Since April, subscription businesses have been grappling with a significant drop in front-end acquisition conversion rates, catching many off guard. Robert Skrob, a seasoned subscription business expert, reports that conversion rates have fallen between 5% to 30%.

We talked to Robert about this change to get his insights into the reasons behind this decline. While there are a lot of economic pressures on consumers today, the negative election campaigns are enough to make anyone pause initiating a new subscription program. He offers strategies for subscription businesses to counteract these challenges.

“Across different niches, from B2C to B2B, we’ve seen a decline in new subscriber conversions ranging from 5% to 30% over the last six weeks.”- Robert Skrob

Robert has worked with global subscription businesses for decades, giving him unique insights into current market trends. He contributes the current decline in conversion rates primarily to the upcoming elections, which he sees every four years. “Election years typically bring a sense of uncertainty, impacting both consumer and business spending behaviors,” he explains.

“This year, the impact seems particularly acute, with both candidates doing everything they can to invalidate the other, leading to a general sense of discouragement and caution among consumers.”

The effect is more pronounced in high-ticket and B2B subscriptions, where decision-makers are more conservative with their spending. “In times of uncertainty, protecting the business by lowering spending is valued more than taking risks on potential opportunities,” Robert notes. This impact appears to be isolated to new subscriber conversion rates, churn rates remain consistent so far.

Managing The Decline in Acquisition Rates

The first thing companies typically do when a successful campaign stops converting at previous rates is to work on new creative. Robert advises against this approach. “Changing creative won’t work, especially if the drivers of the conversion decline are market factors outside your business,” he explains.

Instead, he recommends focusing on something your team probably has not focused on in a long time: pricing and offers. “Get more revenue out of your lower conversions by revisiting and updating your offers,” he advises.

Revisiting Subscription Offers
Many subscription businesses have not updated their offers in years. Robert suggests experimenting with different types of offers to boost conversions. “Switching from an annual to a trial offer or creating product bundles can reinvigorate interest and improve front-end conversion rates,” he advises. Revisiting past unconverted leads with new offers can also drive new subscriptions.

Implementing Tiered Pricing
Tiered pricing is another effective strategy. “Netflix has popularized the idea of offering everything at a low price, but creating meaningful tiers based on subscriber needs can provide better value and improve conversions,” Robert explains. For instance, offering basic, mid-tier, and premium subscription levels can help match subscriber needs more effectively and increase revenue. But, Robert emphasizes, companies need to create tiers based on value to their subscribers and not just what they can deliver.

A subscription business Robert worked with recently moved from a single $100 annual subscription to a tiered model: $100 for basic access, $250 for community access, and $500 for coaching access. “Grandfathering existing subscribers into the higher tier enhanced their perceived value and doubled revenue within the first 60 days due to immediate upgrades and targeted campaigns,” Robert recounts.

Adjusting Subscription Tiers and Pricing
Adjusting subscription tiers and revisiting pricing can lead to higher average revenue per customer and improved retention rates. “Subscribers feel better about their investment when they receive appropriate value, leading to better retention and long-term customer satisfaction,” Robert asserts.

One of the big pieces of Robert’s business has been managing subscription dashboards on behalf of his clients. “One of the chief problems with subscription businesses is they don’t really know if what they have implemented is actually improving things or not,” he explains. Businesses can make informed decisions that drive growth and efficiency by leveraging data and accurate tracking.

Robert emphasizes the importance of being adaptable and responsive to market dynamics. “By revisiting subscription offers and implementing tiered pricing, businesses can not only weather the storm of reduced conversion rates but also emerge stronger with increased revenue and better customer alignment,” he says.

INSIDER TAKE

The decline in subscription conversion rates since April poses a significant challenge for businesses. However, by following Robert Skrob’s expert advice on optimizing offers and implementing tiered pricing, subscription businesses can enhance their value proposition, improve customer satisfaction, and ultimately increase their revenue despite market challenges. “Staying proactive and strategic in adjusting your offers and pricing is key to navigating the uncertainties of an election year,” Robert concludes.