a Peloton-branded treadmill or bike and allows users to try activities such as cycling, yoga, meditation, stretching, strength training, etc.

The current situation also underlines the stark need for the shift to digital services. While there’s a lot of talk (and social media memes!) on the acceleration of digital transformation in large enterprises, we also see the need for it with smaller DTC services. It’s evident that DTC businesses that have a well-established digital service can continue to offer value to their customers with some modifications. On the other hand, businesses that do not have a digital component are getting innovative to meet the moment.

Take 84-year-old Nonna Nerina, for example. Nonna Nerina is the host of a highly-rated Airbnb Experience called “Handmade pasta with grandma.” To adapt to the current situation, she’s going virtual with a two-hour livestream! Many of us have started to see this transformation play out locally as well–with gym instructors and yoga teachers, music lessons, and the like. Virtual classes are beamed into our living rooms over Zoom. DTC companies that are trying to meet this unique moment of our times should make the shift to digital a business imperative.

With people’s screen time becoming increasingly valuable, DTC companies that provide ongoing value will build strong subscriber relationships, gain a steady stream of revenue, and ultimately emerge as the winners.

Zuora provides software for managing subscription-based services.

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