On average, 30% of revenue is driven from subscriptions for brands that offer it – that’s huge. In an era of reducing margins, spiraling CAC, and an uncertain economic environment – subscriptions are a strategic lever for brands to fortify their business with.
Brands offering subscriptions grew 26% faster and were 14% more profitable than those that didn’t – so including a subscription strategy for your brand is a no brainer. So, what are the key levers one must consider in order to launch a successful subscription strategy.
Key Levers for a Successful Subscription Strategy:
i. Ensure the product fits into a regular routine. Consumables such as health and fitness regimes, supplements, and personal care products such as face moisturizers, body soaps,
ii. Launch a special subscription page on your Shopify store.
iii. Educate and inform potential subscription members, on how to subscribe to your subscription program, including.
iv. Help visitors and potential customers understand what’s in it for them!
What you need to be careful of when creating a subscription page?
Fear of committing to subscriptions is a real thing. How do you quell these fears? Here’s how – detailing out the subscription landing page – how it works, how to manage it and its benefits are key to alluding fears. If they cancel, make sure they can understand why. Allow an alternative path to purchase another product or bundle, skip, cancel or gift orders.
Learn more on how to reduce subscription churn for your DTC store here
How could you introduce your subscription offering?
i. Tie your subscription membership program to loyalty!
ii. Introduce your customers to your product portfolio, add samples and share new high value bundles that leverage personalization to match buyer intent!
iii. Launch your subscription program with surprise and delight programs! Research shows that shoppers who are emotionally connected to a brand have 306% higher LTV than customers who are just satisfied with the brand. There is no other powerful tool than surprise to interrupt patterns of daily routine. Learn how when surprise is paired with delight how merchants transform from being mere retailers to a trusted friend. A successful surprise and delight program relies on three main components: good timing, no-strings-attached value and a personal touch. Learn more about how to plan moments of unexpected joy via this Recharge research report here.
iv. Launch leveraging UGC and testimonials – a good example of this is Absolute Collagen sharing customer stories, reminding people to stick to ritual and remind them of the ritual and routine.
v. Introducing Subscription Gift Guides – is a great way to introduce your customers to subscriptions. It is also a great way to expand customer base. Learn more about how to gift your holiday subscriptions here.
vi. Product drops
vii. Free shipping on first X orders
viii. Giving free access to consultation and coaching works well for wellness and diagnostic brands
ix. Adding some form of access to personalized access from the experts.
Learn more on why holiday subscription gift guides matter for ecommerce growth here
Some great examples of brands that offer subscriptions are as below:
a) Who Gives a Crap:
What they offer - Who Gives a Crap delivers toilet paper to your home so you don’t have to carry it all the way to your place.
Target market - the company targets Australian households, providing free shipping to most parts of the country.
Positioning - the company established itself as an environmentally friendly toilet paper with a mission to save the world.
It is made from 100% recycled post-consumer waste such as used exercise books and worksheets that the company gets from local schools.
Who Gives a Crap also comes with a social mission. It uses 50% of its profits to build toilets in the developing world.
They offer the option of a one-time order (24 or 48 double length rolls) or subscribing so you never run out of toilet paper. Delivery options are available every 6/12/16 weeks. One can cancel at any time. Cancellation is available anytime and with a 100% refund.
b) Pet Circle:
What they offer - an all-in-one stop shop for your pet. Here, you can buy everything from food, toys, beds, grooming and health products.
Pet Circle allows you to buy each item as a separate package or choose an auto-delivery option where products get delivered at the desired frequency.
The company encourages people to switch to subscriptions by offering a 10% discount for the first month of auto-delivery. Customers can choose between delivery options such as 1–26 weeks. The target market was pet owners in Australia.
c) Amazon Subscribe and Save:
What they offer - with Subscribe and Save, you can get your favourite products delivered from Amazon once per month to your door. Target market - customers who frequently purchase the same product and want to save time by automating the ordering process.
Positioning - offered as an additional Amazon service. subscribing clients get additional discounts on their order — up to 15%. They also get free shipping on each subscription and the ability to cancel at any time. You can receive your items every 1–6 months, and you can change this frequency at any time.
Email reminders are sent to remind customers before each order. With this service and other services like Amazon Prime, this company has managed to increase sales and their customer retention rate by building a $4 billion subscription business.
d) Swanson Vitamins:
What they offer - swansonvitamins sells natural health and wellness products, including health foods, dietary supplements such as vitamins, minerals, herbs, and natural personal care products.
Target market - people that care about their health and want to boost their immune system.
Positioning - Swanson positions itself as the marketplace where you can save money while purchasing supplements without sacrificing quality.
How do they take advantage of the subscription model? - as an addition to their one-time purchases, Swanson Vitamins created a program called My Auto Delivery. With this new program, customers can automatically receive customized packages of supplements and vitamins based on their desired frequency.
