Retention strategy for subscription ecommerce

Subscription Ecommerce

Retention strategy for subscription ecommerce

Charlie Dyer Digital Strategist

The subscription ecommerce market is big. Globally, it’s grown by 100% year-on-year for the past 5 years and is projected to reach $473 billion by 2025 in the US, with the UK expected to grow another 72% by 2022. And that was all pre-Covid, this past year has accelerated the trend even further. The key to a successful subscription business is winning at retention. This post will cover the basics you need to have a robust retention strategy for subscription ecommerce. 

A retention-focused acquisition funnel

Not every customer will keep up with their subscription. It’s unrealistic to expect 100% of them to stay subscribed. But there are things you can do to help retain customers or entice them back if they do leave. You can also leverage their advocacy to keep things growing. 

To help consider the whole subscription user journey, at every level, we work with a different kind of acquisition funnel. 

This acquisition funnel goes one step further than the classic awareness, consideration, conversion funnel that you may have seen before. In this model, we consider how to retain customers once their subscription is active and limit the churn rate. We also think about their potential lifetime value and how referrals can help to bring more customers into the fold.

growth hacking subscription ecommerce

Growth hacking using performance media

You may have heard about growth hacking. This term refers to a series of marketing tactics that are focused on not just sustaining your business, but growing it. 

In the subscription ecommerce world, you need to think differently to a traditional retail model . For example, when developing a performance media strategy, you’ll plan different messages, content and offers for different people, depending on where they’re at in their journey with you, e.g. are they prospects, subscribers, potentially about to drop off or actually big advocates?

Often the challenge isn’t in the acquisition of new customers through your normal conversion-driven campaigns, but actually holding on to them. When you keep hold of them successfully, they’re likely to advocate for you. And when they do this, you’ll start to generate more customers on a referral basis. Consistency of this method will allow you to keep growing.

Minimising churn rate

Prevention is always better than a cure. Especially when it comes to lapsed customers. You need to ensure you’re providing an exceptional experience and giving the minimal amount of reasons to unsubscribe.

Your churn rate is a critically important metric for companies whose customers pay on a recurring basis. Regardless of your monthly revenue, if your typical customer doesn’t stick around long enough for you to at least recoup your average customer acquisition cost (CAC), you’re in trouble.

Why would your customer keep subscribing?

You need to give them a reason to stay and a reason to advocate for you. This is the quickest path to growth. We’ve listed a few ways to build loyalty with your customers and encourage them to advocate for you. 

  • Focus on community, not followers. Make your values clear because like attracts like.
  • Prioritise your key customers, not just new ones. We all get frustrated by discounts for first time buyers and full price for the rest of us. Consider targeting your loyal, high value customers with rewards in a strategic way that don’t diminish your value.
  • Use your customer feedback to demonstrate that you’re listening and responding to demand. If you’re a food subscription service getting loads of social media messages about wanting a specific recipe. Give your community the recipe or partner with the original creator of it. 
  • We’re 4x more likely to make a purchase if the recommendation comes from a friend and not an ad. That’s why referrals are so important for growth. Often, people join subscription-based services based on a first month discount. However, when this goes, so does the subscriber… To keep gaining new customers through referrals, but also keep the existing customer, make sure both parties will benefit. 
  • Personalisation can be very effective in terms of holding on to customers and attracting new ones. In direct communications, refer to the person by name and reference their specific subscription plan. For example Skin + Me, a brand offering bespoke skincare prescribed by dermatologists to subscribers, include information about the different ingredients included each month within an email, on each customer’s account on their website, and enclosed in the actual delivery of the product. Tails.com are also brilliant at using pet’s names on tailored pet products to drive advocacy. 

We hope that this post around retention strategy for subscription ecommerce has helped with ideas of how you can strengthen your business and increase profitability. If you have any questions, please get in touch.

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