Subscriptions are so hot right now in the DTC space, and not just thanks to the global pandemic (although let's be honest, it did help!) - the subscription ecommerce market is projected to reach $473 billion by 2025, compared to a "mere" 13.2 billion in 2018.
Convenience, savings, wanting to try new products or lockdown boredom are just a few reasons why more and more consumers choose the subscription model. Convenience has always been the hallmark of online shopping, so it's not a surprise DTC brands are taking it a step further. Savings? While I'm not a huge fan of the "Subscribe & Save" approach, a chance to save a few bucks never goes unnoticed by the customers.
Lockdown boredom and wanting to try new products is where things get a little less optimistic for subscription brands. It worked wonders while we were stuck in our homes; but as we're slowly leaving the nightmares of the lockdown behind us, companies must prepare for the inevitable: customers churning. After all, if people feel like trying something new, many will go back to their pre-pandemic buying habits and go for a shopping spree on Main Street. Boredom? What boredom? We're finally allowed out! Online yoga? Why do it at home if the studio's open?!
So yeah, the post-pandemic churn is inevitable; however, it doesn't mean it has to be this way for your brand - there's plenty you could be doing to keep that churn to a minimum.
6 Winning Strategies To Prevent Customers From Churning
1. Double down on engaging your customers
I swear, I'll get this tattooed on my forehead one day:
Churn prevention starts as soon as the customer subscribes.
Or at least, it should. Many subscription brands focus all their efforts on the acquisition side of things, pampering and showering with value only the people they're trying to acquire. Then, as soon as the customer converts... Radio silence, occasionally disrupted by a half-arsed email campaign, followed by a series of panicked emails once the user decides to hit the "Cancel My Subscription" button.
Instead, focus on engaging your customers and making them feel the subscription has been tailored to their needs from the moment they sign up. Customer churn boils down to one thing: people losing interest in your subscription, whether it be because they no longer find it valuable or it doesn't help them achieve their goals. To avoid it, you need to understand your customers and what made them sign up for your subscription in the first place; then use that insight to personalise their experience so it matches their needs and wants.
But, personalisation to new customers can be quite a challenge as you only know very little about them. The simplest and least intrusive way to overcome this is using website quizzes. A well-designed quiz acts like a helpful shop assistant, asking all the right questions to help your customers succeed on their shopping journey. Some beauty brands have reported a 400% increase in conversion rates since introducing the quiz on their website, designed to better tailor skincare products to their customer needs. Quizzes are simply a goldmine of data for brands and a super helpful feature for the customer, making them feel valued and cared for.
Thread does it well where it takes you through quite a detailed survey about what style of clothing you like to show recommendations based on your preferences:
The messaging is simple but powerful: "Dress better in 3 minutes" indicates the quiz is intended to benefit the customer (as opposed to the brand collecting data, for example) and that it'll only take a very short while to complete. Then, there's the "Get started, it's fast and free", addressing any uncertainties the customer might have about its duration or cost.
Website quizzes are just the beginning of your personalisation efforts. Once the customer receives their order, ask for feedback and ask for it fast. I'm not talking here customer reviews, no - ask for their feedback from the customer service perspective. How was their shopping experience? What would make it even better for them? Did they have any issues or questions about their purchase? Make sure the questions are designed not around what you want to hear but rather to help you identify elements that could prevent people from subscribing in the future. And while I'm not a huge fan of incentivising customer feedback with discounts (makes you question the true intentions behind the feedback), some brands use it to encourage more users to share their thoughts:
2. Let the data guide you
You won't get far in marketing without data. Unfortunately, I have noticed an unhealthy tendency for brands to collect data and never fully integrate it into the customer journey. But customers want contextually relevant communications - 80% of buyers who classify themselves as frequent shoppers say they only shop with brands who personalise their experience. Think about this: if they've been your customer for a certain period of time, placed a few orders, took one or two of your customer surveys, and your brand still treats them as first-time buyers with irrelevant messaging or recommendations - would you keep coming back? No wonder they don't.
Instead, really tune into what your customers are saying and use it to provide a better shopping experience. How? By sending out personalised & behavioural email flows - check out this email from Netflix:
As you learn more about your customers (purchase history, on-site behaviour, their feedback and preferences), segment them into relevant customer groups in your CRM and send out communications based on what they consider is valuable and their on-site behaviour. The results speak for themselves: personalised automated emails have a 70.5% higher open rate than regular emails.
Each flow should be highly tailored around the information customer provides. If they indicated they're vegan, their emails should revolve around vegan recipes or tips on how to up their protein intake, for instance. If you're a food subscription box and a large customer group of yours is parents, you could be sending out emails around family recipes and the convenience and speed you get from your subscription box.
One thing to bear in mind when it comes to letting data guide your marketing efforts is context - Amazon, unfortunately, learnt this lesson the hard way:
Context is what stops personalisation from being creepy and quite often, dumb. It takes many factors into consideration, such as the customer's position in the customer journey, their motivators, how the product is being used and their demographics or location. Data without context is pretty much useless - it tells you about events that took place in the past, and while it helps inform your future activities, it doesn't explain the story behind customer trends.
3. Build a community around your subscription
With so many subscription brands to chose from, often offering the same or very similar products, how can you convince customers to stick to your brand? By building a community of highly engaged customers around your subscription. Let me make something clear: your customer database is not a community - they only engage with your brand for the product. What you want to be doing is delivering experiences that make them want to engage with your brand because of the value it brings them.
