A way to grow your ecommerce store’s revenue is to explore subscriptions. Adding a recurring, predictable revenue stream can ensure your brand continues to grow and long-term success.
Many brands think about the customer lifetime value (CLV) but few embrace ecommerce subscriptions as a method of driving more sales, building deeper customer relationships, and creating predictable long-term revenue.
In this article, we’ll delve into the world of ecommerce subscriptions, exploring their benefits, various models, key considerations for implementation, effective customer acquisition strategies, optimization techniques, and the exciting future of this evolving sales approach.
Offering subscriptions might not work for your business but understanding the concepts might spark some revenue-generating ideas that help build your business!
Why Implement An Ecommerce Subscriptions Model?
All businesses have ebbs and flows of customers, by integrating a subscription model into your ecommerce offering, you can lessen the wild ups and downs. Consistent revenue is more likely to bring predictable cash flow and profit throughout the year.
Here are some key reasons you should add ecommerce subscriptions to your offering.
Increased Customer Lifetime Value (CLV)
Advertising costs continue to rise and so many brands are looking for new ways to boost their CLV), and offering a subscription model is one way to improve this metric.
Predictable recurring revenue streams
Subscription models allow you to forecast revenue with more predictability. This allows for better financial planning, inventory management, and sustainable growth.
Improved customer retention and loyalty
Building a stronger connection with customers means creating more meaningful interactions. If a customer expects a regular package from you, they’ll transform from casual buyers to dedicated fans!
By offering ongoing subscriptions, you remove the friction of customers needing to remember to reorder or being frustrated when they run out of your products. Both of which lead to lower customer acquisition costs.
Enhanced sales forecasting and inventory management
Forecasting of any kind is part art, part science. It can be really tricky to get right. Offering subscriptions allows for more accurate demand forecasting and inventory optimization.
Opportunity for deeper customer relationships
Subscription models allow for more personalized and meaningful interactions with customers. You can build stronger relationships, increase CLV, gather valuable feedback, and create new brand advocates!
Types of Ecommerce Subscription Models
An exciting aspect of ecommerce subscriptions is versatility. Several models are available, allowing you to select the right one for your products and customer needs.
Replenishment subscriptions
As the most straightforward model, the replenishment subscription model is ideal for consumable goods that customers often repurchase (e.g., coffee, personal care items, pet food). Automated deliveries ensure customers never run out of essential items.
Curation box subscriptions
These subscriptions offer a curated selection of products around a specific theme (e.g., beauty products, snacks, books). As subscribers don’t know what will arrive, it’s an exciting way for customers to discover products while creating a unique experience.
Access or membership subscriptions
This model provides subscribers with exclusive access to products, services, or discounts for a recurring fee (e.g., software subscriptions, exclusive online communities, early access to sales). Members love the exclusivity and ongoing benefits they receive.
Hybrid subscription models
Combining elements of different subscription models can be a winning offer! For example, offering a replenishment subscription with the option to add items or pay for additional membership benefits can cater to a wider range of customers.
Key Considerations for a Successful Subscription Program
As with launching a new product line, you need careful planning and execution to ensure your ecommerce subscriptions program thrives. I’d suggest starting small and growing as you see green shoots.
Choosing the right product mix
Many subscription programs fail due to a poor product mix that doesn’t evolve with changing customer demands. It’s best to include products that are frequently purchased, offer consistent value, or create excitement.
Start by looking at your existing product line to identify items that align with these criteria.
Pricing your offerings
If a poor product mix is a common mistake, another one is getting the pricing wrong. The perceived value for the subscriber is of paramount importance. You need to bake the cost of goods, shipping, and customer acquisition costs into the price while ensuring it offers superb value.
It’s worth offering tiered subscription options or discounts for longer commitments as they can attract a wider audience. Focus on communicating the value proposition, including the savings compared to individual purchases.
Subscription management software and tools
Investing in the right software is important for managing subscriptions effectively. You can use platforms like Subbly, Recharge (integrates with Shopify), or Rebillia (integrates with BigCommerce).
These platforms offer tools for managing recurring billing, customer accounts, subscription modifications, and communication, ensuring a smooth operation.
