How to build a marketing funnel for APAC’s subscription economy

Why it matters

Amid the rise of the subscription economy, knowing your consumers and retaining them are just two of the key marketing principles that brands have to embrace when building a marketing funnel for this new business model.

Takeaways

• Knowing your audience is the bedrock of good marketing and a subscription business yields much permissible data on consumers
• To build a marketing funnel for a subscription business, brands must look at which old habit is changing to build a new habit
• Across the consumer journey, retention is the holy grail and prioritising awareness and acquisition over it is a mistake

The subscription economy is rising worldwide, fuelled by the growth in the digital economy and changing buying preferences from ownership to usership. For the first time since its inception in 2012, Zuora’s SEI (Subscription Economy Index) growth rate reached 437% in 2021.

A subscription economy is a model for the trade of desired content, products and services in exchange for recurring, scheduled payments, and this growth is also being anticipated in APAC.

A study by Citi’s Treasury and Trade Solutions with Longitude found that:

• 46% of C-suite executives polled believed that subscription-based models will be widespread in their respective industries in three years’ time
• 31% also believed that 100% of their organisations’ revenues would come from these models in the future

Traditionally, the media and entertainment industry has relied on paid advertising, but the rise of the subscription economy is ushering a new way of doing business. So how can brands build a marketing funnel for this type of business model?

Dipashree Das, content and brand marketing lead for films at Netflix India, outlined the key marketing principles at the recent eTail Summit 2022 in Singapore.

1 – Get intimate with your consumers

Knowing your audience inside out has always been the bedrock of good marketing. But Das shared that subscription-based businesses allow you to do that even more effectively and intimately by going “dumpster diving with your consumers” – a term coined by the late Harvard Business School professor, Clayton Christensen.

This is because “a subscription business gives you a lot of permissible data on consumers”.

“You have to look for affinities, efficiency and how to develop those direct connections,” said Das, adding that one is then able to mine that data for actionable insights.

2 – Dethrone old habits with new ones

Habit building is something that is difficult to build and unbuild, but it has been the key driver of the subscription economy, especially in the entertainment industry.

Das said: “When the OTT industry came into the APAC region around six years ago, key players were trying to dethrone a key habit of appointment viewing on TV.”

Now it’s the norm for consumers to watch all episodes in one go instead of two every week. 

So as marketers build a marketing funnel for a subscription business, they must ask themselves: What old habit is the brand changing to build a new habit?

Marketers must think about this question, not just in communications, but within research too.

3 – Retention is the holy grail of the subscription economy

Across all stages of the consumer journey, Das shared that retention is the holy grail of any subscription business.

“Every returning consumer for a subscription economy is worth their weight in gold. They will be your biggest advocates.”

However, prioritising awareness and acquisition over retention is a common pitfall that she has observed with startups in the region and she always asks them about their retention strategy. “

As a subscription business, you are supposed to start thinking about retention the day you start acquiring.”

4 – Content marketing is your best tool

While paid marketing is a highly effective tool, Das believed that content marketing is one of the most costeffective tools in the marketing toolbox for customer retention. Marketers can plan for highly targeted and relevant content across every stage of the consumer journey.

5 – Target a new type of audience

The subscription economy is targeting a new generation of consumers that grew up with the likes of Uber, Grab, etc.

“They don’t want to deal with the hassles of ownership,” said Das. “Just think about that when you are building the marketing funnel. They are not just your next consumers but they are your now consumers.”

This type of consumer mindset has implications for the value exchange.

“Because these consumers don’t own anything, they are looking for a recurring service and value add.”

6 – A successful partnership ecosystem is built on win-win

There is no silver bullet for building a successful partnership ecosystem. But the one key piece of advice that Das shared is that all partnerships have to be win-win, which can come through in a few ways.

The type of partners that subscription businesses need are those that can give you an additional lift or infrastructure

. Aside from shared infrastructure, another key criterion would be in shared audiences.

“One of the biggest reasons subscription businesses partner up is because their audiences are not the same. But they are similar, which means that they could get to the similar audiences if they partnered up together.”

While creating a win-win may sound idealistic, these are the types of partnerships that, in Das’s experience, have survived.

*This article was written in partnership with WARC, a media partner of eTail Asia