How to optimize your subscription program for retention (and what’s next)
David Cross |
Editor’s note: This article is based on an episode of eCommerce Fastlane featuring Ordergroove CEO Greg Alvo.
Subscription programs are having a strong moment right now. But more demand means more competition. Once you’ve brought customers to your service, you still have to retain them.
The best way to keep your customers — in addition to offering a great product or service — is to make managing their subscription as easy as possible. On top of that, you need to understand what they want from you, whether that’s savings or novelty, and the most effective way to consistently deliver on it.
How to Optimize Your Subscription Program to Retain Customers
The success of your subscription program depends on your ability to find customers, bring them on board, and keep them coming back. There is no one-size-fits-all approach to doing that, but there are a few key elements that should matter to any subscription program.
Understand the product or service you’re offering
Understanding your customers and the experiences they want with your product is important for retention. For example, customers who sign up for toiletry items expect convenience and savings. They probably don’t want curated toothpaste and cotton swabs.
A “wine of the month” club, on the other hand, is selling novelty. Customers expect to be surprised and delighted by every order.
The three main types of subscription programs are:
- Subscribe and save: Delivers essentials, e.g., The Art of Shaving
- Access/Membership: Gives customers additional perks when using a service, e.g., Amazon Prime
- Subscription/Curation: Introduces customers to new products around a theme that they’re interested in, e.g., Universal Yums
An easy-to-navigate subscriber portal
At this point, an easy-to-use subscriber interface is not a nice-to-have feature: it’s a must-have, especially in competitive niches. The harder it is for a customer to use your portal to get the service they want, the more likely they are to drop out and go to one of your competitors.
Your portal should enable customers to:
- Easily navigate their accounts page and update personal information
- Know when their subscriptions are coming
- Understand how billing works, including when they will be billed
- Make any changes they need to, including adding or removing products in an order
A big problem subscription programs face is declined cards. The card the customer signed up with may have expired, hit its credit limit, or been lost and replaced.
This is a type of involuntary attrition: The customer wants to use the service, but an external factor is creating a challenge. Nevertheless, they might drop out for good if you don’t act.
If a card has expired, send an email linking to the page where they can add a new one. If the card was declined but is still active, try charging it again in the middle or end of the month, when people are most likely to get paid.
Incentives that suit your customers
Let your service dictate your offers: Don’t assume everyone is equally motivated by a discount.
Customers using one type of subscription program will likely respond better to certain incentives than those using a different kind. For example, someone who subscribes to a monthly bulk order of cat food was probably attracted by the savings and the convenience. That means they’ll likely respond well to a discount.
On the other hand, someone with a subscription to receive a box of high-end beauty products every month is less interested in saving than they are in experiencing something new. They might be better motivated by samples.
When thinking about offers, consider your business targets. If your main goal right now is to bring more customers into the pipeline, a first-time user discount or 10% off for introducing a friend could be effective. But if you’re more focused on long-term customer retainment, a loyalty program is a better bet.
Use data to make decisions
The best way to predict customer behavior is by monitoring and asking real customers how they use your service and why, and what could be better.
Even the cancellation process is a great opportunity to get feedback. Did they find a better deal or product elsewhere? Did something in their life change that meant they no longer needed their subscription? Did they end up with more than they needed? This information might help you assess issues with product-market fit, and ultimately help you retain other customers.
Pro tip: If a customer wants to unsubscribe because of overstock, a simple way to keep them signed up is to give them the option to pause their order instead of canceling. Include a reinstatement date to make rejoining even easier.
If you haven’t launched yet and you’re not sure how your customers will use your products or service, take the plunge and figure it out on the way. You can theorize your way into anxiety before you’ve even got one customer, but the only way to get hard data is by starting, monitoring, and adapting as you go.
Anticipate and counter the weak links in your service that are most likely to lead to customers canceling their subscriptions. This is one area where artificial intelligence (AI) is particularly useful, as computers can spot patterns humans might miss.
For example, if the first couple of boxes include premium content (with thin margins) and the third is on the mediocre side, you risk losing your customers with a less-than-impressive fourth box. If that’s a pattern the AI picks up on, you know that you can save money on the third box, but you’d better make sure the next one is strong.
Where the Market Is Heading
Subscription-based products and services experienced a resurgence during the pandemic. Consumer demand combined with ever-improving technology is opening up exciting possibilities for the future of the space.
Over the last few years, eCommerce sites have done an impressive job of cutting the time between browsing, adding to cart, and purchasing. And the next iteration of that is using AI to predict what people will need before they even think to order it — and ordering it for them.
This is particularly relevant to subscription programs, which by their nature are vested with more trust than other eCommerce sites. Customers hand over their payment and contact details in advance, and trust subscription programs to deliver what they say they will, when they say they will.
Anticipatory shopping is especially applicable to the subscribe and save model, since it’s the ultimate convenience. But the ability to deliver on customers’ needs and wants before they even think to order certainly has other benefits across subscription programs.
Personalize the experience
Easy interfaces, streamlined payments, and fast shipping are becoming expected rather than appreciated. In this environment, the companies that will start to stand out will be those that can offer the most personalized subscriptions.
Customers are more loyal to brands they believe understand them, and with which they feel a personal connection. Soon, the most successful subscription services will be those that can make customers feel like they’re getting a unique selection of products and services, specially chosen by experts just for them. You can do this by:
- Getting more detail than you really need in your initial survey. Even if you only have three or four SKUs, ask 10 questions so the customer feels like you’re making a deeply informed decision based on their personal information.
- Asking for customer feedback so you can better serve them in the future.
- Upselling products that complement the ones they’re already buying. For example, if they subscribe to a tea sampling box and favor a certain blend, offer them the chance to buy a full box.
- Personalizing emails with birthday or anniversary offers.
Texting is back in a big way. As eCommerce interfaces get more complicated, texting feels less fussy to people who want a quick and easy interaction with a company.
At the moment, SMS is largely limited to marketing and possibly customer service. But in the future, expect to be able to make purchases over text. Again, the smoother the process between browsing and paying, the better for you.