How to Build a Working Subscription Marketing Strategy
Sephora Play!, Netflix, AT&T, Spotify, Google Cloud, the CRM you use for work… the list of fully or partially subscription-based businesses is growing daily, and so are their market opportunities. The value of the global subscription e-commerce market is expected to reach 478.2 billion USD by 2025—a staggering increase from 13.23 billion USD in 2018!
The reasons are simple. Subscription commerce is convenient for customers as they don’t have to bother making the same purchases over and over again, and it gives companies a steady recurring revenue. The only challenge left for you as a subscription business is keeping your customers, right?
That’s where an effective subscription marketing strategy comes in.
Understanding what makes a great strategy and following it can be the difference between having a growing subscription business and hosting a storefront that just isn’t working. In this article, we’ll discuss why that’s so, and which tactics you can use to help your business prosper.
Why Subscription Marketing Strategy Matters
Subscription-based e-commerce is based on recurring purchases embedded into a subscription business model. Subscription marketing is the strategy you use to sustain your subscriptions and meet your KPIs. What’s important is that it’s a slightly different strategy than the one product-based businesses use.
While pay-per-product companies use marketing to increase the number of purchases, subscription-based marketing focuses more on retaining existing customers—as well as attracting new ones.
What does this mean for you as a subscription business? Here are the main things an effective subscription marketing strategy should always target.
- Retaining existing customers. The “80-20 rule” in business states that 80% of a company’s revenue comes from 20% of its customers. Applying simple math and pure logic, it’s more cost-effective to focus on a small group of people willing to pay instead of throwing money at reaching the 20% of revenue from those who might end up buying from you once.
- Acquiring new subscribers. Landing new customers is great for any business, no exception. Marketing subscription boxes to new customers requires researching market and consumer data to offer something they can’t refuse.
- Reactivating churn customers. There are different reasons for customer churn. Good marketers work out why customers have canceled or paused delivery and use the information to come up with a strategy that fits them better.
- Increasing brand awareness. When we say “streaming platform,” most likely we think of Netflix or Spotify. That’s brand awareness at work. Your strategy should target this as well, or you might end up in the pool of businesses nobody knows about.
Now you know why subscription box marketing counts for your business, it’s time to look at the things you can do to make it happen.
9 Steps to a Great Subscription Marketing Strategy
A great strategy covers all of the points above. Let’s look at each one and how you can make it work.
1. Know Your Customers and Their Journey
Even if you have the best product, your business won’t succeed if you market it to the wrong people. Knowing your customers and stepping into their shoes in all your communications will help you see what they’re looking for, how they view your brand, and what their needs are.
Knowing your customers will help you to
- Correctly segment your target audience
- Identify the stages or touchpoints in your sales process that need fixing
- Understand what makes you stand out from the competition
- Upgrade your boxes and add new features or items to your list
How to do it
- Ask them directly and encourage feedback. All feedback counts, both positive and negative. Gathering it can often help you to see something that’s right under your nose.
- Gather data. Most box companies ask their new subscribers to fill out a short questionnaire. Create your own and use the data from it. Subbly also offers tracking codes as part of its analytics features, which gives you more data to consider when adjusting your marketing strategy.
- Organize paid tests. You’ll probably be the worst judge of your product, website, or app, which is why it makes sense to ask someone else to do it. Prepare a checklist with the areas you’re most interested in, and ask your testers to rate their experience.
2. Encourage Upgrades
If you have several subscription tiers, higher tiers should provide more value to your customers while bringing you extra revenue. Encourage people to try them out and upgrade.
How to do it
- Promote it. Use a trial of the most expensive option as a reward for, let’s say, taking a detailed survey about their experience with your company. After all, 34% of surveyed people said they’re more likely to complete a survey if they have material gratification. In this way, you’ll get to know your customers better, show them the way to upgrade, and build a positive impression about your brand. Plus, it’s a great marketing strategy for subscription retention, as you keep the customer and increase your ARPU.
- Make it a thank-you for a referral. What about offering a month of premium plan/box in exchange for referring a new customer? That can both show the benefit of a more expensive box and land you a new customer: a double win!
3. Offer an Excellent Shopping Experience
There’s a huge number of online stores and subscription businesses out there. People will opt for the one that provides them with an excellent shopping experience. What’s more, if something feels off, they won’t purchase again from the same company. This means you need to make sure that online shopping from your website or app is impeccable from the first visit to clicking “Confirm order.”
How to do it
- Run diagnostics regularly. You’ll be surprised how many pitfalls your customers are facing without you even knowing it.
- Write memorable (and shareable) copy. Writing original and creative thank-you-for-your-order messages can go a long way, so it’s worth investing in it.