This is what it looks like in real life:
Beer52, a craft beer subscription business, delivers such a feel-good experience to its customers, they want to tell others about it all over social media. Make no mistake: it doesn't happen by accident - the beer itself would never elicit such a strong emotional response from subscribers.
To build a community around your brand, start by reframing your mindset around the subscription model and make it seem more exclusive by calling it a secret club instead (you can learn more about what I mean by it on episode 51 of the Customers Who Click podcast here). Scarcity works, and your customers will feel more inclined to join your subscription if the membership is only available to a few chosen ones.
Exclusivity is what grabs attention - now you need something to keep the subscribers engaged so that even if they're no longer interested in the subscription box, they remain subscribed because of the value being a part of your community brings into their lives. It could be anything: if you're a food subscription service, you could be sharing recipe videos or cooking classes. A beauty subscription box? Skincare guides or beauty experts sharing their favourite makeup hacks. While we're still on the Beer52 case, the company sends out their Ferment Magazine, providing a tonne of useful content for beer lovers.
4. Personalisation is key
I know we've already covered a fair share of personalisation methods for subscription brands but this one's different - I'm talking about enabling the customer to personalise their subscription box at any given time. It's crucial the subscribers have full control as to what and how often is sent to them, otherwise they'll churn within months (if not weeks!) from signing up.
Take a look at the example below. The customer can request a delivery every eight weeks, but it's an eight-week supply; for those who'd like to receive the same amount sent every four or twelve weeks, the only option is to either purchase as a one-off or hit that cancel button.
The whole point of the subscription model is convenience; peace of mind for the customer to put purchasing replenishable products on autopilot so that they have one less thing to worry about - if they can't go back to edit their purchase, it doesn't exactly scream convenience to me... Anything from order frequency, product flavours to the number of items sent in the next round needs to be easily customisable.
Oddbox does it well and they even allow customers to exclude certain vegetables (because who likes brussels sprouts?)
5. Optimise for lifetime value, not just quick wins
This should go without saying it but here we are, saying it anyway. You can improve the product as much as you like; give out discounts and offers to re-engage churned or inactive customers; deploy as many CRO tricks and methods as possible, and still not see a significant increase in revenue because you're doing everything but serving the needs of your customers. You'll forever be chasing new customers, spending more and more on paid acquisition channels while failing to leverage your biggest asset: your existing customers.
Building a sustainable subscription business starts and ends with providing ongoing value to the customer, so rather than optimising for revenue, optimise the customer journey to increase the customer lifetime value. And it all starts with providing excellent customer experience across all touchpoints, from the on-site experience to your customer service department. Everything mentioned above contributes to excellent CX, so you're on the right track but know that it's just the beginning.
The real magic happens when you go the extra mile and explore techniques that surprise & delight or add a personal touch to the journey. I still remember my first Gousto box - it contained a really cool wooden box as a gift, totally unexpected and it's now my default spoon. So, you know, it doesn't have to be anything extra - just a little something relevant to me & my experience.
I also absolutely love Edgar & Cooper's loyalty scheme below:
Now, of course, a loyalty program is a no brainer when it comes to increasing LTV, but what I've found is that most of the loyalty schemes today are plain boring. You see, Edgar & Cooper could have gone down the same route but they chose this opportunity to make the customer feel good about being a part of their loyalty program. Essentially, the customer earns "belly rubs" instead of points (sounds soo good already, am I right dog lovers?), which can then be redeemed for either a discount, a meal to be donated to a dog shelter or used to plant a tree.
It's that warm, fuzzy feeling the customer experiences when interacting with your brand that makes them remain loyal to a brand - no discount code will ever make me feel the way I feel about earning those belly rubs...
Speaking of discounts and offers, please don't get me wrong - they're useful when implemented strategically and thoughtfully. My problem with them is that you're altering customer expectations if it's the only strategy for engaging subscribers you have in place - they'll probably never buy from you at a full price. Not to mention the damage to your margins...
6. Speak to your customers
This is the real deal. This is the stuff. Speaking to your customers on a one-on-one basis is the ultimate churn prevention weapon every subscription brand needs in their arsenal. And I don't mean just asking for post-purchase feedback - I mean having actual conversations with them and trying to find out as much about their needs and motivators as possible.
What goal are they trying to achieve by signing up for your subscription? What made them sign up and remain signed up? Why did they only use the free trial and never upgraded? Why did they cancel? How are they using the product? And so on...
Answers to those questions will help you create more meaningful experiences in the future and better serve your existing customers today. But don't just stop there - leverage your customer service too. Many brands treat their support team as a place where minor customer issues are solved, but I see it as so much more than this; I see it as a goldmine of data. After all, the customer service representatives speak to your customers daily - what insights are you missing out on by not listening?
Churn prevention starts the minute a customer subscribes. It's no good trying to prevent the customer from leaving when they've already made their mind up; most of them will probably cancel regardless of what you're doing to stop them, so focus on providing value from the very beginning. Make sure that any messaging you send out has a purpose and is contextually relevant to their interests and wants. Deliver experiences that make them feel good about interacting with your brand, and above all - speak to them and listen to what they have to say.
If you want to chat customer churn some more, or if you're interested to see how those methods would apply to your brand feel free to reach out to me on LinkedIn or drop me an email on firstname.lastname@example.org.