It is a truth universally acknowledged that it costs less to keep a customer than acquire a new one.
But lately, retailers have been faced with an increasingly common hurdle: they are expected to absorb the cost of customer acquisition, only to lose customer long term value to marketplaces like Amazon.
In response, retailers have begun implementing recurring revenue programs to better retain their customers. Those programs — especially ones that leverage data science — are an opportunity to monetize retailers’ investment in CRM and loyalty programs and contribute to incremental revenue growth in a significant way.
Ordergroove commissioned NAPCO Research to survey retailers about the current and future role of recurring revenue programs to their businesses; respondents were from a mix of company sizes ranging from $100 million to over $1 billion.
The results, in short, show that recurring revenue programs have become integral to success in this increasingly competitive retail landscape.
The Bottom Line for Retail
The financial edge offered by recurring revenue programs is top of mind for retail.
- 61% of those surveyed cited the greater profitability that comes from these programs as a significant benefit, while 67% point to greater revenue.
- 54% of retailers said they expect “significant growth” in revenue from recurring customer purchases in 2019 and beyond.
Retailers aren’t the only ones embracing Relationship Commerce; consumers are fans as well.
- 54% of retailers reported customer adoption of programs that drive relationships has “increased significantly.” Another 39% agreed that it has “increased somewhat.”
- 86% of the retailers surveyed reported that their subscription customers are “more satisfied” than non-subscription customers, with 49% being “significantly more satisfied.”
It’s the Future
Recurring revenue programs have become the new normal for retailers.
- 65% of retailers said they already offer subscription programs. Of those who don’t, 22% report they are considering adding them in 2019.
To learn more about the how recurring revenue programs are changing retail, download the full results of Ordergroove’s survey right here.