How to choose the right subscription technology
David Cross |
With so many subscription technologies on the market, choosing the right solution or platform can be a daunting task.
In this guide, we’ll walk you through how to make the right decision. We get to the bottom of why you should implement a subscription experience, the types of subscription technologies on the market, and must-have subscription capabilities.
Let’s get started.
Why You Should Use a Subscription Technology
If you’re new to subscriptions, partnering with a subscription technology provider will help you improve your customer lifetime value (CLV) and scale recurring revenue. A subscription technology provider will also greatly decrease the amount of time it takes to launch your experience.
More specifically, if you partner with a subscription platform (more in a moment), you’ll gain access to turnkey capabilities that will further enhance your company’s ability to scale and stand out from your competition.
Types of Subscription Technologies
There are dozens of subscription technologies in the market. The two most common are recurring billing solutions and subscription platforms.
Recurring billing solution
A recurring billing solution is a system that eliminates manual billing, which is often complex and time consuming. With a recurring billing solution, you can easily invoice your customers on a regular basis. Some of these solutions also offer basic portals for customers to manage their subscriptions and provide simple promotions on subscription items.
If you sell a digital product, a recurring billing solution is a good option. However, subscriptions for physical goods are more complicated and require nuanced features and capabilities.
A subscription platform is significantly more advanced than a recurring billing solution. It helps manage all aspects of a subscription-based product, including:
- Subscriber acquisition and checkout: The initial enrollment experience to checkout with a new subscription in which a consumer enters their credit card information to subscribe to a product.
- Billing: Ongoing billing, including dunning efforts.
- Customer portal: Tools that give your subscribers control over their subscription, enabling them to manage their order frequency, products, shipping details, and payment information.
- Subscriber management: Tools that give your team the ability to manage subscribers, customize the subscription experience, and run reporting on program performance.
A subscription platform will enable you to scale faster than recurring billing solutions because the technology focuses on the end-to-end subscription experience. Best-in-class subscription platforms include capabilities that boost enrollment, retention, and average order value.
If you have a homegrown subscription solution, a subscription platform is also a better option than a recurring billing solution. Not only do subscription platforms give you access to the benefits we just mentioned, but they also integrate with other technologies. This will save you resources in the long term and enable you to more easily find the subscription technology stack that’s right for you.
What to Consider When Shopping for a Subscription Platform
While recurring billing solutions have their place in the market, a subscription platform is the right choice for merchants who want a more robust subscription program and better performance. Here are important topics to consider when evaluating subscription platforms.
eCommerce platform integration
The first place to start your search is to find a subscription platform that fully integrates with your eCommerce platform.
Some subscription platforms claim they integrate with popular eCommerce platforms, but in reality, they offer only a partial integration. Pay close attention to whether they integrate with your platform’s checkout.
Subscription platforms that don’t fully integrate with eCommerce platforms often use a “hijacked checkout.” In other words, the subscription platform transfers shoppers to a different site and interface to complete their purchase.
A hijacked checkout creates numerous challenges for merchants that can, and often do, keep subscription programs from being successful.
If you partner with a subscription platform that uses a hijacked checkout, you’ll be forced to maintain two distinct checkouts. This will more than double the amount of work it takes to operate your subscription program.
Other challenges associated with a hijacked checkout:
- Loss of customer conversion tracking and analytics
- Product catalog duplication
- Duplicate or separate payment processors
- Replication of all promotional and marketing programs
- Disjointed consumer experience
A hijacked checkout can also increase the cost of your program in surprising ways. It’s common for subscription platforms that use a hijacked checkout to charge merchants for non-subscription purchases that flow through the checkout.
When evaluating subscription platforms, specifically ask if they fully integrate with your preferred eCommerce platform and if they use an integrated checkout.
One of the primary reasons consumers sign up for a subscription platform is to receive additional value. Typically, this is in the form of a discount. When evaluating a subscription platform, ensure they provide both basic and strategic promotional capabilities. This will enable you to drive greater customer acquisition and subscriber retention.
Here are a few promotional capabilities you’ll want:
- Discounts: This is the most common type of promotion. We’ve found that a 5% discount increases subscription enrollment by 104%.
- Free shipping: As the name implies, free shipping is when a subscriber doesn’t have to pay shipping costs. Normally, merchants couple this incentive with a specific threshold. For instance, a merchant might offer free shipping on orders over $25.
- Subscribe more, save more benefits: This incentive encourages customers to sign up for more subscriptions by offering greater incentives. For example, Ordergroove customer bareMinerals offers a greater discount to their customers for each subscription they sign up for. The beauty brand offers 10% for one subscription, 15% off for two, and 20% for three or more.
- Cross-selling: This capability enables subscribers to add one-time purchases to their recurring order, which drives up average order value. Ordergroove enables this capability through our Instant Upsell feature, which has been shown to increase AOV by up 36%.
In the long term, churn is one of the leading drivers of program performance. The most common reason subscribers give for canceling their subscription is overstock. When evaluating a subscription provider, pay close attention to their retention capabilities.
Your subscription platform should offer:
- A subscription management platform that gives subscribers the option to skip, pause, or change their order frequency easily. The portal should also allow shoppers to quickly cancel their subscription. Cancelation blockers erode trust and will prevent consumers from returning in the future.
- Operational capabilities like the ability to swap out-of-stock items or proactively refreshing credit card information.
Ordergroove takes churn prevention a step further. We use artificial intelligence (AI) to anticipate when a subscriber is at risk of churn due to overstock and send them an email offering them the option to skip their next order. This can reduce churn by as much as 17%.
If you already have a subscription program, pay close attention to a subscription platform’s migration capabilities. Ask questions about their migration subscribers and the resources involved in the process. The last thing you want is to lose valuable customer data.
Your subscription platform should provide tools to help you import your subscription records into their system. For example, Ordergroove offers merchants the ability to dry test their data as many times as needed to ensure seamless import of records on migration day.
Want to know more about switching subscription platforms? Check out our blog post on the topic.
Selecting the wrong subscription platform will hamper your recurring revenue potential. When evaluating providers, focus on subscription platforms instead of recurring billing solutions. With a subscription platform, you’ll gain access to advanced promotion and retention capabilities that set you up for long-term success.