Article

Sruthi Narayanan
Sruthi Narayanan 9 February 2017
Categories B2C, Ecommerce

3 Ways To Retain Customers In Subscription Retail

Subscription marketers need to be extra proactive beyond the acquisition stage in order to make sure their customers are happy – and, more importantly, that they’re aware of any points of friction with enough time to fix them.

Right now, the popularity of the subscription-box industry is at a peak. Internet Retailer reported that subscription-based retail has grown by nearly 3000% in the past 3 years, and is expected to continue climbing well into 2017. But unfortunately, many subscription retailers still struggle with retaining customers long-term – some brands report churn rates as high as 14%, and research by Shorr revealed the average churn rate for subscription customers to be around 4 months.

It may not be immediately obvious, but one of the biggest differentiators between the subscription industry and traditional per-purchase retail is the “passive” nature of subscription-based retail. In traditional ecommerce, every click a customer makes while browsing your site and discovering your products can be mined as personalization data – it’s not only easier to capture signals of intent, it’s easier to identify signs of disengagement or drop off before it’s too late. But subscription marketers have significantly more trouble understanding when a customer is unhappy until it’s too late to save the relationship – resulting in too many “What went wrong?” surveys at or after the cancellation stage.

Subscription marketers need to be extra proactive beyond the acquisition stage in order to make sure their customers are happy – and, more importantly, that they’re aware of any points of friction with enough time to fix them. From our research on the marketing strategies of top brands, we’ve identified four ways that subscription retailers are actively working to maximize customer lifetime value. To retain customers long-term, marketers should consider:

1. Rewarding customers for referring friends

Several beauty boxes we looked at offer points towards future purchases for each new prospect that a customer refers, and a month-to-month sock subscription gives its customers a free pair of socks for each new shopper they bring the brand. Offering customers a reward for referring their friends allows you to lower your costs of acquisition by reaching out to people in your existing customers’ networks, while encouraging them to recommend your product to their friends and family.

2. Incentivizing longer subscriptions

A retailer that offers healthy and organic samples of food each month gives new customers the option to sign up for a six-month plan or a per-year plan, where customers agree to purchase several boxes up front but at a much lower per-box rate. And a popular snackbox offers new customers a coupon off of their first purchase and their fifth purchase – provided, of course, that they make the subsequent purchases in between 😉 When you can offer an incentive for customers to continue with their subscription, you let them know that you appreciate their business, and significantly increase the likelihood that they’ll be willing to stay on long-term.

3. Offering add-on items to customize each delivery

A subscription retailer that delivers monthly razors gives customers the option of adding various shaving accessories – shaving cream, aftershave, and hair gel – to each box for a small upcharge, and a dog-owner subscription offers to include a $9 premium toy in each box if a subscriber wants it. Beyond serving to increase the purchase’s average order value, offering add-on items puts some of the control back in your customer’s hands and provides shoppers with an opportunity to personalize their shopping experience.

From the point of view of the customer, per-purchase retail is proactive in a way that subscription retail isn’t, so marketers need to find creative ways to understand the health of the relationship of passive relationships and offer solutions to fix any problems or respond to any signals of disengagement. And if you’re able to retain existing subscribers with a customer-centric experience, the returns on investment will be huge – because each loyal subscriber is essentially a dependable and constant stream of revenue for your company. Even if a customer has signed on to receive a monthly subscription, there’s no guarantee that they’ll stay with your brand without the right kind of nurturing – but if you can determine ways to engage with your customers and help them meet their needs, you stand a much better chance of retaining them.

This post originally appeared on the Zaius Blog - to learn more about how you can actively drive customer retention, visit our website or reach out to us directly at insights@zaius.com.

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