Subscription services are one of the best things you can do for your ecommerce site.
Think about it – one of the most challenging parts of running any business is getting monthly recurring revenue (MRR). Monthly subscription services break through that barrier.
As such, this post will teach you why subscriptions are important, how to get subscribers, and how to grow your subscription based business.
According to a recent study, more than half of U.S. adults pay regularly for online services. But guess what?
They’d do so more often if the businesses offering those services introduced more features and premiums.
Consumers want greater subscription flexibility, and more options in general, when it comes to functionality.
Offer three different levels of subscription packages. This will provide flexibility in choice, as well as making it easy for customers to choose the middle ground.
Allow users to customize their subscription. Letting your customers choose what they get every month and how often they get it will appease their desire for control.
If you’re a Shopify store user, you can offer product customization options with this app.
Think about this: All of your customers are now on monthly subscription services. Every month, all you have to do is make sure the right product is shipped to the right person at the right time.
No more one-off orders. No more confusion as to which products need to be sent. Sounds convenient, right?
Well, it’s convenient for your customers, too.
People don’t want to remember to reorder a product every month. We’re busy – that’s just another annoying thing on our to-do list that we might forget.
They may be exaggerating a bit on the $5-a-gallon gas, but they have great points. Subscriptions are really friggin’ convenient!
Allow for a free trial. Notice how Trunk Club offers 10 days to try everything on and decide what you want.
Offer free shipping. People hate paying for shipping. In fact, it’s the single biggest reason for abandoned carts.
Provide excellent customer support. Trunk Club gives you a “personal stylist”. That’s really just a customer support person who really digs fashion. Try to offer a service of your own to add to the value of your subscriptions.
By the way, Shopify store owners can easily add subscription services to their store with this app.
Customer referrals are the single most powerful advertising tactics your company has at its disposal. Referrals are often the highest paying and longest lasting customers – and they come for free! No paying per click and no showing them a banner ad.
Referrals are so effective that they influence 81% of people’s buying decisions, compared to the next highest influencer, TV ads, which account for only 65%.
You’re probably wondering: What do referrals have to do with subscription signups?
Referrals are easier to gather when you offer subscription services.
As I said above, subscribers to your products/services are often longer-lasting and higher-paying.
The longer a customer is with you, the more they trust you and the more you become top-of-mind. The more they trust and think about you, the more they talk about you – thus bringing in more referrals, who are longer-lasting and higher-paying and go through the same process! It’s an upward spiral.
Remember that MRR we talked about in the opening paragraph? You want that!
Not only do they create a recurring payment, but subscriptions also increase your customer lifetime value.
The graph above shows “the ratio of subscription customers’ LTV (customer lifetime value) to transactional customers’ LTV among online merchants who work with the two models.
A value above the green line indicates that these businesses’ subscription models have a higher LTV (a measure of profitability) than their transactional counterparts.
In other words, you’ll create consistently higher income with subscription services if your products are under $75.
Death Wish Coffee used to sell ground and full bean coffee by the bag.
After seeing the same customers order from them consistently, they eventually decided to create subscription packages ranging from $14.39 to $71.99 per month – right in the sweet spot, according to the LTV chart above.
According to their founder, Mike, their success in adopting subscription services and driving customer loyalty was “honestly, by adopting Bold”. He’s talking about the BoldCommerce Recurring Orders app for Shopify.
As I’m sure you’ve heard, the cost of acquiring a new customer is 6-7 times higher than retaining an old customer. Subscription services lie in the latter – old customers becoming even more loyal (and at a very low cost).
Easy peasy. But what about customer retention?
A 2% increase in Customer Retention has the same effect as decreasing costs by 10% – Leading on the edge of chaos, Emmet Murphy and Mark Murphy.
Talk about the 80/20 rule! Such a small increase in customer retention leads to major business success.
It’s simple: Recurring customers are more loyal and stick around longer.
Setting up a subscription service is (or at least, should be) stupid simple. You choose your package, enter your payment and shipping information, and get a package to your door every month.
The simpler you can make this process, the higher your conversions will be and the more customers you’ll get (and keep). Why? Cognitive load.
Cognitive load is the psychological term for how much our working memory can handle at any one time. Essentially, it refers to the amount of “stuff” (i.e. navigation bars, offers, images, options) you can work on at one time.
When your cognitive load becomes too high, you experience cognitive overload – a feeling of being overwhelmed and confused.
Offering too many options or making your offers too complex causes your customers to experience cognitive overload and leave.
