Three Biggest Challenges to Ecommerce Subscriptions and How to Tackle Them
If you ask me how I spent my 2020, I have three words for you: Add to cart.
I most definitely wasn’t the only one because, in 2020, consumers spent $861.12 billion online with U.S. merchants, a whopping 44% jump over 2019. A noticeable trend in the online shopping frenzy was the increasing popularity of subscriptions. From pet supplies to razors, consumers can now have almost anything delivered to their doorstep.
But the growth wasn’t just a pandemic-induced fad. Since 2013, subscription ecommerce has grown by more than 100% YOY. However, the flip side of this growth is that the subscription ecommerce market is becoming increasingly crowded. So, merchants should now brace themselves for three challenges:
- How to thrive in the highly competitive subscription ecommerce market?
- How to conquer subscription fatigue?
- How to develop a long-term association with customers?
And who better to guide us than people who have ‘been there, done that’?
I asked Lanie DePasquale and Kaitlin Holliday about their take on these challenges.
Lanie DePasquale previously was Director of Customer Retention at Kopari Beauty and is now championing Performance Marketing at Stasher. Kaitlin Holliday was Head of Ecommerce and now specializes in retention at Four Sigmatic.
In this post, I am sharing their insights and some industry examples.
Thriving in a Highly Competitive Market
With a growing market as fast as subscription ecommerce, there are always new brands and offerings coming up as we speak. It can be challenging for new and growing subscription ecommerce businesses to differentiate themselves to acquire new customers.
So, subscription ecommerce businesses are trying unique and innovative ways to acquire customers.
“Build-your-own-bundle is an excellent way for customers to be able to tailor the subscription service they want,” says Lanie.
Hydrant offers a variety of rapid hydration mixes and focuses on the wellness of health-conscious people. Their subscription options provide significant discounts for customers who go for 2-3 packs bundled together. There are various options available that give customers the flexibility to choose what they want in their subscription at a discounted price and helps the business acquire more value per customer.
Let’s look at another approach taken up by businesses that offer customized products to their customers. Brands like Prose, which offers customized hair products, or Care/of, which offers personalized vitamins and health supplements, involve a personalization quiz acquisition funnel. If your product can accommodate customization, quizzes seem to work well for many brands. Not only does it give you insights on how you can improve on your product based on customer preferences but a great way to start engaging with your customers.
However, some companies take the opposite route. For example, take Athletic Greens. They offer a ‘one size fits all’ health supplement in their subscription and use different acquisition tactics like free swag and free samples to encourage new customers.
“There’s no magic bullet that works for every business! You need to experiment based on the products you offer and what your customers prefer,” says Kaitlin.
Conquering Subscription Fatigue
Did you know an average American household has nine paid subscriptions spread across music, video, and gaming? But about 53% feel frustrated managing so many subscriptions. The subscription fatigue is real, and even though more than half of online shoppers subscribe, 40% typically end up canceling the subscriptions.
How do subscription ecommerce businesses tackle this subscription fatigue then?
Well, the first step towards making your subscribers want to stick around is to give them a ton of flexibility.
Allow Product Swaps
It helps avoid product fatigue and retain subscribers who are not satisfied with the products they are subscribing to. For example, YogaClub, a yoga-themed subscription box, has two dedicated Facebook groups reserved for YogaClub members who want to swap, buy or sell unwanted/unused products.
Another innovative approach is to offer to swap the box for online store credit. Check out how FabFitFun, a subscription box that includes fashion, beauty, fitness, and wellness products, among other things, offers this creative option when their subscribers want to cancel.
Enable Skip Option
It’s always better to allow subscribers to skip a single shipment rather than cancel the subscription. It is crucial to make sure it’s SUPER simple for customers to have more control over their subscriptions and don’t feel too smothered. ‘Let’s make art’, is an art-themed subscription box that allows their monthly subscribers to skip a shipment if they want to take a break.
Allow Pause/Snooze Option
While the skip option enables skipping a single order, the pause/snooze option allows customers to take a break to work through their product. It is another alternative to subscription cancellations. Check out how Heatonist, a hot sauce subscription box, gives their subscribers the freedom to pause their subscription box any time.
“It is essential to identify when customers are most likely getting to the point of canceling, watch out for behavioral indicators, and intervene with check-in from your support team,” says Kaitlin.
It can also help to offer perks beyond just a discount/free shipping.
If your subscribers are engaged in your community (ex. private Facebook group) or are receiving valuable education, they’re more likely to stick around.
Maintaining Long-term Relationships
As the ecommerce and DTC subscription space gets increasingly crowded, brands need to focus on preemptively eliminating any possible friction for their customers.
With the ‘subscribe and save’ option, customers are very likely to ‘subscribe and forget’. That’s why continuous customer engagement is vital.
Much like building a long-term friendship with a friend, the first step is getting to know them. And then find ways to keep the warm and fuzzy feeling alive for a long, long time.
“Treat your customers like VIPs. Ask their opinions on new products. Send some delightful surprises their way. Give them exclusive access to a product, service, or a community,” says Lanie.
Kaitlin adds, “Each business has a unique customer base. Find out where your customers hang out digitally and in real-life, and then find ways to engage with them there non-intrusively.”
For example, if your customer base is primarily millennials that have Facebook as their preferred social media. In that case, you can create exclusive facebook communities to engage with them and add value beyond the product.
DTC and the ecommerce subscription industry are showing no signs of slowing down. Offering convenience is no longer a differentiating factor – brands now have to go above and beyond to delight their customers.
While you work on delighting your customers, it is always helpful to bank on a solid subscription engine that enables that. Chargebee’s ecommerce subscription management system allows you to scale your subscription strategy even as your business grows and increases in complexity. With extensive core system integrations like BigCommerce and Avalara, Chargebee can help you expand your footprint globally, enable a frictionless customer experience, and build a loyal customer base.
Head here to see how Chargebee can help!