Subscription Models – Strategies to Retain Customers
Subscription Models: The Key to Customer Retention
Subscription services are increasingly gaining popularity with time. So, it comes as no surprise that e-commerce businesses are taking advantage of subscription models. These models serve as the key to custom retention for e-commerce businesses with the right strategies.
In this post, we shall talk about subscription business models in detail while covering the following:
- What Is a Subscription-Based Model?
- Different Types of Subscription-Based Business Models
- Top 4 Customer Subscription Retention Strategies
What Is a Subscription-Based Model?
A subscription-based or subscription business model is a model in which customers pay recurring fees for accessing a product. Moreover, customers usually pay monthly, yearly, or at a frequency for it.
In addition, a subscription-based model helps businesses capitalize on the compounding value of customer relationships. It happens when customers continually see the value that e-commerce businesses can provide them with. When that happens, it generates recurring revenue for businesses.
Different Types of Subscription-Based Business Models
The following are the three different types of subscription models:
1. Curation Model
It is a popular subscription model with a focus on luxury or specialty items, like beauty products, clothing, and food. Further, this model offers subscription services with boxes targeting an individual’s personal needs and preferences.
Example: Birchbox subscription service that focuses on beauty products and is primarily targeted to women.
2. Replenishment Model
Often referred to as “Subscribe and Save,” this is an increasingly popular model for busy people. It allows customers to automatically receive essential items they use regularly, such as toiletries.
Example: Amazon’s Subscribe and Save that helps subscribed customers regularly receive essentials with savings.
3. Access Model
The access model focuses on access-focused subscriptions, offering exclusive discounts, early access, etc., to customers. Further, this model is all the rage in fashion and food verticals. It benefits businesses financially and allows them to show their love to valued customers, too.
Example: Streaming media services, such as Netflix.
Top 4 Customer Subscription Retention Strategies
Innovative subscription models serve the purpose of customer retention strategies in service marketing, provided that e-commerce businesses leverage them well. Moreover, you may want to know the top customer subscription retention strategies as an e-commerce business. Without further ado, let us reveal to you the top 4 strategies in this regard:
1. Reward Customers with Discounts
Consumers always look for cheaper alternatives to products and services they use regularly, and you can take advantage of that. The same holds for subscription services that you offer. For example, you can reward your customers with discounts who regularly use your subscription service to retain them.
Furthermore, here are some of the ways you can reward your customers for your subscription retention:
- Offer a certain percentage on the first order and some discount on recurring orders.
- Provide your customers with a free delivery service for each recurring order.
- Let your customers buy more from you to save more.
- Offer your customers a huge discount for a specific number of orders.
2. Authorize Customers to Self-Service
Customer subscriptions justify they trust a business enough to deliver them needed products or services on time. However, 55% of consumers do not sign up for subscriptions due to the lack of control. This is what a survey from Kibo (a leading digital commerce platform) reveals. So what can businesses do to encourage these customers to subscribe and retain? Here is the answer:
E-commerce businesses can empower customers to self-service. That is to say, they should allow customers to manage their subscriptions, update their account details, check order status, etc.
Moreover, e-commerce businesses should consider adding the following functions and features to authorize their customers to self-service:
- Order Now
- Update the Shipping Address and Payment Method
- Pause or Cancel Subscriptions
- Swap Products or Services
- Control the Use Frequency
3. Let Customers Get the Right Products on Time
Businesses cannot rely on their typical e-commerce model, such as B2B subscription models (Business-to-Business Subscriptions) to sell subscriptions. As a matter of fact, they require seamless inventory and order management to avoid order disruptions or miscommunication with customers.
In other words, e-commerce businesses need to make sure their customers get the products they order on time. Not to mention, it can aid them in retaining their subscribed customers. Here are some of the ways e-commerce businesses can improve their subscription rate with inventory management:
- Track both subscriber and one-time purchase inventory needs in a single UI (User Interface).
- Make use of inventory levels to decide on promotional plans.
- Understand changing customer behavior based on subscriptions.
4. Satisfy Customers with Transparent Communication
Today, transparency has become a new battleground for businesses to attract and retain customers. And ecommerce businesses, in particular, are no different in this respect. Why?
Customers who subscribe to the products and services of ecommerce companies rely on them to timely fulfill their orders. For the same reason, customers are curious about how they spend money on subscription products and services.
Put differently, customers nowadays expect transparent communication from ecommerce businesses to subscribe to their products or services. Not to mention, transparent communication ensures customer satisfaction and eventually retention.
Moreover, you can satisfy and retain your customers in the following ways with transparent communication:
- Provide your customer with real-time updates throughout the delivery process.
- Send emails to your customers to remind them of the deadlines to make changes to subscriptions if they need any.
- Honestly communicate with customers about order delays or out-of-stock items.
- Regularly, remind the customers to update their payments and address information.
These are the key strategies for subscription-based businesses to leverage for customer retention. Besides, we recommend you read our post on 5 Top Digital Marketing Strategies and exploit them for your ecommerce business.
Conclusion
Subscription services are immensely gaining popularity with time. By the same token, it comes as no surprise e-commerce businesses are taking advantage of subscription business models. There are three types of subscription models, including curation, replenishment, and access models. To wrap up, here is a recap of the top strategies that e-commerce businesses can leverage for subscription retention:
➔ Reward customers with discounts.
➔ Authorize customers to self-service.
➔ Let customers get the right products on time.
➔ Satisfy customers with transparent communication.
FAQs (Frequently Asked Questions)
Q1. What are the benefits of the subscription model?
A1. Here are the noticeable benefits of subscription models:
- A subscription model is convenient to use for customers and discover new products.
- Further, it allows businesses to accurately predict revenue.
- Furthermore, it helps businesses attract more customers.
- Also, it decreases customer acquisition costs.
- Lastly, it establishes strong customer-business relationships.
Q2. Why is customer retention important?
A2. Customer retention is an important aspect for businesses because of the following reasons:
- It helps businesses cost-effectively increase their revenue.
- Also, it offers businesses a competitive advantage.
- It aids businesses in maintaining a strong brand reputation.
- Further, it provides valuable customer feedback.
- Moreover, it contributes to long-term business growth.
Q3. What is an example of a subscription model?
A3. Content streaming services are an excellent example of a subscription model.
Q4. What is subscription retention?
A4. Subscription retention refers to keeping existing subscribers (customers) paying businesses for their recurring subscription service.
Q5. What is the subscription model in e-commerce?
A5. A subscription-based model is an e-commerce business model that allows customers to subscribe to regular delivery of products or services.