The subscription service saves clients time and ensures that they will never run out of supplements because they forgot to order.
Additionally, they are motivated by a 10% discount on all Swanson brand products and free shipping for $50+ orders.
Learn more about Smarte Digital Inc’s lifecycle marketing subscription services here
Some Big Subscription Mistakes To be Wary of:
i. Poor backend infrastructure: If it’s hard for a customer to skip shipments, swap products, or cancel their subscription due to a poor UI experience, it’s a given you’d likely see higher churning than otherwise. This will result in poor repeat purchase rates, high customer service tickets and greater returns.
ii. Bad reporting: If you’re doing reporting the same way you were before a subscription program, you’re going to miss key insights. You should at least be segmenting reporting by new customers vs all one-time purchaser’s vs subscribers.
iii. Not diving into subscriber acquisition data. If you tag your customers right on the way in, you should be able to understand where your best subscribers came from, down to specific ad per ad campaign, so you can be sure to keep those insights in mind going forward.
iv. Treating subscribers like a number: Your subscribers are not just a recurring revenue stream for you! Go out of your way to keep them happy with access, content, surprises, etc. Its easy to feel comfortable about growing subscription members, remember its going to be equally important to make your members feel special from onboarding onwards.
v. Non-branded emails and texts. If you’re using Shopify, there’s a good chance your subscription platform sends the emails + texts for upcoming subscriptions. Make sure it’s rebranded and designed to fit your brand personality to provide a seamless experience and reduce dissonance.
vi. Not personalizing emails and SMS flows based on subscription segments: It is critical that one segments and personalizes communication. This can lead to a poor customer experience and subscription churn. Send a personalized email to customers who purchased a product multiple times but are not subscribers. Create exclusivity for active and subscribed customers. Winback cancelled subscription customers. Segment customers active, cancelled or expired subscriptions based on product titles or SKUs in Klaviyo leveraging Recharge.
vii. Trying to get customers to subscribe right away. Most likely, your best subscribers are NOT going to be the ones that subscribed on the first purchase. In my experience, it’s the 2nd or 3rd purchase. Don’t force people into a subscription, by tricking them into it and not educating them enough around the program.
viii. Not monitoring subscriber churn: Just because the industry average for churn in your category is X%, don’t let yourself just be at that average. Your churn might be a biproduct of a broken pipe, not because it’s normal.
Learn more about Smarte Digital Lifecycle Marketing Solutions here.
Best Subscription Software you could leverage:
Treat your subscription customers like VIPs.
Leverage Yotpo’s Subscription Platform data and segmentation features, create targeted SMS and email campaigns to both increase subscribers and make sure your current subscribers get more from your brand.
This subscription data is combined with purchase behaviors, customer attributes, review sentiment, loyalty data, and communication engagement data, so one can create segments that create an impact.
One could also leverage Recharge Subscriptions and their various subscription flows and features on subscription such as active churn recovery which has been a game changer for customer retention. The results are as below:
a)Average active churn attempts saved rate: 11.26%. On average, merchants are able to save an impressive 11.26% of subscribers who indicated that they wanted to cancel their subscription.
b)Consistent monthly active churn saved rate: 10%+ saved rate each month since the availability of the Active Churn Recovery flow in August. These results affirm the sustained effectiveness of Active Churn Recovery in preserving valuable customer relationships.
Increase LTV and AOV with bundles, save time managing your subscriptions and charges by bulk management of subscriptions, increase checkout conversions with direct checkout links, automatically swap products with SKU swap workflows, reduce cancellations by allowing subscribers to pause a subscription, allow pre-paid subscribers to skip an order, gift a skipped shipment besides grow LTV with one click subscription upsells with Klaviyo email flows and save time by managing bundle selections directly.
So, do you have an eCommerce business similar to any of the companies listed above? Do you think you can benefit from the subscription model, as well? How do you plan to do it?
Smarte Digital Inc. is an ecommerce growth and retention marketing agency for modern DTC brands. We are certified agency partners with Klaviyo, Postscript, Attentive, Okendo, Yotpo, Recharge, ReBuy, Pantastic Apps, Social Snowball.io, Disco, PostPilot, Gorgias, Malomo, Triple Whale, Retention.com and Just Uno.
Interested in building a subscription strategy for your DTC store? If yes, we be glad to help you choose the best subscription tech stack for your store. Implement a holistic subscription strategy for increased profitability and predictable cash flow for your brand.
At Smarte Digital Inc. we offer irresistible Q5 holiday offers that will help you and your team get to a winning start in 2024. To know more, book a free 30 min introductory call with us at https://www.smartedigital.com/contact-us, let us explore opportunities to succeed.
