Subscription commerce is fast gaining momentum as a preferred method of product and service exchange, with customers gravitating towards subscription businesses for their convenience, cost-efficiency, and lifestyle advantages. 

While it’s always a reason to celebrate when you gain a new subscriber, it’s also a reminder of the real challenge. As you’re refining your subscription business model, it’s essential to consider customer retention — as retaining your existing subscribers in an increasingly competitive landscape is no easy feat.

Below, we deep dive into why retention should be a priority for your subscription business and explore how you can implement strong customer retention strategies.

Traditional businesses selling individual products on a one-time basis are often focused on customer acquisition. This is time and cost-consuming, with most efforts and resources spent on ensuring enough new subscribers are coming to the business to remain viable. 

Subscription box businesses, in contrast, have the luxury of being able to focus on retention. Once potential customers become subscription box subscribers, you know they’re interested in your offering, making the core focus retaining subscribers. 

There are several reasons why subscription box businesses should be focused on customer retention. Loyal customers are five times more likely to repurchase, five times more likely to forgive, four times more likely to engage with referral programs, and seven times as likely to try a new offering. It also costs five times less to retain a customer than it does to acquire one.

In fact, U.S. companies lose around $136.8 billion each year because of customer churn. One study found that just one poor experience is enough for 95% of consumers to consider never returning to the brand.

Customer churn rate refers to the percentage of customers who unsubscribe from a subscription service within a certain predefined period, usually the end of their billing cycle. There are two types of customer churn your subscription company will encounter: voluntary and involuntary

  1. Voluntary churn, also known as ‘active churn’, happens when a customer actively chooses to end their subscription. Voluntary churn can happen for a variety of reasons, including lack of customer satisfaction with the product or service, or changes in lifestyle.
  2. Involuntary churn, also known as ‘passive churn’, occurs when a customer’s subscription ends without their active involvement. This usually happens when their contract lapses or their credit card details expire.

To address and reduce voluntary subscriber churn, you need to identify customer signs for potential churn and rectify the reasons that led to them abandoning their commitment to your subscription box business. They had expectations of what your subscription boxes would deliver, it fell short of the mark, and now you need to figure out why.

There are a few ways subscription companies can identify areas for improvement and retain subscribers:

  1. A post-cancellation survey for customer feedback
  2. Offering easy access to a customer care line or 24/7 chat support
  3. Keeping a data log of cancellation interactions and identifying commonalities
  4. Looking at what stage of the journey subscribers abandon your offering 
  5. Communicating throughout the buying journey to ascertain customer sentiment 

The rise in subscription-based businesses has come alongside an equal rise in the competition for customer retention. Strong customer acquisition will not equal success if you’re losing as many subscribers as you’re gaining. 

Below, we cover some of the most effective ways to retain customers with a bulletproof customer retention strategy and position your subscription business for success.

Perfecting your subscription box product or products is one of the biggest challenges of starting a subscription business. There are, however, several places you can look for inspiration:

  • Online marketplaces – Think Etsy, Amazon and eBay. These are great places to identify trending products and high-value opportunities for subscriptions.
  • Social media – Instagram is particularly useful, partly because of its hashtag functionality, but also because you’re more likely to find product curation accounts and influencers offering a wealth of insight. There’s also a wealth of other subscription industry Facebook groups you can browse for insight!
  • Trend publications – Research organizations like PwC frequently release trend analysis reports and projections. These can be used to identify emerging opportunities and potential product niches.

Knowing your subscriber base is crucial to your subscriptions and it’s important to continue your research beyond the initial product selection. Market trends and subscriber wants are continually evolving, and a savvy ecommerce subscription business operator should strive to be at the forefront of emerging products and consumer sentiment.

Within the context of the subscription model, maximizing your customer retention also means targeting the right customers in the first place. 

Most subscription businesses focus on high-intent customers. A high-intent customer knows what they want to buy and has the intent to purchase it. High-intent customers are more likely to generate long-term returns and the most revenue.

In a nutshell, subscription businesses are built on the long-term commitment of existing customers, and high-intent customers offer more loyalty and commitment.

