In this interview, Matthew (Matt) Holman (Founder, Subscription Prescription, Creator, Commerce Catalyst & Co-Founder, QPilot.cloud) & Paul Lancaster (Founder, PLATFORM | UK Startup & Scaleup Week) discuss how to build profitable, sustainable subscription businesses, emphasising customer retention & maximising value over short-term sales tactics.
Common Subscription Mistakes
According to Matt, the biggest mistake business owners & leaders make is viewing subscriptions as a top-down, finance-driven agenda to increase Lifetime Value (LTV), often trying to force a square peg into a round hole.
- Misaligned Consumption: Businesses often fail when they try to force a subscription cadence that doesn’t align with the customer’s actual product usage. Examples include selling protein powder for daily use when a customer only uses it twice a week, or sending electric razor replacement heads monthly when a customer only needs them quarterly.
- Beverage Challenges: Drinks are tricky due to widely varying consumption & high shipping costs, which force brands to heavily incentivise large-pack subscriptions. Many direct-to-consumer (D2C) beverage companies ultimately shift focus to retail to avoid shipping concerns & gain better foot traffic.
Strategy: Prioritising Value Over Discounts
Instead of focusing on aggressive discounts & short-term incentives, businesses should prioritise demonstrating value to acquire higher-quality, long-term customers.
- Deepening Commitment: Offer strategies can encourage commitment to a longer time period by stacking value, such as bundling three free gifts with a two-month supply. Elevate Collagen & Everyday Dose are good examples of brands employing gifting strategies to build value.
- Value-Packed Offers: Customers who value exclusivity or a beneficial add-on (e.g. extra time with a keynote speaker at an event) over a 50% discount tend to stick around longer & are better customers.
The Importance of the Initial Customer ‘Win’
The single biggest impact on retention is getting the customer to use the product & “feel like they’re winning” in the first few days.
- Frictionless Onboarding: For digital products (like software), success depends on guiding users to achieve a quick win right away. Paul shared how one software company he previously worked at found that if users didn’t use their SaaS product within the first 24 hours of a free trial, they never would. This requires engineering the experience to move a user from intent (e.g. searching for ‘how to design a Halloween card’) all the way to success (making the card) in minutes, as seen with Canva.
- Nurturing & Milestones: Matt suggested using the first 7-10 days to “pepper” new subscribers with 7-10 emails focused on adding value, education & instruction on how the product or service works. This nurtures their first uses & helps them recognise the product’s impact. Retention teams should define & track customer milestones (e.g. completing a first course on the BBC Maestro or MasterClass online learning platforms) to tailor follow-up & content introductions.
Acquiring & Retaining the Best Customers
Brands should focus on acquiring & understanding their best subscribers – VIP customers who are most profitable, stick around the longest & are heavily invested in the brand & its content.
- Personalised Communication: Avoid treating all customers the same. Subscribers should be nurtured to continue developing the relationship, unlike one-time or non-buyers.
- Cross-Channel Engagement: Relying on email communication can be risky as customers can unsubscribe at any time. Brands should therefore use early email to introduce & incentivise following them on their social media channels to maintain engagement.
- Referral Schemes: Successful brands like Huel leverage generous referral schemes to incentivise existing customers to share the product.
The Impact of AI on Business
Matt’s work with Subscription Prescription & the communications he does around the Commerce Catalyst events is now heavily integrating AI, which is also a significant topic in the wider business community he is part of.
- Increased Efficiency: AI allows for faster work, such as generating initial offer structure designs in minutes before handing them to a human designer.
- Personalisation: AI enables highly personalised communication systems, ensuring that professionals who attend events (e.g. finance or operations) receive content most relevant to their roles.
- The ‘SaaSpocolypse’ is Unlikely: Matt believes that while AI is shifting job roles & company operations, the prediction that AI will destroy software companies (the ‘SaaSpocolypse’) is improbable. Instead, AI will enable software to ship features faster & increase a system’s configurable value from 80% to 90-95%.
- Human-Centric Value: Matt & Paul agree that AI cannot replace the value of physical products (like a HydroJug) or in-person interactions, meaning the event businesses they both run remain highly valuable.
Matt Holman’s Challenge to the Audience
For anyone who has never used AI for business insights, Matt suggests taking the transcript from this conversation (grab it from YouTube), pasting it into an AI tool like Google Gemini or ChatGPT & providing a couple of sentences about your business. Ask the AI: “What should I take away from this episode?”. This is an easy way to experience the immediate benefits of AI for clear action takeaways.
Want to know more?
You can connect with Matt on LinkedIn at www.linkedin.com/in/holman-matthew & learn how to run a better subscription business at www.thesubscriptiondoc.com. If you’re interested in the Commerce Catalyst events that Matt & his colleagues run in-person & online, visit https://ccatalyst.co (& subscribe to their newsletter too).
ps You can also listen to this interview (& more) on Paul’s ‘SuperConnector Show’ podcast which is available on Spotify, Apple Podcasts, Amazon Music, Audible or Spreaker via our ‘Podcasts‘ page.
