Empathy and Adaptability in challenging markets

It’s confounding and even a bit frustrating when growth slows in spite of all your best efforts, “how can this be improved when we’re already using all the best practices?”

We often hear this sentiment from subscription product teams that have delivered strong growth but now face challenges in acquisition, engagement, and churn, that are suppressing net growth. Many subscription, membership and loyalty products are now dealing with a (much) lesser version of the market conditions that crushed gyms, movies, fashion, travel and more during the pandemic. So how can you use this market cycle to build for sustainability?

Through many market cycles up and down, and from new product launches to mature product optimization, what we’ve learned is that sustainable subscription growth boils down to two priorities and how well they’re practiced - empathy & adaptability.

💜 Empathy is truly working to understand your customers by their discrete differences, and the ways you can improve their lives with your product. Without customer empathy, it's difficult to build and maintain customer loyalty.
🐪 Adaptability isn’t responding to change, but constantly testing variations that allow you to thrive in the face of change — be it customer behaviors attitudes, or market conditions. Without business adaptability, subscription products can quickly become irrelevant.

(Why the camel emoji for adaptability, you ask? Because I love this HBR article about startup culture and unicorns vs camels, wherein camels represent “valuable lessons on how to survive and grow in adverse conditions. They do this with three strategies in mind: they execute balanced growth; they take a long-term outlook; and they weave diversification into the business model.”)

Every market change is an opportunity to adapt and move ahead of those less capable of doing so, only if you’re understanding how to better solve the problems of your customers and are willing to try new things. Many aren’t understanding or willing, though they may be frustrated with the present challenges, they’re stuck. Now’s not the time to be stuck.

Teams responsible for new products should ask yourselves:

Do you understand customer preferences?
Customer empathy can help understand what customers like and dislike about the current products or services. This information can then inform experimentation efforts aimed at testing new product or service features that align with customer preferences.
Are you collecting feedback?
Empathetic companies are more likely to actively seek out customer feedback, whether through surveys, focus groups, or other methods. This feedback can then inform experimentation efforts aimed at improving existing products or services or developing new ones.

Teams responsible for mature products should ask yourselves:

Are you testing institutional assumptions?
Most companies have assumptions about what their customers want or need, but these assumptions may not be accurate in the current economic climate. By using experimentation to test these assumptions, companies can gain valuable insights into what is and isn't resonating with customers right now. This information can then inform product development and experimentation efforts aimed at improving customer acquisition, engagement, and retention.
Are you adapting to changing customer behaviors?
The current economic climate may be causing subscribers to change their behaviors and preferences. By being empathetic to customers and understanding these changes, subscription product companies can adapt their offerings to better meet customer needs. Experimentation can be used to test these adaptations and ensure that they are effective in driving growth.

You’re probably very familiar with how Netflix used empathy to fill a market gap (movie rental logistics) and how they’ve adapted to their customer’s preferences to continue to grow. Likewise, Peloton showed exceptional customer empathy by creating a community around its products, offering live and on-demand fitness classes with a range of social features that allow users to connect and compete with each other. But more recently:

ChatGPT was created as part of OpenAI's efforts to develop advanced language models that can understand natural language and generate human-like responses to various prompts and questions. The primary goal is to provide an advanced conversational AI that can assist with a wide range of tasks, including answering questions, generating text, and providing recommendations, among others.

And in 2020, Intuit conducted research that led to the development of a new feature in QuickBooks that allows users to track cash flow more easily. This feature resulted in a 25% increase in new customers and a 40% increase in revenue for the company.

Fun fact: I experimented with ChatGPT to help with this newsletter and it completely made up that last stat — an AI “hallucination”. Experimentation leads to learning even more so than outright wins…

No matter where you are on the product lifecycle curve or experimentation maturity scale, a greater commitment to customer empathy and adaptability in your efforts is most likely to contribute to more sustainable growth in this challenging market.

If you’re interested to know more about how House of Kaizen helps create more sustainable growth for top recurring revenue products, check out the workshop on our Sustainable Growth Framework coming up in a couple weeks.

Thanks
- Matt & 🤖