In recent years, the global ecommerce subscription market has been skyrocketing in value. Recharge’s latest State of Subscription Commerce report found that in 2022, subscription businesses saw an average of 12% year-over-year growth in lifetime value, 11% growth in average order value, and 7% growth in monthly recurring revenue.
With more and more customers buying into the ecommerce subscription model, expectations are higher than ever, and the stakes are being raised for merchants to stand apart from the competition. In today’s market, brands who continually optimize their subscriptions in strategic ways have key advantages that can help them both attract and retain more customers.
In this post, we’ll cover the advanced strategies that a mature, successful ecommerce subscription business can use to take their subscriptions to the next level. Apply these strategies to your own ecommerce subscription service to get more value out of the business model.
- For ecommerce merchants with recurring purchase options, subscription optimization is a key process.
- It’s important to approach subscription optimization from multiple angles, including studying customer behavior, personalizing offers with segmentation, A/B testing, and refining marketing and promotion strategies.
- Subscription businesses should be sure to track and refine their optimization efforts consistently over time.
4 advanced ecommerce subscription tactics to aid retention & acquisition
1. Understand customer behavior within the subscription model
In order to unearth key context about their store’s performance, merchants must diligently study and track trends in their customers’ behavior.
The specific behaviors and actions a merchant should track all depend on their products or services. Behaviors to track could include:
- The number of subscriptions the average customer holds
- How many one-time products customers typically add to their subscriptions
- Whether or not customers typically swap items in their subscription box
- Whether or not they skip any orders
- How frequently existing customers cancel their subscriptions
Merchants should track these types of actions alongside key metrics like AOV, LTV, MRR, customer churn, and retention. This can help shed light on why their subscription ecommerce service is performing a certain way. Additional insights can be found by gathering customer feedback through surveys and customer interviews.
Once merchants have identified patterns and trends in customer behavior, they can better understand successful areas and ones for improvement. They can then use this to inform business decisions and create more compelling subscriptions.
2. Segment customers & personalize subscription services
Personalization is key for success with the subscription business model. But in order to personalize effectively, merchants must narrow down their customer base into smaller groups.
This is where customer segmentation comes into play. With this strategy, merchants can break down their customer base into groups with similar traits.
Depending on the business, these segments could include:
- Subscribers vs. non-subscribers
- Customers who have previously all purchased the same product
- Customers who have all been with the business for similar amounts of time
- Customers in similar geographic areas
Merchants can then personalize their offers or communication based on the similar traits of each group. These personalization efforts could mean:
- Customized messaging for subscription customers, since there are more built-in touchpoints for communication with them
- Tailored product recommendations for customers with similar purchase histories
- Discounts on subscription boxes of particular items for customers who have purchased them as a one-time product
Regardless of the traits a merchant uses to segment or the strategies they use to personalize, it’s key to track effectiveness over time. To optimize subscriptions, merchants should note the impact of any tactics on key metrics, particularly customer lifetime value, retention, average order value, and any other priority KPIs.
3. A/B test offerings continuously
In A/B testing—also called split testing—two or more versions of a webpage, email, or other asset are compared against each other to determine which performs better. This marketing strategy is a powerful tool for optimizing subscriptions. And when done correctly, it can help merchants identify the most compelling offers, designs, or copy to sell their products or services.
When A/B testing, it’s crucial to only test one variable at a time to pinpoint exactly which changes improve metrics. Merchants may also need to repeat certain A/B tests multiple times, at different points in the customer journey, or at different times of year to validate hypotheses.
Elements to A/B test depend on the metrics a business is trying to improve. These could include:
- Product names
- Subscription discounts
- CTAs in an email or pages of an online store
- Seasonal offers
- Product photography
For example, let’s say a merchant finds that many customers are purchasing a specific item one time, but not signing up for a subscription. They might consider A/B testing the design or wording of their “subscribe-and-save” CTA button. One by one, they could then change and test updates to the copy, color, shape, and/or placement of the button to see which improves conversions.
Note that there is little point in A/B testing without measuring, analyzing, and tracking the results over time. Merchants should repeat tests as many times as necessary to validate their findings.
4. Refine subscription service marketing & promotion strategies
The success of a subscription offering depends on more than the quality of the product or service being sold. It also hinges on any marketing and promotion strategies a merchant uses to make customers aware of different options and increase conversions.
This is a vast and varied topic that includes an array of different channels. Depending on the products or services being sold, marketing channels could include:
- Email campaigns
- Social media posts
- Paid social media ads
- Influencer marketing campaigns
- Digital ads
- And more
For subscription merchants, it can be valuable to focus on engaging your most loyal customers. For example, you could create an email campaign for a referral program where customers who get others to sign up receive a discount on their next order.
Subscription merchants can also leverage marketing strategies to encourage existing customers to sign up for a subscription. To start, this could be done by segmenting out customers who have purchased an item once. From there, the merchant could sending them targeted social media ads with special offers for subscribing.
For success with the subscription business model, optimize continuously over time
Optimizing subscriptions is more than a one-time effort or single strategy. It is a constant process that should be approached from a multitude of angles, consistently over time.
Make it a priority to understand customers’ behavior, personalize offers for different segments, A/B test offerings, and hone your marketing and promotion strategies. You can then gain valuable insights about your subscribers’ preferences, and continuously test, analyze, and track the results. In doing so, you can create your best possible ecommerce subscriptions.