Creating a seamless customer experience
The subscriber experience should be effortless and enjoyable. This includes easy sign-up processes, clear communication about billing and shipping schedules, flexible subscription management options (e.g., pausing, skipping, modifying orders), and proactive customer support.
Creating a positive experience is key to reducing churn and fostering long-term loyalty.
Effective marketing for your offer
I’ll cover marketing in more detail next but you should consider how you’ll acquire customers and at what cost. You can start with low-cost tactics such as emailing your list, posting on social media, and adding a banner to your website’s sidebar.
Handling subscription cancellations and churn
Customer churn is inevitable, but you must understand why subscribers cancel. Make cancelling clear and easy. Do try to retain customers by offering several subscription options or incentives to stay.
Over time, analyzing churn data can provide valuable insights for improving your subscription program.
Attracting Customers To Your New Offer
Part of creating a subscription program is marketing your new offer. You can’t build it and they will come!
Integrating subscriptions into your ecommerce store
You’ll want to add your subscription options to your online store by building a custom landing page. Make these pages easy to find by highlighting them on the home page and in the main navigation.
It’s also worth testing different call-to-action (CTA) buttons to see what messaging works.
Offering incentives for sign-ups
The first challenge is reaching 100 subscribers. You could offer discounts on their first order, free gifts, bonus items, or something exclusive. Don’t rely on incentives long term but do use them to encourage early adoption of your subscription service.
Email marketing to engage with subscribers
There are 3 ways to promote your subscription offer. One is on your website, another is to use email marketing. If you have a general email list, you can use targeted email campaigns to promote your new offer.
Over time, you can build out a more comprehensive email plan that includes a welcome sequence, order updates, exclusive deals, and ask for feedback.
Promote the offer on social media
Social media is another fantastic way to promote your new subscription program. Use a mix of organic content with paid ads to showcase the benefits and build social proof.
Optimizing and Scaling Your Subscription Business
After reaching your first milestone of having 100 active subscribers, the work doesn’t stop! You’ll need to keep optimizing to ensure growth and long-term success.
Key Performance Indicators (KPIs)
If you’ve read any of my articles, you’ll know I love KPIs! They help define the big picture and give you goals to reach for. You should set KPIs for subscriber growth rate, churn rate, average subscriber lifetime, and customer acquisition cost.
Personalizing the experience
As you gather more customer data, you can start personalizing the ecommerce subscriptions experience. Consider how you can offer tailored product recommendations and personalized communication to enhance engagement and loyalty.
Expanding Your subscription offerings
Take time each quarter to consider how you can update or expand your subscription offering. You could offer more product offers or new subscription tiers. Keep your offer fresh and exciting for members!
Tips to reduce subscriber churn
Customer churn will be your biggest problem if you don’t expand and adapt to the market. There are plenty of tips to help reduce subscriber churn.
You could reduce churn by offering flexible subscription options (e.g., pausing, skipping), providing excellent customer support, soliciting feedback and acting upon it, and offering win-back incentives to those who have cancelled.
Future of Ecommerce Subscriptions
The landscape of ecommerce subscriptions is constantly evolving, with several exciting trends shaping its future.
Emerging trends in subscription commerce
I’ve seen a rise in more flexible subscription models, greater personalization, and the integration of subscriptions with other services. To be successful, focus on creating more dynamic and customer-centric experiences.
Personalization and how AI can help
AI can help further personalize your ecommerce subscriptions experience. AI-powered tools can analyze customer data to offer more relevant product recommendations, predict churn risk, and automate personalized communication, leading to higher engagement and retention.
Role of sustainability in subscription models
Sustainability isn’t just a hot topic. It’s a response to changing customer demands. It pays to be eco-friendly. Consider using ethically sourced products or carbon-neutral shipping, as customers want to shop with brands that care for our environment.
How To Build A Thriving Brand With Ecommerce Subscriptions
Building a successful brand using ecommerce subscriptions requires a customer-centric approach. By understanding your target audience, offering compelling subscription options, and continuously optimizing your program, you can unlock the power of recurring revenue and build a thriving, sustainable ecommerce brand.
Need a partner who can design your rocket-fuel ecommerce growth strategies and supervise their execution?
