If you can make a subscription model work for your eCommerce business, what’s not to like? Subscriptions can deliver more predictable revenue, more opportunities to upsell or cross-sell, and higher customer lifetime value (LTV). We work with many brands that ask us about subscriptions and how to integrate a subscription platform like ReCharge into their Shopify or Shopify Plus stores. We think subscriptions can be an exciting way to grow an eCommerce business, and have seen the most success with replenishment goods, like razors and vitamins, and curated items, like fashion and beauty boxes.
If a subscription model does make sense for your business, adhering to some best practices can help you build and optimize subscription retention. No matter your subscription type, including replenishment, curation or special/members-only access, these retention strategies can help make subscriptions a great experience for customers while boosting revenue for your business.
Put the customer in the driver’s seat
A perceived (or actual) lack of flexibility is a big reason why customers don’t sign up or ultimately drop subscriptions. McKinsey reported that only 55% of consumers that consider a service sign up for a subscription. And even when consumers get on board, more than a third of consumers who subscribe cancel in less than three months and more than half cancel within six. To increase subscription conversion and retention, we recommend focusing on several moments in the customer experience/journey where you should make it clear that consumers have choice and are in control of their subscription options.
- Nudge, but don’t coerce: Consumers like a good deal, but don’t want to feel like they’re being pressured. Therefore, on the product description page, make sure the subscription discount is clear, highlighting what the savings are. It should be easy to choose either a one-time purchase or a subscription.
- Make it easy to cancel: This sounds counterintuitive, but no one likes to sign up for a service if they fear they’ll be stuck with it forever. A good place to add a callout about easy subscription cancellation is near the “buy” button on the product page.
- Offer multiple levels: It’s smart to do research to understand the range of frequency options that make sense for your subscription service. For example, if a customer feels they are regularly getting too much product or not enough, they won’t feel like they’re deriving value from the service and may cancel. One of the most effective retention strategies is to make it intuitive for consumers to choose what category or delivery frequency they need when they sign up.
- Enable ongoing adjustments: The only constant is change – so make it easy for customers to adjust quantities, products, delivery timing and more whenever they need to. Consider improving the user experience of your subscription customer portal to improve retention. Customers also appreciate timely reminders that a delivery is coming up and what options they have to tweak it.
Make it personal
Subscribers have made a commitment to you; you have to make a commitment to them to understand their preferences and make them feel catered to in your communications and services. In fact, McKinsey reported that 28% of consumers indicated a personalized experience was the most important reason for sticking with a subscription.
The good news is, the longer your relationship with a customer, the more you’ll know about his/her preferences. Leverage this data to segment customers to provide them with curated product recommendations and content they’ll appreciate – via the communication channel they prefer, such as email and/or SMS. Also, by proactively communicating information like when products are expected to ship and arrive, if the delivery needs a signature, etc. and allowing them to make changes, you are signaling that your subscription service is designed to conveniently fit their life, not disrupt it.
Develop an upsell and cross-sell strategy
Subscriptions provide a prime opportunity to upsell or cross-sell existing customers. If done correctly, it’s not only part of your retention strategies to build up subscriptions to increase revenue, but also strengthen and personalize the customer relationship. Customers appreciate when companies recommend additional products they think they’ll like, or improve the customer experience, for example, by offering a higher level of service.
Keep it fresh
Subscriptions generally are seen as an addition to, not a substitution for regular shopping habits. Research shows that subscriptions have not yet significantly changed shopper behavior, with fewer than 9% of subscribers reporting they made changes to their shopping habits after signing up for a service. And just 8% of consumers said they planned to do more shopping via subscriptions – although subscriptions are still more popular for shopping than other channels including social media and voice-activated assistants like Google Home.
Therefore, increasing retention rates depends heavily on keeping your offerings exciting and fresh. One way to do this is to make it easy to try different colors/flavors/scents of the products customers subscribe to. The element of surprise also goes a long way to enhance subscriptions, so consider including free and curated samples of other products in the box from time to time.
Keep the lines of communication open
Yes, some customers inevitably will cancel, even when you implement the multiple retention strategies described above. But you can learn from your cancelling customers and even entice them back by asking them why and offering ways to fix any issues. For example, if a customer feels they are getting too much product, make sure they know they can easily adjust the quantity and frequency. For customers who are bored with a product, offer a discount and a recommendation for a different one. Don’t assume customers know all the ins-and-outs of your offerings; make sure you give them the information they need to potentially address their issues and then let them decide.
Eliminate recurring payments hiccups
This seems obvious, but it’s still a common problem. As much as 40% of churn may be involuntary – that is, caused by failed payments due to expired or canceled credit and debit cards. Not only does this hurt your bottom line, but it can also damage customer relationships when customers don’t receive their expected shipment or are locked out of their accounts. By keeping track of expiration dates and other issues and proactively contacting customers via automated emails, you can avoid payment issues before they happen and keep everyone happy.
Grow your business with subscriptions
Ready to launch your subscription service and optimize customer retention? We can help ensure you wow customers from the get-go and continue to provide an engaging customer experience that helps prevent churn and retains subscribers over the long term.