On the other hand, low-intent customers are your typical window shoppers and internet browsers. They might be looking for a solution to a problem like, for example, a shaving rash. They stumble upon your sensitive skin shaving balm subscription but since they’re still early in their research, they most likely won’t be ready to commit to a purchase. They’re not unreachable though, with the right approach.

There are a few strategies subscription companies can use to increase buying intent:

  • Build a strong brand reputation with social proof by encouraging subscribers to leave reviews, feedback, and even videos of their unboxing experiences – and make sure they’re visible on your social media accounts.
  • Optimize your customer buying journey to reduce unnecessary friction and make purchasing as easy as possible.
  • Experiment with special offers and deals at different stages of the customer journey to identify where customers are most likely to convert.
  • Reach subscribers where they’re most likely to notice by mastering SMS marketing and social media outreach.

Part of providing an exceptional customer experience is providing an unforgettable customer journey, from the unboxing experience to any interaction with your customer support team they may encounter. Subscribers aren’t just receiving your box. They’re also receiving information about your company; brand perception, your value for quality, and your attention to detail. The experience your subscriber has when they open their first box — but also if they ever need to contact you about it — will contribute to their long-term customer loyalty.

The unboxing experience incorporates more than just the product inside. It also includes the design and packaging, personalisation aspects and potential bonuses or materials. (providing an exciting experience?)

To retain subscribers, consider the experience your customer has throughout their dealings with you. It’s been found that 73% of people attribute quick support resolutions to excellent customer service. Demonstrate the value of your service by offering self-resolution portals like FAQs and easy points of contact.

While a fast resolution is preferable, you should also give the customer an update in the instance that it’s taking longer than expected to find a solution to their concern. Providing responses to queries and complaints as soon as possible will help increase your retention rates, as it shows you’re actually present and engaged with their problems.

Subscribers are always looking for a better deal, a better product, and better value. While you can’t control competitor offerings, you can control your customer relationships. Offering your subscription box subscribers rewards for their loyalty can drastically improve subscriber retention. 

Offering rewards could be as simple as providing bonus items or samples. Alternatively, you could consider providing an online platform related to your product for community building and information exchange. 

You could also introduce action-based rewards, wherein subscribers receive a discount code or freebie when they leave a positive review or refer a friend (as part of your referral program).

As part of their subscription pricing strategies, subscription box companies often focus on selling add-ons and upgrades. However, having a downgrade option is also a valuable retention strategy. If, for example, a customer’s financial position has changed, providing an option to downgrade could be the difference between losing and keeping them as a subscriber.

Consider releasing a cheaper version of your subscription box with fewer or different (but still high-quality) items. You can market the downgrade option as part of your core offering, simultaneously providing a cheaper entry point for new subscribers, but you can also prompt customers with this option as they begin the canceling process, thus retaining customers.

Subscription box subscribers are typically billed on a predetermined schedule. Subscription billing often entails a setup that saves merchants time and money through automation, provides a better checkout experience with optimized payment gateways, makes it easier to predict revenue and encourages customer retention, among many other benefits.

Every subscription box business owner will encounter failed payments. This isn’t necessarily a fraud attempt, and could just be a case of credit card expiry or insufficient funds.

The process of recovering a failed or missing payment is called ‘dunning’. It usually involves repeated attempts from your system to process the payment and notifying the consumer via email or text message.

There are a few strategies you can use to streamline your dunning process:

  • Notifying subscribers of upcoming billing dates via email or SMS
  • Revamp your dunning emails with personalized subject lines and a clear, concise email body with instructions to rectify the payment issue
  • Provide the customer with simple next steps and, if possible, just one link to click

Developing your subscription business’s customer retention strategies could reduce your customer churn and your spend on customer acquisition, drastically improving your bottom line. 

Use this guide as a starting point for curating effective customer retention strategies. Treating your customers as brand ambassadors can help you reap the benefits of having loyal subscribers, consistent revenue and a strong brand reputation for your subscription company. Coupled with an all-in-one, subscription-first platform like Subbly, your retention rate will soar – your first 2 weeks are on us so you can experience for yourself. Try Subbly today!

By Zaki Gulamani
Editor-In-Chief at Subbly