8 Reasons Why Subscriptions Are The Future For E-commerce Brands
Ecommerce subscription models are becoming more and more popular these days. Why? Well, they offer a lot of benefits for both brands and customers alike. For the customer, subscription boxes make it easy to get the things you want without having to think about it too much whilst enjoying a lower cost from platforms such as subscribe and save offers for products and services. For brand owners, subscription services allow you to build your own business with pre-orders that keep coming in every month as long as people like what’s on offer – so there’s no need to worry about marketing or finding new customers all the time!
Many online subscription services will reduce your customer acquisition costs, create recurring revenue and if you develop a successful subscription model you will supercharge your eCommerce business.
Many online subscriptions will reduce your customer acquisition costs create recurring revenue if you develop successful
In this blog post, we’ll take a look at 8 reasons why subscriptions are so powerful for e-commerce companies.
1. Monthly subscriptions are an easy way to get customers to make a commitment to your brand.
When you create a subscription box, you can be sure that your customers will on average spend much much more than a non-subscriber. That is because they have already paid for the next shipment and are committed to receiving it. This allows you to have a more predictable income stream but it also means you have built an emotional connection with the consumer. They will not only accept your subscription-related content but also be more willing to receive information regarding new products and offers that you send them by email, so you can significantly reduce your marketing budget assigned to remarketing for repeat purchases and utilise that budget for new client acquisition campaigns.
2. Subscriptions allow you to build relationships with your customer and keep them coming back for more.
It sounds obvious but subscriptions services are a key driver for keeping your customers coming back for more. It’s a simple concept, but so many companies are still missing the boat as they put their focus on new customer acquisition rather than building successful relationships with existing ones. In fact, studies have shown that if you offer subscription services to your consumer and encourage them to share them with others in exchange for discounts or other rewards, more people will subscribe!
It creates a snowball effect as your consumers refer and recommend your products to their friends and family. The goodwill that we create by wanting our friends to share in our enjoyment of a product is very powerful. Combined with the trust that our friends and family have when receiving a recommendation it means that our offer can quickly gather momentum as referrals and recommendations start to gather pace.
3. The subscription box model is great for brands with seasonal products or who need a predictable revenue stream.
If your product niche is seasonal then a subscription offer is a great way to guarantee revenue throughout the year. This will help you keep sales ticking over during the fallow months. Alternatively, subscriptions are a great way to tackle the unpredictable nature of retail. You can build in some buffer and have products on hand for when demand increases (but it’s not seasonal).
If you are manufacturing to order, subscriptions will allow you to plan ahead and keep your workflow steady.
If you’re a small brand, it can be hard to project your production and throughput and wastage potential, so a subscription removes this barrier by guaranteeing purchases and allows you to know a significant portion of how much raw material to order to meet your demand. Remember, if you run out of product, that’s not necessarily a bad thing and you can start to plan effectively knowing what is guaranteed and slowly add incremental buffer stock to accommodate ad-hoc purchases to accelerate your growth.
4. The rise of e-commerce platforms like Shopify have levelled the playing field for smaller brands.
Platforms such as Shopify & WooCommerce have app integrations that provide business owners with everything they need to set up a subscription service.
The ability to create a subscription has never been easier. It’s not just the big e-commerce brands that are leveraging subscriptions either.
The rise of e-commerce platforms like Shopify have app integrations that provide business owners with everything they need to set up a store providing subscription services.
This means entrepreneurs who want to start their own businesses can now do it in a way that makes sense for them and without the headache of having to build it all from scratch. However, it should be noted that to fully optimise your subscription model some customisation may be required.
5. Customers love the convenience of having their favourite items delivered on schedule without any work involved.
Set and forget is one of the biggest advantages of a subscription service. More often than not a customer will set up a subscription and then become so accustomed to receiving their goods on a schedule that it becomes ingrained in their day to day life. So much so that only a major change in the customer’s circumstances would warrant their cancelling their subscription. Provided you are keeping your customer happy with on time in full delivery, then they are unlikely to cancel.
This is a huge advantage for you as your brand loyalty goes through the roof, but also it keeps your customers at bay. Their loyalty will be strong against your competition as whilst there might be a better offer out there, your customer is committed to your brand and enjoys the experience they receive from your service.
6. You can track performance metrics like conversion rates, lifetime value, and retention rates much better when they’re tied into a subscription model
The conversion rate on a monthly subscription is usually much higher than the one for a single purchase–because people are more likely to buy something when they know that it’ll be delivered and they don’t have to think about whether or not there will be anything else coming.
By including subscription services in your platform, you are almost guaranteed to increase the LTV (Life Time Value) of your customers because everything is automated and you no longer have to keep reminding them to order or chasing their repeat purchase.
Keeping a close eye on your churn (cancellation) rate is essential. Firstly for a business to gauge the lifecycle of customers but also to understand at what point in their subscription do they need to sweeten the deal by offering new options or incremental value to retain a customer for longer. This is where it gets really interesting as you look to optimise sales cycles and new product releases.
7. Build A Box concepts are extremely popular as they give your customer the perfect opportunity for customisation.
A study by the Digital Marketing Institute found that consumers who are presented with a ‘Build Your Own’ option were willing to spend, on average, 33% more than those offered pre-set options.
This is because they feel valued and as if their needs have been taken into consideration. Personalisation is one of the key points of brand connection in these days of flexible lifestyles. Whether it is beauty products via a beauty box or food via a meal kit, consumers want to be able to go online and get what they want, how they want it and when they want it.
Build A Box subscriptions tick all the boxes, handing the power of curation over to customers and gives you that ability to understand what your clients demand that not only allows them to enjoy an amazing customer experience with your brand but provides you with valuable data to understand your customers wants, needs and desires to fit in with their ideal lifestyle.
8. With guaranteed income and visibility of your churn rate, you can calculate your customer lifetime value and this is very interesting to potential investors for your business.
OK, so this is the part that most e-commerce business owners overlook and is not often spoken of. Not only do subscription services create great experiences for your customers, predictable and consistent revenue for your business, but the power of that stability and ability to project customer lifetime value makes your business very interesting to potential investors in the long term.
When weighing up a potential investment, investors will evaluate the depth of your sales pipeline, your ability to project your sales figures and understand your churn rates whilst knowing your costs. Many businesses are unable to provide this critical data, so they fail to gain investment but armed with all the data and the benefits outlined above, you could put yourself in a prime position to attract backers for your business if that is what you desire.
In this article, we’ve talked about the benefits of the Ecommerce monthly subscription model and how to implement them. This strategy is a great way for you to gain loyal repeat customers that enjoy your products because they are always sure of what they will be getting in their monthly box. Creating a monthly subscription can smooth out those peaks and troughs in your revenue stream so you have a constant source of predictable income as well as being able to focus on new customer acquisition whilst providing you with an ideal test audience when launching a new product offer or discounts. Have you created a successful subscription business model? If you need help setting up your first subscription then get in touch! Our team has plenty of experience creating monthly subscription solutions for our clients which have transformed their business model to generate significantly more income for far less marketing investment.