With the developing world-wide Corona situation and a looming recession, much has changed in little time. Businesses must rapidly adapt to manage the short- and long-term effects of the crisis. First of all, if you already have a subscription business model, you are probably better positioned to manage this uncertainty than many other companies. A recurring, stable and predictable revenue is a god send in times likes these.
The considerations listed in this article fit most subscription businesses, but which actions that are most important will depend on the segment you are in. Therefore, you should view this list as a number of possibilities to consider, and not as an all encompassing strategy you can act on. You must always consider the specific challenges and opportunities which are presented to you at this time.
For example, the effects of this crisis will hit different subscriptions segments differently. Fitness chains will see an immediate drop in activity and perhaps even force to temporary close their facilities (this is currently happening across the Nordic region). Media and SaaS products, on the other hand, might see an upswing in sales and engagement, when more people work from home.
Here is our list of considerations of how to manage the current uncertainty:
Realize the game has changed
First of all, you must realize that much has changed in a short amount of time and that the subscription strategy you had last week might no longer be relevant.
Gather your management team and your organisation and discuss the situation. Try to predict consequences and form a coherent plan. Be sure to set up the right management and organisational structures to be able to iterate your plan and be flexible for the developing situation. This includes ensuring business continuity, even in a situation where most people have to work remotely.
In practice you might have to reconsider the delivery and sales of your products and services. Depending on your product, demand might drop or rise significantly in the short-term. You must reconsider your marketing, sales and acquisition channels to reflect this change. There is no point in pushing your product if there is no demand, you’ll just burn money. Focus on making a forceful return when things blow over instead. However, if there is an increasing demand, you should make a push for new subscribers.
Talk to your customers and be generous
Constant dialogue is always important in a subscription business. Even more so through uncertain times. Let your customers know that you understand the severity of the situation, while also ensuring them that you are here for the long-run and that your products and services will keep running. Be susceptible for their worries, desires and ideas. The best solutions always comes from close customer collaboration
In troubling times you can make a positive impact by being more generous than usual. This can lead to positive effects in your community in the short-term and have a positive impact on your brand in the long-term.
If the delivery of your service is negatively impacted by the ongoing situation, you need to be even more generous to your customers. You should loosen your terms and conditions, allow your customers to pause their subscription, or provide proactive compensation mechanism. This might damage your cash flow, but will have long-term positiv impact.
If you are a digital media company, or generally have subscription business with low marginal costs, you can provide extended access to your product during a fixed period of time. If you are in the business of serious news journalism, this is a no-brainer: You should provide open access to your content during times where accurate information is needed.
Manage your costs and spending
If you expect a drop in revenue or a decrease in your cash flow, then you must quickly manage your costs and spending. This does not necessarily mean you should stop all spending. However, you should increase your understanding of the cost structure to be able to plan for different future scenarios. Here, flexibility is key. You need to understand how your costs can be changed for the short- and long-term.
Do a cost analysis of your business or unit to understand which costs you can modify and when you should do it. There is no point in rushing your actions and decisions, but planning ahead is always a good idea.
Rethink your business
It’s currently difficult to foresee the short- and long-term effects of the ongoing situation. Nothing might change, or everything might. To be prepared you need to consider how your product, organisation and business might have to change.
Ask yourself (and your organisation) the following questions:
- What’s the short- and long-term effect of the ongoing situation?
- How can we rethink our products and services to accommodate this?
- How is the development, production and delivery of our products affected?
For example, if people, for the foreseeable future will spend more time at home, this might present opportunities in re-thinking your product for this new reality. One example is where fitness chains now quickly move into remote classes instead. If your organisation is forced to work from home, you have to understand how to ensure business continuity during this time.
The new situation might provide new opportunities for you as a business. To survive in the long-term any business must be adaptable, especially in uncertain times. However, there is often a fine line between catching the opportunities, and being (or coming across as) opportunistic. Tread carefully here.
Plan for next time
The developing Corona virus situation has presented significant gaps in the risk assessment and crisis readiness of governments, businesses and individuals. One thing is certain: This will happen again and the businesses who are prepared will prosper. Already now you should prepare for next time.
Do you have suggestions on how subscription businesses should mange the current uncertainty? We’d love to hear your feedback and keep the discussion going.