- Make it fast and easy. Make sure your ordering process uses as few clicks and taps as possible.
4. Make It a Game
We all love to play, so making shopping on your site feel like a game can keep your customers feeling happier. App gamification is, of course, the most popular solution, but it isn’t the only one.
How to do it
- Include ‘unlocking’ in your marketing toolkit. Think of Mario jumping from level to level and apply this concept to your box. For example, when a customer has bought 10 of your gardening boxes, they get the foundation for a virtual cottage. Show their cottage developing in your website or app as they get their box, so they can see their progress.
- Use loyalty programs. This is a proven technique for both retaining customers and appealing to new ones. If you want your customers to keep buying from you, make sure they have a reason for doing so! Think of extra points that can be applied as discounts or early access to some new features. Or let your customers collect points which they can trade for a discount later on.
5. Offer a Free Trial or Samples
This is a great idea regardless of whether you offer a physical product or an intangible product or service. For instance, Sephora always puts free samples in its Play! Box, and allows you to choose them when you make a regular purchase. The only drawback is that people can get used to this quickly, so when you decide to stop giving things for free, be ready for anger, questions, and negative comments.
How to do it
- Offer free trials alongside full-featured products. Don’t forget to mention what comes with each pack, so your customers can choose for themselves.
- Put miniatures of a new product into every box. This will surprise customers and also give them time to think whether they need to buy it in the future.
- Think freemium. This is a staple subscription marketing strategy to land as many customers as possible on the most expensive plan or box you have. Why do you think YouTube music offers one month of its best premium plan for free? So you stick with it later! Just be aware that this may involve more upfront investment, as you’ll be sacrificing short-term revenue for the chance of longer-term gains.
6. Offer Advance Payment Discounts
Most subscription companies charge you less if you pay for a year upfront instead of paying on a per-month basis. They also tell you exactly how much you’ll save when you do so. You consider paying upfront, right? Who wouldn’t, after all? This is exactly the point of providing advanced payment discounts: you retain your customers and make sure you have the money you can spend for business needs.
How to do it
- Introduce an annual subscription if you don’t have one yet. Add and advertise an annual billing option. It would be even better if it comes with an extra goodie on top!
- Show the obvious benefit. For instance, display both the monthly and annual subscription prices and show the amount that the user can potentially save.
7. Provide Clear Pricing
Nobody likes hidden fees and small print— we all know they don’t bring any good news. Make sure your pricing information includes all the details users need in order to make their choice.
How to do it
- State it out loud. People hate not seeing the answer to “How much?”. Don’t make them hunt for pricing in a DM or comments: make your subscription pricing plans transparent from the get-go.
- Don’t use small print or footnotes. If your price comes with certain terms and conditions, add a link to a webpage or PDF file that covers them. It’s better for both your customers and your design.
8. Set Up Automatic Renewals
Nobody wants to be reminded every week or month that they need to pay for their subscription box. First, it may at some point raise the question of canceling it because it’s too much money. Second, if the person needs your products or services for work, they won’t appreciate an unnecessary notification on their screen. Automatic renewal is an option, just like automatic charging for services.
How to do it
- Get permission to charge the payment card. This is step zero for automating payments. Subbly, for example, supports automated renewals and recurring payments, so your customers get their boxes with just one confirmation they give at the start of the process.
- Customize billing and shopping cycles and communicate the payment date. People like to know where their money is going, so keeping things regular will make them happier. Set up a particular payment date for your customers to know when they should have some funds on their cards.
9. Improve Your Customer Relations
Happy customers are customers that will stay with you, so focus on nurturing your relationship at every opportunity.
How to do it
- Ask them how you’re doing. Use a survey or rate-us questionnaire to ask your customers how they feel they’re being treated by your business. Maybe some customers feel like you’re spamming their e-mail boxes, while others might want to hear more from you or hear some different information. The most important part? Use this data to change your ongoing marketing campaigns.
- Invest in excellent customer support. As much as we’d all like to be free of less-than-positive issues that can cloud our business, there will be questions that require assistance. It’s always better when that assistance is delivered quickly and professionally. Fast and customer-centered service is the best solution.
A Platform That Supports Your Strategy
An effective subscription marketing strategy uses a bunch of puzzle pieces to put together a great picture. As a subscription-first e-commerce platform, we at Subbly know that better than most. The good news is that by using the tips we’ve given here, you’ll be well on your way to creating a strategy that retains existing customers and acquires new ones. And if you want a subscription platform that helps you every step of the way, just sign up for a 14-day free Subbly trial to take your marketing game to a new level and unlock more opportunities!