Sales strategies

How to use subscriptions to boost your revenue

- May 22, 2024 3 MIN READ
a woman unpacks a subscription meal box
In an era of waning customer loyalty and tighter consumer spending, eCommerce businesses are constantly seeking innovative strategies to drive sustainable growth. This has led to the emergence of subscription models across almost every major industry — from meal kits to beauty, and more — offering benefits such as reliable recurring revenue and enhanced customer retention. Shaun Broughton, Managing Director, APAC at Shopify explains why you should get on board.A recent report by IAB Australia found that nearly a quarter of online shoppers subscribe to a product delivery service, reporting convenience as their major driver. However, not all subscription offerings are immediately successful. To succeed in this space, retailers must have a deep understanding of their customer base and carefully tailor their subscription offering to meet their specific needs and preferences. Additionally, the perceived benefits of the subscription must consistently outweigh the cost for consumers to justify the ongoing commitment.

Here are four tactical tips to help retailers build and maximise a successful subscription offering.

Let customer data guide the way

Like any new business initiative, the decision to add a subscription model should be guided by data. There are a couple of different ways that data can be used to inform subscription offerings. Some retailers may choose to segment customers by characteristics and purchasing behaviours, and then tailor subscription offerings to resonate with each customer’s preferences, needs, and purchasing behaviours.

Alternatively, retailers can start by identifying popular products and products with a high purchase frequency, and use this information to create a replenishment-style subscription offering. This type of subscription appeals to heavy-users of a particular product who would benefit from the convenience of a subscription.

Play into convenience

Many customers are drawn to subscriptions for the convenience of having their favourite products delivered without the hassle of frequent reordering or shopping trips. This desire for convenience extends to the way that a customer can manage their subscription. Therefore retailers must ensure that customers can update and manage their subscription with minimal friction.

At a minimum, customers should have the flexibility to modify their subscription orders at any time that suits them. For example, customers of Shopify merchant Who Gives a Crap can log into their online account and easily pause or delay orders if they already have enough of the product on hand.

More strategically, retailers can amplify convenience by offering personalised product recommendations based on purchase history or buying patterns of similar customer segments. Preempting customer needs by providing targeted upsells or cross-sells can both streamline the buyer journey and help retailers boost sales.

Reward subscribers for their loyalty

With so many subscription offerings now on the market, weaving additional value into the subscription can help to prevent customer churn. Retailers may choose to offer small discounts or gifts with purchase. However, there are also plenty of ways retailers can add value without cutting into profits too much.

For example, a wine retailer might offer free wine-tasting masterclasses, complimentary recipes, or exclusive access to new release wines as part of their subscription offering. Benefits like these strengthen the customer’s perceived value of the subscription and help to foster stronger relationships, thereby prolonging loyalty.

Keep an eye on churn

Gaining new subscribers is one thing, but keeping them is another. According to IAB Australia’s research, over half of shoppers who previously subscribed to product delivery services are no longer subscribed, with most reporting they did not want to be locked into a recurring purchase.

To ensure satisfied customers and ongoing subscriptions, retailers must closely monitor their metrics. Being aware of the behaviours customers exhibit before cancelling allows retailers to implement tactics to mitigate the risk of churn. For example, retailers may notice that customers with reduced usage and decreased login frequency are more likely to cancel. This could prompt re-engagement tactics such as a “we miss you” or “what’s new” email.

While the benefits of subscription offerings are clear to retailers, getting customers to commit long-term requires a thoughtful, strategic approach. By embracing these tactics, retailers can enhance the value proposition of their subscriptions, ensuring high uptake and loyalty that safeguards against the threat of new entrants.

This post first appeared on Kochie’s Business Builders. You can read the original here.

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