Skip to content
Close
Request a Demo
Request a Demo
UXUI 8 min read

The impact of user experience on subscription business outcomes

Design thinking for subscription businesses | Part three 

 

S-Sep-06-2022-11-43-36-76-AM

tudies have shown that a well-designed user interface can increase a site's conversion rate by up to 400%. What's meant by 'well-designed' though? In this article we look at how user experience impacts subscription business outcomes.

 

 

Businesses grow when they improve their user experience

Recently, Bank of America showed a customer increase of 45% after launching a new UX for their online banking enrolment process.

 

  • They gained two million active digital clients
  • Total verified digital users reached more than 54 million
  • Their clients logged in a record 10.5 billion in 2021 (a year-over-year increase of 15%)

 

Though not a subscription business, Bank of America customers use the online customer portal to perform banking related tasks one or more times a month in the same way that they use a subscription business's customer portal.

Digital banking platforms also require a high degree of user autonomy (only speaking to a person online or in-branch when there’s no other choice). Similarly, customer self-service is an essential part of subscription based businesses. 

In any business, user experience is important. However, in subscription businesses it's essential because the success of the organization is reliant on the internal teams that design customer journeys and interact with customers directly. User experience also influences the customer's ongoing choice to retain the relationship and keep 'buying'. The customer’s experience with your company, your product/service and the platform they're interacting through needs to be consistently excellent to incentivise them to stay rather than being tempted away by a competitor. 

This makes the design of the user experience paramount. Customers shouldn’t hesitate to access an organization's online portal to interact with their purchases or with your business. When the user experience is frictionless, intuitive and easy to navigate, it allows customers to find what they need, to perform the tasks they want, and ultimately it instills trust as well as satisfaction. 

Understanding the consumer mindset and designing the user experience to meet and exceed their wants and needs can be a challenge. However, design thinking is an approach that enables you to gain clarity about the reality of the user experience within your organization and to consistently improve it to exceed expectations.

Business benefits of a good user experience include:

 

A good UX minimizes costs

From the manual customer service overhead to the cost of sales, a good user experience drives the costs of your subscription business down by minimizing the need for human interaction, minimizing the number of changes that need to be made and increasing customer retention.

 

Increasing customer engagement

With excellent customer experiences comes a willingness on behalf of customers to engage with the business and use the customer portal. This gives you the data and insights to continuously improve customer experience and exceed expectations.

 

A great UX improves customer stickiness

As mentioned, the aim of a subscription business is not just to win customers but to retain them in the long-term - in essence, to keep winning them each day. A good user experience means that customers have little reason to leave unless their needs change or something better comes along. However, an excellent user experience encourages trust, loyalty and a proactive reason to stay.

 

Increases new product uptake

When customers have had a positive experience to date, both of the product/service and the method of interacting with your business, they're much more likely to upgrade to new products or services when they launch. This in turn means that the cost of sales goes down as time goes on and they can be targeted at existing customers as well as new ones.

 

 

The impact of a poor user experience

Poor customer experience is something that's hard for a business to come back from. Once it's been experienced once, it can damage the relationship with the customer permanently.

In research from PwC on the importance of customer experience, the company wrote:


“Imagine losing one-quarter of your customers in a single day. Because that’s exactly what could happen after just one bad customer experience. In the U.S., even when people love a company or product, 59% will walk away after several bad experiences, 17% after just one bad experience. 32% of all customers would stop doing business with a brand they loved after one bad experience. In Latin America, 49% say they’d walk away from a brand after one bad experience. 


If your business is based on one off sales, then what you risk through bad customer experiences is:

A) The customer won't return
B) They won't recommend you
C) They might proactively tell others not to purchase from you either personally or on review platforms

However, if you're a subscription business you not only stand a high chance of suffering all three of these consequences from a poor customer experience, but you also endanger your existing revenue stream. If that happens too frequently, you won't grow and you won't profit; at best you will tread water.

Most subscription businesses are built on a cumulative model; they want to gain customers and retain them whilst also attracting more. To fundamentally fail at the first hurdle will undermine your entire business strategy.

Even if customers don't choose to leave immediately following poor user experience, it still undermines your relationship with them and limits your capacity to grow. For example, it makes them more vulnerable to competitor offerings, and it makes them unlikely to upgrade to new products or services as and when they become available.

Business challenges arising from a bad user experience include:

 

Low adoption rate to new products or services

It’s reported that 70% of new projects fail due to low adoption rates both internally and externally. When it comes to launching a customer portal, a poor user experience on a subscription system is challenging for internal teams to roll out a consistent experience for the customers and partners. As a result, the poor experience turns into a consumer repellent loaded onto a new digital offering.

 

Development costs cut into profit margins

As mentioned, a good user experience can cut development costs significantly. Good design is about getting the user interactions and data architecture right first, to save thousands of dollars down the line rather than cutting corners to save pennies at the start. If it's done correctly, you’ll find that you’ll have a lot less reworking to do during the development phase as well as fewer change requests long term. Change requests are not always bad, but can lead to bandaid solutions to fix unanticipated problems, which in turn can lead to much bigger issues as the business grows.

 

High levels of customer support issues

Customer autonomy and self-service is essential for subscription businesses to grow. It allows the business to allocate financial and human resources to other areas of the business where they can be more effective, and it allows customers to get on with interacting with your business as they wish. When the user experience is not intuitive, customer support becomes tied up in helping customers to navigate the system, often frustrating the customer and not providing optimum benefit to the business. A good user experience design can eliminate up to 90% of unnecessary customer service calls and their associated costs.

 

 

The challenges to implementing good user experience

The greatest challenge to creating good user experiences in subscription businesses tends to start with two things:

 

  • An insistence on using multiple systems instead of a purpose-built subscription platform.
  • A finance-first mindset.

These two things tend to feed into one another. A finance-first mindset is common in traditional one-off sales environments, but they tend to have very rigid architectures that won't allow the business to grow and evolve (a fundamental feature of a subscription business). Those systems make it convoluted to keep track of revenue, to add partnerships and to add new customers. The net result will be a poor customer experience and not only difficulty keeping customers, but little insight into why you can't keep them either.

Design thinking is a method forward-thinking designers use to place the user experience first, thinking about the relationships with the customer and how best to obtain them and retain them over an extended period of time. If your system is approached in this way, it will make finances easier to manage as well.

 

 

Solutions to better user experiences 

At keylight, we take a user first approach in everything we do. That’s why we designed and built our subscription business platform from the user down instead of taking a finance-first, bottom-up approach. Financials are important and should be solid, reliable, predictable, and immutable. However, a good customer experience must be tailored to the business and the context of each interaction. It should seamlessly integrate with other backend business processes for a frictionless user experience.

That's why we have used design thinking to create a platform that allows for configuration to suit your business and your customers, resulting in a great user experience straight out-of-the-box. It has a backbone designed to be user-centric, and the system administrators have an intuitive user interface to design the customer portal accurately, thereby enabling the strategies and experience they envision for their customers.   

When we tested it, we found that sales teams wanted an experience that was tailored to their businesses and the needs of their own customers. By creating an adaptable system that provides what each persona wants, adoption rates within client organizations have improved dramatically.

 

Group 156460
Employ design thinking with a
user-centric subscription system
Start now with >keylight/