Just a few years back the percentage of eCommerce shoppers who paid for recurring subscriptions was less than 1%. In 2020, that number is now over 15%.
This dramatic shift mirrors the overall growth of the subscription marketing, which according to Shopify has exploded nearly 3000% since 2013.
The impact on eCommerce sellers is game changing.
The typical subscription customer has a 38% higher CLTV (Customer Lifetime Value) than an average customer overall. These customers become loyal parts of a brands community and are also more likely to advocate or spread the word about the products they receive.
So if these subscription customers are so valuable, how do eCommerce brands reading this (or agencies helping those eCommerce clients) replicate this success?
Your blueprint to success with eCommerce subscription boxes
Here are the 7 tactics you need to know to pivot your eCommerce store to subscription nirvana.
1. Design an unboxing experience that delights
Source: Stitch Fix Unboxing
When you ship your product as part of a subscription box service, you have to realize that you are moving from selling a commodity to selling an experience. Top subscription box services like Stitch Fix, Me Undies and Birchbox do this by including extra product/free gifts or incorporating surprise in as part of their strategy. You want to keep the customer anticipating what they are getting each month to get them excited to stick around. Shopify puts it well when they say,
“Turn receiving a package into an event. The key to keeping your customers surprised, delighted, and coming back for more is a memorable unboxing experience. Put some extra love and care into how you ship your products with free gifts, personalized notes, and fun packaging.”
2. Be aware of shipping and pricing
Especially with small businesses who run at a tighter profit margin, it is critical to be aware of how adding a new type of packaging is going to impact things. Make sure to talk with your fulfillment house, have the conversations around volume with reasonable expectation and budget for problems arising (especially with international shipping!). I have seen many subscription boxes that fell apart because of a myriad of issues around shipping and logistics.
While there is no hard and fast rule around how to price your subscription box, data from Adviso shows the average consumer pays for eCommerce subscriptions that are between $15-45/month. If you are going to go above that range, make sure to really work on content and presentation to make your product deliver that “premium” or “luxury” feel. Ka’Chava, a health food protein powder that has a $60/bag subscription (down from $70 if you buy it individually) does a great job of establishing this premium feel on their website.
Play around with your Pricing to make it obvious to your customer that a subscription is a better option. You should position it as rewarding your existing customers, who can often feel unloved when it comes to cost-savings. UK based probiotics manufacturer Symprove does this really well on their website. They make it super clear that subscriptions are a benefit for existing customers, and clearer still how the price of a subscription delivers big savings on a daily basis. The clever thing here, is that as a daily food supplement, they position their subscription saving around that pricing metric (daily cost).
Symprove's subscription offer and pricing
Symprove's other offers and pricing
3. Invest in personalization
Recently I was working with a small coffee shop that had converted 50% of their one-time buyers to their new subscription box model. It was mind blowing. Their secret? They sent each new purchase a video just like this using Bonjoro 👇
After watching that video it made more sense. Joe pulls them in emotionally, showing them the coffee they are ordering, giving that small business vibe and explaining why the subscription is just a no-brainer move. He doesn’t push hard for a conversion, just educates them that it’s another option they have. Whether it’s a personal video like this or a handwritten note, personalization is a strong way to make a customer feel like more than a statistic and it builds brand loyalty.
4. Make it easy
Customers don’t like to jump through hoops or subscribe to confusing pricing plans. Make it easy to join a subscription, then make it easy to pause it, delay it or cancel it. Have different durations of plans (weekly, bi-monthly, monthly etc). Never lock people into eCommerce subscription plans.
Source: Amazon Subscriptions
The negative PR and hassle you will incur when they want to pause it for a month because they are traveling to Fiji is just not worth it. Also, many successful companies provide a 50% first month discount or some front-end incentive to get people to take the leap. After that, I see around 10-15% being the average discount amount for the MoM subscription moving forward.
If you run on Shopify, there is a simple app called Bold Subscriptions that helps you to create the full subscription checkout experience like the one above. Go check it out if you're ready to make the pivot!
5. People love an exclusive
For certain eCommerce products (especially in the apparel industry) a big draw to subscribing can be getting something exclusive that nobody else has access to. While I think including exclusive products is an awesome strategy, be mindful of inventory here. One problem I see happen frequently is companies order too much exclusive product and they are stuck with the situation of having unsellable merchandise (because it was supposed to be for subscribing members only) or unhappy members who feel like they have been had.
6. Get buy-in from your email list
Before going all-in on designing this new subscription service, talk to your customers! Email them or post on social media with polls asking them about what they would love in a subscription service and see what they value. If you work hard on the buy-in portion of this, you will not only develop a better service but you will save money from mis-judged order sizes or wasted capital investment if demand isn’t there.
7. Get active on social media
People buying from brands today want to feel a sense of affinity to what these brands stand for. Social media has become a central hub from which brands deliver their values. If you want to succeed with a robust subscription service it's critical that you build the emotional connection with your audience and create that genuine sense of community. If you check out the social feeds of any top eCommerce subscription services you will find they talk about these values, they share educational content and they develop that strong sense of “why”. If you only use social media as an advertising channel for coupons or promotions or new releases, you will find your engagement and traffic from social will drop to near zero.
Join the wave
In the early 2000’s we saw the explosive growth of eCommerce as an industry. Businesses that were distributing and selling goods online became increasingly common.
Now, with a change in consumer behaviour swinging towards subscriptions, there is a huge opportunity. Right now in 2020 eCommerce is outperforming projections by nearly 20% due to COVID related restraints that have people staying at home. But if businesses don’t capitalise and build life-long customers, their gains will be temporary.
It is clear that the next paradigm shift in eCommerce is here. The question is…. Are you coming along for the ride?