The challenge for most retailers is speaking to the precise needs of the subscriber – and keeping them engaged, stresses the RetailX Subscription 2024 report.
“Subscription interest is driven by convenience, which the Netflix/Spotify/Uber economy also ladders up into,” says Melissa Minkow, director of retail strategy at global digital consultancy CI&T.
“Any service that makes our needs easier to meet is welcomed with open arms, especially in retail. The set-it-and-forget-it nature of subscription really speaks to our love of convenience.
“The key to cracking subscription services is intentionally deciding upon a target market: either a category-savvy explorer – someone passionate about innovative brands in the industry, or an uninterested autopilot – someone who regularly purchases within the category, but considers purchases in this space routine and would rather have the purchase decisions outsourced for them.”
Chargebee research shows that the subscription economy has entered something of a retention era, with a definitive 87% of subscription leaders saying that retaining customers is as important or more important than acquiring them.
Yet, 96% acknowledge that cancellations occur for reasons that can be managed or resolved, highlighting the urgent need to proactively address and prevent customer churn.
For starters, there is the issue of one-off purchases versus commitment. When signing up to a subscription service, consumers are not only parting ways with their cash but they are also signing up for a long-term commitment.
Communicate the savings
“With subscriptions businesses, financial incentives are not enough to drive customer acquisition and retention,” says Becki Francis, director of client strategy, retail at Movable Ink.
“It’s essential to calculate and communicate these savings to the customer – brands need to do this work for them. This can be done by highlighting potential savings based on purchasing habits or predicted buying cadence. Additionally, highlighting the subscription price of a merchandised product with a subscribe call-to-action, shows potential customers the value they would get if they subscribed to the brand.”
It is crucial to make the value of subscribing tangible to the customer. Asda’s hugely successful Year In Review demonstrated to its customers the value of opting in to its rewards programme by doing the maths for them and bringing that value to life in a year-end review email.
“Too often, brands become too complacent and treat their consumers as though the subscription is the same as a regular purchase,” says James Herridge Leng, head of CPG and retail for EMEA at Braze, which handles the customer engagement and customer loyalty programmes for some of the top subscription services in the world: “Customers should be rewarded for their commitment and loyalty.”
Successful subscription businesses prioritise customer engagement and retention strategies. This includes proactive data-led messaging, targeted promotions and community-building initiatives to foster a sense of belonging among their subscribers.
Personalisation is key
The fact is that one size doesn’t fit all when it comes to subscriptions and, says Leng, “Direct-to- consumer subscription models typically harness lots of data about the consumer, including their preferences, zero-party data and transactional data. However, all too often, this data is not used in meaningful ways.”
Personalisation is pivotal in enhancing customer retention rates within the subscription industry. Leng adds: “Brands can create more meaningful customer interactions by tailoring messages, recommendations, and experiences to individual preferences and behaviours. In the subscription industry, we need to always be engaged to keep users away from the unsubscribe button. Customers are more likely to remain loyal and engaged when they feel valued and understood personally by the brand.”
Allow for flexibility
RetailX research has found a growing demand for flexibility in subscription plans. Customers want the ability to customise their subscriptions, adjust frequency, or pause/resume services according to their changing needs and circumstances.
Leng says: “Use customer feedback to gain insights into subscribers’ evolving needs, preferences and expectations. Understand why customers choose to subscribe, what features or benefits they value most, and what would compel them to continue their subscription long-term. Tailor retention strategies to meet these needs effectively.”
Subscriptions will yet again be the focus this October as SubscriptionX returns.
As part of the Autumn Festival, the Executive Brief, brings together 40 like-minded subscription leaders, from across sectors, representing a wide range of job functions, who want to be kept abreast of trends and analysis in the industry with a six month update following the conclusion of the main SubscriptionX conference in May.
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