Episode 60: Retaining Subscribers with Jesus Luzardo, VP, Head of Global Partnerships & International Sales, Vindicia

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In this week’s episode of Subscriptions: Scaled, we speak with Jesus Luzardo, Vice President and Head of Global Partnerships and International Sales at Vindicia.

In the episode, we learn everything from how the bundling trends in the subscription industry work to the challenges of providing a successful subscription model.

Keep reading to learn more about the episode.

Vindicia

Vindicia is a worldwide leader in subscription management and recurring revenue. The company provides its clients with more recurring revenue and customer data, improved insights, and greater value throughout the subscriber life cycle.

Jesus starts the podcast by discussing how Vindicia works and his role at the company. Vindicia became part of Amdocs multinational software company a few years ago, and we also learn about this partnership.

Bundling

We discuss the trend of bundling in the subscriptions industry. This refers to the selling of different items or services together as a package.

Organic Bundle

Jesus explains that today there are three different types of bundles. One is the organic bundle, which is when a company has multiple offerings. With these products, they can create a bundle of different services to upsell their offerings.

This is a common type of subscription model among companies.

Partnership Bundle

Then there’s the partnership bundle. This is when two companies on a subscription model offer their services in a bundle to create more value for the consumer. 

Jesus explains that if you’re going to offer a partnership bundle, you need to have the right technology and platform in place. Otherwise, it’s not scalable.

The example Jesus gives of a partnership subscription would be if Peloton partnered up with LA Fitness, or any of the larger gym memberships worldwide. 

Jesus explains that while everybody was working out from home during the pandemic, Peloton grew significantly. But now that everybody's starting to go out again, people are keen to go to the gym to work out. This means Peloton might have some challenges with retention.

By teaming Peloton up with a big gym brand for a combined type of membership, both brands can benefit. For example, if someone were to buy a Peloton product, they could receive a reduced discount membership at LA Fitness.

Super Aggregation Model

The last type of bundle is super aggregation. This is a subscription model that TV operators are adopting to add more relevant content and value for their consumers.

Super aggregation is defined as combining streaming content and linear channels into a consolidated TV experience. 

The Challenges of the Subscription Model

Another topic of conversation is that many different types of companies are currently moving toward the subscription model without much experience. Jesus shares what he sees many brands lacking or overlooking when they try to make this move.

Technical Integration

When it comes to subscription models like partnerships and super aggregation, one challenge is technical integration. When you begin integrating multiple apps and subscription services, it becomes complex. It becomes an ecosystem, and maintaining, aggregating, and expanding it becomes challenging.

Jesus explains that technical integration needs to be addressed carefully to ensure that an integrated subscription is something you can scale. Brands should also consider the customer, as all the services need to be easy to access, discover, use, and pay for.

Engagement

Another issue is that many brands lack an understanding of what it takes to keep consumers engaged.

Jesus gives the example of the publishing industry. Newspapers have been using the subscription model for years and understand it well. They started the migration to digital several years back.

However, around 50% of the digital newspaper subscriptions in the US are left in the first four months. So, even if the acquisition cost is low, losing so many subscribers after four months isn’t good.

The challenge in this situation is around content. Many people may sign up for the newspaper because they are interested in a particular story. But unless they continue to see interesting and relevant content, they’re going to leave and find another publication that serves their needs.

Jesus refers to this as the serial subscriber. This is the type of subscriber who signs up to HBO Max because there's a new season of Game of Thrones. But once the season is finished, they cancel the subscription and look for a new TV subscription to watch a new show.

Later in the episode, Jesus also shares the markets he believes are suitable for subscription, such as those that already have the proper payments infrastructure.

Retaining Customers

Towards the end of the episode, Jesus discusses some ways to retain subscribed customers. 

Maintaining Engagement

Jesus explains that retaining customers is about maintaining engagement with consumers, keeping a pulse on how they use a subscription, and constantly offering them ways to improve their experience.

Every time you notice a lack of usage, Jesus recommends reaching out to these customers and offering promotions and other ways to keep them engaged. 

Recovering Failed Recurring Payments

Jesus also talks about recovering failing recurrent payments. According to Visa, 23.5% of their recurrent payments fail each year.

What Vindicia does for their merchants is provide a service that allows them to heal failed transactions. The service uses algorithms, techniques, and machine learning AI to do this. The company can recover between 15 to 50% of those failed payments, depending on the sophistication of the tech the merchants already have.

Jesus explains that what’s important is that Vindicia not only recovers the payment but does it in a way that helps the merchant avoid contacting the consumer. The merchant doesn’t have to call them requesting a new payment method, which can be disruptive.

The issue is that some merchants reach out to a customer, only to hear that they’re not using the subscription frequently and would like to cancel. The goal is to try and avoid that interaction. Vindicia can heal the payment without that interaction occurring.

Instead, Vindicia helps prolong the consumer life cycle because that client was never meant to cancel their subscription. It was just a technical error in the payment process.

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