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Amazon’s Move to Avoid Subscription Stagnation

By: Jason Nyhus
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Primarily known as a two-day free shipping benefit for its online shoppers, Amazon Prime is giving customers one more reason to sign up or renew their $99 annual subscription.

Amazon this week launched Prime Reading, which gives subscribers access to more than a thousand Kindle magazines, books, comics, short stories and other reading material. The kicker? Prime members have access to this new content for no additional cost. Prime Reading builds on a defining insight of Amazon’s Prime program, and one that other subscription-based providers would be smart to imitate: subscriptions succeed when they grow in value.

Amazon Prime continues to add value

Since the launch of Prime in 2005, Amazon has continued to add new services to its pioneering subscription bundle. In addition to the new Prime Reading service, customers already receive on-demand access to hundreds of popular movies and TV shows, more than a million songs from top artists, free image storage, video-game streaming and its famous free two-day shipping. If history is any indicator, these offerings will be followed by others as the company continues to refresh its subscription bundle.

Herein lies the brilliance of this value-added strategy. A major challenge for any subscription-based service provider is avoiding stagnation. Static subscription offerings often lead to churn — and lost opportunities for new customers. If my credit card keeps getting charged, month after month or year after year, for the very same thing, I might one day decide that the same old benefit no longer has the value I once thought it had. With subscriptions, familiarity can breed contempt. Worse yet, an unchanging subscription offer that isn’t of interest today is unlikely to interest me a week or a year from now — which means that I’ll never become a customer in the first place.

The most successful subscription-based commerce keeps current customers engaged while consistently attracting a new subscriber base. It’s not about one product or transaction. It’s about the customer experience and relationship. Smart merchants frequently infuse new value into the existing service to create an experience that customers simply cannot live without. When your customers see that monthly charge on their credit-card statement, you want them to feel good about the value they are receiving from the reoccurring payment (not surprised or trapped). The best subscriptions, make customers think to themselves, “I can’t believe I’m only paying $XX per month for all of this.”

Learn more about how to reduce voluntary and involuntary churn by reading our revenue optimization guide.