Subscriptions, when done right, keep this from happening and make it stupid simple for your customers to buy from you.
I think I’ve hammered it into your head by now – emotional connections are important.
Subscription services are ripe for creating this emotional bond between you and your customers.
Subscription services are often very personal – even more so if they’re customized.
People use theses products every month, sometimes even every day. Repeated use and exposure to something (especially when you characterize that something as “yours”) causes an emotional connection to form.
People tend to subscribe to a business they like. The longer they’re subscribed, the more they like that business. Upward spirals, baby!
They have it easy because people are so in love with their pets, but you can see how something like this would create an emotional connection.
And so we’ve arrived – after some thorough convincing, you’re ready to grow your subscription based business.
Whether you already offer a subscription box service or you haven’t broken into the subscription economy, this section is sure to offer great insights.
Influencer marketing is easily one of the top digital marketing methods to date. It’s free, effective, and built on relationships rather than money.
Little LIFE Box, a subscription box service offering healthy snacks, skincare, and lifestyle products, used influencer marketing to grow their business to over 1,500 subscribers.
They also gave a little gold nugget of knowledge: offer an affiliate program to influencers. An affiliate program means giving the influencers a small profit for every sale they send your way.
It’s really a win-win; They get paid to enjoy and spread a good product and you make more sales.
Use tools like BuzzSumo, Klout, Whalar Labs, or Social Mention to find influencers in your niche.
Find them manually by searching for them on social media, using #yourindustry. For example, to find influencers in the healthy lifestyle niche, I would search #fitlife or #healthylifestyle.
See who your customers follow on social media. Chances are, they follow the influencers you’ll want to target.
For more tips on influencer marketing, check out this full guide by Shopify.
Referral programs are the bread and butter of online subscription sales. They’re basically free money.
Speaking of butter, Magic Butter, an online store for Cannabis products, was able to gain an extra 105 referral purchases in a single month by adding a referral program!
Setting up a referral program isn’t difficult, either. In fact, ReferralCandy’s referral program comes built in with BoldCommerce’s recurring orders app for Shopify – so you get a subscription program AND a referral program, for the price of one!
For more information, check out this guide on how to promote your referral program.
Popups have a love-hate relationship. Everyone hates them, but they work so damn well.
Shopify performed a few tests for this theory, “In one test, popups drove 1,375% more email captures vs. a sidebar opt-in form.
There is a way to capitalize on the results while avoiding the hate. The answer lies in making your popups as not annoying as possible.
Only use on-scroll or exit-intent popups. On-scroll popups only appear after the user has scrolled so far down your page – indicating an interest in your site. Exit-intent popups appear when the user’s mouse leaves the browser – indicating they’re going to leave your site.
Allow the user to close the popup. Forcing them to refresh the page or find a hidden “x” button is just bad morals. Please don’t do it.
Make your popups beautiful. There’s nothing worse than an ugly popup. Make ‘em look good! Bonus points if they’re funny.
Look: Popups can boost your referral program and grow your subscription base. You should at least try them to see how well they perform. You can get a free 14-day trial of Pixelpop if you’re ready to start.
This is by far the most fun (and arguably the most effective) way of getting more subscribers.
You see, people love to feel important. They want to know that the businesses they buy from actually care about them. The easiest way to show that is through engagement.
Take Pley, for example. They’re a subscription-based service for children’s toys. Today, Pley offers subscriptions to LEGO collections and kits. If you’ve ever seen the excitement of a kid getting legos, you know how awesome this service is.
Pley created an online community called PleyWorld, where its most loyal customers can submit their own designs for LEGO kits. The community members vote on the designs, and the winning designs become part of the Pley subscription service.
This kind of customer engagement takes subscriptions, customer loyalty, and referrals to a whole new level. It makes the customers feel like they have an impact on the brands they buy from, which keeps them coming back.
Let’s face it: Subscription services are here to stay.
Recurring payment means great things for your business. It increases your customer lifetime value, thereby increasing your profits and decreasing your costs.
Starting a subscription service on your site is as simple as installing the Recurring Orders app on your Shopify store, creating a few packages, and advertising it to your customers.
It’s so simple that anyone can do it. But, few people do because it seems like extra work. Don’t let a little extra elbow grease hold you back from making massive sales. Create a subscription service today!
Kevin is the Partner Manager at Bold Commerce. He's passionate about ecommerce and believes there is no better substance than single malt scotch.