7 Ways to Use AI to Build a Better Subscription

A “membership mindset” is the foundation of growth

Before we dive into the seven ways to use AI to build a better subscription-based businesses (SBB), remember, it’s important to start with a “membership mindset.”

If you want customers to be loyal, to trust you, and to allow you to charge them on a recurring basis, you need to give them something in return — something to earn that trust.

A membership mindset is the way employees feel about the people they serve. It has to do with prioritizing their long-term success over short-term revenue and being focused on helping customers achieve their goals, rather than just buying the product. Every company says it is customer-centric, but the most successful companies have practices for the customer that they adhere to, even if it drives short term loss.

7 Growth Strategies for a Better Subscription-Based Business

Once your SBB is in operation and your forever promise is clear, there are seven steps you can walk through to continue to improve your business model — if you aren’t using AI to accelerate and optimize your efforts, you’re missing out.

1. Organization

Evaluate whether your organization has the structure and metrics to support the long-term success of members. Many subscription businesses overemphasize acquisition instead of engagement and retention, for example, something that I often work to fix with my clients.

Leveraging AI: Implement AI to enhance organizational alignment with member success by analyzing data on member engagement and retention in real-time. AI can identify patterns that predict long-term loyalty and suggest structural adjustments to prioritize these outcomes.

• Actionable Steps:Use AI-driven analytics to measure and optimize member engagement and retention metrics.Apply machine learning to personalize member experiences and increase loyalty.

2. Rethinking the Funnel

Original Text: The traditional sales and marketing funnel is wide at the top, where prospects enter, then narrows as prospects try the product, and narrows even more at the moment of transaction. It may seem counterintuitive, but you don’t want to grow your subscription business at the top of the funnel with broad awareness until you know that the people who subscribe are going to stay.

Leveraging AI: AI can redefine the marketing funnel by predicting which prospects are most likely to become loyal subscribers, allowing for more targeted and efficient marketing strategies.

• Actionable Steps:Deploy AI models to analyze prospect behavior and identify high potential subscribers early in the funnel.Use AI to optimize marketing spend on channels most likely to attract long-term subscribers.

3. Onboarding

Original Text: To make sure you engage the people who sign up, optimize the onboarding process. How new subscribers feel in the first seconds, minutes, and days will determine whether or not they become long-term subscribers.

Leveraging AI: Enhance the onboarding experience with AI by creating personalized onboarding journeys. AI can analyze early subscriber interactions to tailor the onboarding process, ensuring a positive initial experience.

• Actionable Steps:Implement AI to customize onboarding content based on subscriber preferences and behavior.Use AI-driven insights to continuously improve onboarding processes based on subscriber feedback.

4. Pricing

Original Text: The more complicated your pricing, the less your customers will trust you because they aren’t going to understand at a gut level what they’re paying for.

Leveraging AI: Utilize AI for dynamic pricing strategies that are transparent and tailored to individual member usage and value derived. This can help maintain trust while optimizing revenue.

• Actionable Steps:Apply AI models to analyze customer behavior and adjust pricing models to reflect perceived value.Use AI to communicate pricing changes clearly and transparently, maintaining trust.

5. Free(mium)

Original Text: Freemium is appropriate only in three circumstances: a) To teach a new behavior and drive usage up to a point where the customer converts to paid b) When free subscribers recruit other subscribers who may be paid — a viral effect c) When free subscribers are the product for the primary paying customers — like LinkedIn

Leveraging AI: AI can optimize the freemium model by identifying the most effective paths to conversion and enhancing the viral effects of free memberships.

• Actionable Steps:Implement AI to track and analyze the behaviors that lead free users to convert to paid subscriptions.Use AI to personalize invitations and communications from free to potential paid members to enhance viral growth.

6. Customer Success

Original Text: Engagement drives retention and customer success drives engagement. It’s a key functional competency for SBBs.

Leveraging AI: AI-driven predictive analytics can anticipate customer needs and issues before they arise, enabling proactive customer success initiatives.

• Actionable Steps:Use AI tools to monitor customer usage patterns and predict potential points of friction.Implement AI-driven customer success platforms to automate personalized engagement strategies.

7. Technology

Original Text: Every SBB should periodically evaluate new technologies in service of subscription, as they are being released so frequently.

Leveraging AI: Regularly integrate the latest AI technologies to streamline subscription management, enhance customer experiences, and leverage data for strategic decisions.

• Actionable Steps:Adopt AI technologies that reduce friction in the subscription process and increase customer engagement.Utilize AI for deep data analysis to inform strategic decisions and forecast trends.

By incorporating AI across these seven strategic areas, your subscription-based business can significantly enhance its growth trajectory, leveraging technology to deepen customer relationships, optimize operations, and drive sustainable success.