In the business arena, recurring revenue is a highly coveted outcome. It’s evident in Apple’s transformation into a services-centric company, boasting 20% earnings from services like Apple TV+, Apple Music, and iCloud. With customer acquisition costs surging by over 200% in the last decade, businesses are emphasizing the stability of income streams. This shift magnifies the challenge for subscription-based enterprises to not only expand their customer base but to maintain it. Addressing customer attrition, or churn, is critical to this model.
A Danish startup named Subsets, established in 2022, addresses this need through an AI-driven solution promoting subscriber retention within the subscription sector.
Explainable AI in Retention
Originating from Copenhagen, Subsets employs “explainable AI” to predict potential customer loss and provides ‘retention experiments’ aimed at retaining subscribers. Explainable AI refers to AI solutions that render transparent insights and decisions, enhancing AI’s trustworthiness and tackling the notorious “black box” issue inherent with AI technology.
Having completed six months on the market, Subsets has succeeded in securing significant clients, including The Athletic owned by the New York Times and the Danish publication Børsen. Following its participation in the Y Combinator’s Summer ’23 program, Subsets has secured $1.65 million in pre-seed funding spearheaded by Upfin and Y Combinator, propelling its initial surge of success.
Focusing on the Media Sector
Subsets, suitable for a variety of subscription services, is currently honing in on digital media, according to Co-founder and CEO, Martin Johnsen. While its initial application focuses on digital publishing and related industries, Subsets has potential for broader application including sectors like mobility and food delivery services as digitalization progresses.
Subsets integrates with internal systems like CRM and billing to collect subscriber data for behavior analysis. It then presents this data visually and in natural language to facilitate understanding and action by non-technical teams.
Subsets: Audience discovery Image Credits: Subsets
Via Subsets, teams can test various retention strategies on customer segments. Successful strategies from these “experiments” are systematized to automate effective retention efforts.
Subsets: Experiment Image Credits: Subsets
Subsets’ technology, born from Johnsen’s mathematical background, utilizes gradient-boosting and temporal sequencing to predict churn, which it then makes intelligible through Musk’s xAI frameworks.
While independent from OpenAI’s models, Johnsen indicates an interest in integrating similar underlying models akin to ChatGPT in future Subsets functionalities.
Subsets’ growth benefits from strategic networks like YC, which has invested in several AI-reliant companies, and Subsets’ involvement with YC has opened doors for valuable connections, including with YC alumni such as the Athletic.
Subsets’ funding round witnessed contributions from Upfin, YC, and various institutional and individual investors, marking a robust start for the company.
FAQs about Subsets and Retention Experiments
- What is Subsets?
Subsets is a Danish startup providing an AI-platform to subscription-based businesses, aimed at identifying potential customer churn and implementing effective retention strategies.
- What is explainable AI?
Explainable AI is an approach that allows AI systems to provide clear, understandable explanations for the decisions and insights they produce, which is crucial for trust and transparency in AI applications.
- Who has invested in Subsets?
Subsets has secured funding from venture capital firms such as Upfin and Y Combinator, as well as other institutional and angel investors.
- How does Subsets integrate with other systems?
Subsets integrates with a company’s internal systems like CRM, CMS, billing, and data warehouse systems to access subscriber data for analysis and the implementation of retention strategies.
- Can Subsets be used for any subscription business?
While Subsets is currently focusing on the digital media sector, its underlying technology has the potential to be applied to a wide range of subscription-based businesses in various industries.
Conclusion
Subsets is paving the way for subscription businesses to optimize their retention strategies using AI. With its ability to seamlessly integrate with existing systems and provide actionable insights through explainable AI, Subsets is honing in on reducing churn—a critical factor in sustaining a dependable revenue stream. The company’s early achievements and recent funding position it for significant growth in the subscription economy. Through Subsets, businesses can tap into the power of AI to retain their valued subscribers and, ultimately, secure their financial future.
