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Spotify's strategy of allowing customers to downgrade to a cheaper plan contributes to its growth by reducing churn rate. This strategy is effective in retaining customers who might otherwise leave due to cost concerns. By offering a cheaper plan, Spotify ensures that these customers remain on the platform, albeit at a lower price point. This approach not only retains users but also maintains their engagement with the platform, which can lead to longer-term loyalty and potential upselling opportunities in the future.
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Spotify grew to 140 million active users and 70 million subscribers in less than ten years while simultaneously reducing churn to just 5.1% in 2017.It offered an excellent Customer Experience (Path1) through curated playlists and personalized recommendations to make customers stay. Interestingly, Spotify offers customers the ability to "downgrade" to a cheaper plan. While this may sound counterintuitive, it's an effective strategy to prevent churn by getting ahead of customers who might leave because they wish to pay less. The company has an extraordinary focus on scaling its excellent customer support along with its growing customer base. Spotify allows Artists to sell merchandise without taking a fee to increase artist and customer loyalty to the platform.
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How do you find the right strategy to grow your organization in a rapidly changing business environment? "Growth IQ" distills decades of tested strate...
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