At our recent Subscribed Live London event, Caroline Wren of MTM unveiled the groundbreaking HEART framework, a new approach to driving growth for subscription and digital services brands.
This innovative framework promises to reshape how businesses approach customer acquisition and retention, positioning businesses to better adapt to increasing customer demands. In this blog, we’ll recap some of the main points Wren shared.
A Comprehensive Approach to Customer Relationships
HEART, which stands for Healthy Acquisition and Retention T-score, is MTM’s proprietary framework designed to provide actionable insights for subscription businesses. By focusing on seven brand experience drivers, HEART offers a comprehensive approach to understanding and improving customer relationships throughout their lifecycle.
At its core, the framework emphasizes the importance of healthy customer acquisition. By combining survey data with first-party customer information, HEART yields deeper insights into customer behavior and brand perception, enabling businesses to make more informed decisions.
The Skyglass Success Story
One of the key principles underlying the HEART framework is the importance of understanding customer pain points beyond just product features. Wren illustrated this with the success story of Skyglass, a TV brand that rapidly gained market share in the UK.
“We knew that they needed to challenge the status quo,” Wren noted, “because they were entering an established market, and subverting it with vertical integration.” By addressing the entire brand experience, from choosing and buying to installing and using the TV, Skyglass was able to offer a unique value proposition that resonated with consumers.
The key insight was the complexity customers faced in the TV market. As Wren pointed out, “People were finding it was a really complicated set of separate costs and decisions that they were having to make.” By offering an all-in-one solution that bundled hardware, software, and content, Skyglass simplified the TV-buying process and tackled common issues like complicated setups and cluttered living rooms.
This level of complexity with products, particularly subscription services, seems universal across industries. Consumers are actively seeking easier ways to subscribe and manage their subscriptions, and inflexibility or complexity are crucial blockers that can impact acquisition and retention.
The Impact of Introductory Offers on Customer Lifetime Value
The HEART framework also provides insights into the long-term impact of different acquisition strategies. Through an anonymized case study of a subscription business, Wren demonstrated how different introductory offers can significantly impact customer lifetime value and brand perception.
Interestingly, the study revealed that while referral programs might seem cost-effective for acquisition, they often led to less valuable customers. Conversely, offering a free gift for the first month resulted in more valuable, long-term customers.
This insight challenges conventional wisdom about referral programs and highlights the importance of thinking about a lifetime customer, and understanding the long-term impact of acquisition strategies.
Key Drivers of Customer Satisfaction and Loyalty
The HEART framework identifies several key drivers of customer satisfaction and loyalty:
- Value Perception: Using examples from brands like YouTube Premium and Vitality health insurance, Wren demonstrated how companies can enhance value perception by encouraging the use of premium features during trial periods and offering tangible benefits that resonate with customers’ daily lives.
- Personalization: The framework emphasizes the importance of personalizing customer relationships. Examples from Sky Mobile and Monzo showed how rewards can be made contextually or personally relevant to enhance customer satisfaction and loyalty.
- Evolving Customer Mindsets: Wren explained how customer mindsets change throughout their journey with a brand, using insights from a flower subscription service. She noted, “For new customers at the point of sign up, the relationship is full of promise, with strong emotions elicited from every new experience. Just like first dates, really. However, for established customers, when they get to about one to three years, the honeymoon period is over at this point.” It’s clear that different tactics need to be employed at different times in the subscriber journey to combat the effects of hedonic adaptation, where customers experience less intense enjoyment over time. Wren suggested implementing variable rewards as a means to do this – with unpredictable or intermittent benefits that keep customers engaged and excited about the service.
Benchmarking Against the Best: Looking Beyond Traditional Competitors
One of the most compelling insights from Wren’s presentation was the importance of looking beyond traditional competitors when setting benchmarks. She revealed that even top-performing brands like Netflix can learn from subscription services in other categories.
“Customers are gaining their expectations about what a strong subscription experience means from one of the subscription brands that they deal with across all categories,” Wren explained. This insight encourages businesses to set their benchmarks wider and learn from successful subscription models across various industries.
Implementing Sustainable Growth
As subscription businesses navigate an increasingly competitive landscape, the HEART framework offers a roadmap for sustainable growth. Wren’s key takeaways for implementing the framework include:
- Focus on acquiring customers in the healthiest way possible, targeting those who join for the right reasons and are likely to stay.
- Remember the principle of hedonic adaptation when developing retention strategies, and plan discounts and benefits accordingly.
- Continuously invest in creating value throughout the customer lifecycle to keep customers feeling central to the experience.
By adopting these strategies, subscription businesses can create stronger, more resilient customer relationships that drive long-term growth and success.
In conclusion, MTM’s HEART framework represents a significant advancement in how subscription businesses can approach growth. By focusing on healthy acquisition, personalized experiences, and evolving customer needs, companies can build a loyal customer base that not only sustains but propels their business forward in the dynamic world of digital subscriptions.