As pretty much any retailer and brand can attest, acquiring and retaining subscription customers in a good economy — particularly high-value ones — is no easy task, but when the hardship of headwinds is added in, the job gets even tougher.
However, if certain steps and processes are followed, the chances of bringing in and keeping customers can be greatly improved.
Speaking with PYMNTS for the Subscribe and Scale Series, Justin Shoolery, head of data science and analytics at sticky.io, said that task can start simply by respecting people’s busy schedules.
“When we’re talking about acquiring customers, specifically high-value customers, the most important thing is to create a streamlined checkout experience,” he said. “Consumers today value their time. They’re expecting streamlined experiences. They demonstrate this with their purchasing behaviors.”
Customers notoriously bail on what he termed “clunky” checkout experiences, noting that as average checkout times have fallen in recent years, conversions have risen accordingly.
The same goes for payment choice at the checkout moment of truth.
“Offering payment like Google Pay or PayPal or buy now, pay later (BNPL) options can all help with the checkout experience,” Shoolery said. “You don’t want to overwhelm consumers with choice, but I think that in this example, with payment options, you’re actually reducing friction because people often come in with an expectation of what payment option they want to use.”
Research backs him up here. Per the latest Subscription Commerce Conversion Index, “overall retail product subscription providers continued to reduce friction for their customers in Q3 by providing more of the features they want,” with recent gains most impacted “by the increased prevalence of plan options and pause features as well as shorter checkout experiences.”
Retention Is Hardwired to Experience
Moving down his own subscribe and scale checklist, Shoolery stuck with choice, not just in payments but in the cycles of subscriptions and the importance of giving consumers control.
The ability to manage shipment frequency along with product mix and quantity “can all help set up that customer for a better experience,” he said. “We see that in some of the longer-term trends like customer lifetime value, rebill rates and refund rates.”
Once you’ve acquired the customer, strategies shift to retention where many — but not all — of the same principles apply.
“Retention is directly correlated to the quality of the customer experience, which stems from quality products, timely service and good user experiences on the website,” he said, but you can do all of that right and still lose a customer.
That’s the scourge of involuntary churn, perhaps the most preventable problem subscription merchants face.
“Even if your customers aren’t canceling, if you can’t bill them anymore because the credit card information is out of date, you’re going to lose them,” he said.
Platforms like sticky.io are valuable here, as is the use of credit card updater services and modifying decline recovery strategies. Handing technical aspects of churn opens the door to delighting subscribers throughout the life cycle with gifts, samples and upselling.
“Flexibility shouldn’t end at the checkout,” he said. “If you’re giving customers the opportunity to change shipping frequency and the freedom to update the contents of their shipments on an ongoing basis, you’re going to positively impact customer retention.”
See also: ‘Great Unsubscribe’ Gains Momentum as Inflation Forces Consumers to Scale Back
Dig Into Your Data
Confronted with the odd fact that roughly 70% of subscription merchants allow flexible billing at sign-up, but only around 40% allow plan changes afterward, Shoolery explained that it’s not only unnecessary from a management standpoint; it’s also bound to chase off subscribers.
He said, “take a replenishment model as an example. Demand for your products may change over a customer’s life cycle with you. If you’re running into consumers that are getting oversupplied or undersupplied, it’s creating friction that could jeopardize the relationship.”
Better to give customers “the ability to proactively reduce those kinds of situations” by letting them adjust quantity, delivery frequency, billing dates and other aspects of your offering, he said.
“I think that the market, in general, is demanding that we as merchants adjust and offer more flexibility in order to help improve the customer experience,” he said.
Swimming as they are in a pool of first-party data, subscription merchants don’t need to clamp down on customer choice because they can always divine the data for additional revenues.
“Some examples of that would be developing specific offers for certain cohorts or analyzing cohort trends and behavior over time to help identify issues with churn or customer acquisition,” Shoolery said. “We can also identify at-risk customers before they churn and help nurture them back to good standing with good deals or free products.”
This is the case when it comes to enhancing subscriptions using performance data that merchants already possess on lifetime value, rebills, churn, acquisition rates and conversion rates.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More