Andy Hill, managing director at King of Shaves shares how you can create a thriving business around a subscriptions service.
Although subscriptions services have been around forever, the onset of the digital age has really opened up new opportunities for them. The internet has made it incredibly easy to automate a lot of the subscription process for both the customer and the supplier.
However, this technology is widely available so every business offering a subscription service is now able to reap the benefits. There are a few key things that you have to remember to ensure that you keep your brand ahead of the competition.
Visibility on acquisition costs ROI
Acquiring new customers can be an expensive business and all that investment can so easily go to waste, especially if you are unable to retain enough of those hard earned new customers to give you a return on your investment. If your business has no visibility on retention, you will have no accurate way to measure or monitor your acquisition cost’s return on investment (ROI). Look to find a method of accurately measuring this ROI, and with each subscription repeat you will be able to gauge the life time value (LTV) for each customer.
A new subscriber potentially makes a bigger commitment to your brand and your products than a traditional online purchase. This provides the opportunity to build a much closer relationship with your customer than with a traditional B2C relationship. For a start, based on the frequency of the subscription that they have taken out, you get an accurate measure on how often they consume your products. From this, you can begin to see their ongoing potential value to your business.
Therefore, subscriptions can give you a much clearer understanding of the average customer LTV, which in turn allows you to better manage how much you are prepared to invest in acquiring new customers in the future.
Keep them buying
A subscribing customer is less likely to be influenced by your competitors’ marketing. If a non-subscription customer is influenced by a competitor’s marketing campaign, they may be tempted to give the new product a try, especially if they are nearing re-purchase. A subscription customer has made a bigger commitment to you, and they can’t become passive and elect not to buy your product. They actually have to make the effort to pause or cancel their subscription, changing their relationship with your brand. If your products offer value and the service you have provided has been good, then this is not something they will do lightly.
Flexibility and control
A well-coded subscription website puts the customer in a position of control, which can help to boost customer confidence and trust. The more that the customer can do for themselves, the less of your resources are tied up dealing with customer and subscription admin. With these resources freed up, you can dedicate more time to providing high-quality customer service and other more important areas.
Reward loyal customers
You can prioritise your high-value customers who have subscribed for a long time by rewarding them with discounts and loyalty schemes. By doing so, you can begin to build a level of affection for your brand. Study the demographic of these returning customers to identify other potential customers with similar traits.
Market to your customers
Subscriptions services deliver products to your customers on a regular basis, with the pick, pack, and postage costs already built in, and each delivery provides you with an opportunity to market your brand to your customer. You can surprise with a sample of a new product, keep them informed of new offers or tempt them with an upgraded service. This method of marketing will always be more impactful and have much bigger redemption levels than an email campaign as it is more tangible. Also, as you know so much about your customers, you can be more targeted and relevant in your offers.
Providing great customer service
One of the cornerstones of a subscription business is excellent customer service, and you need to make sure you have enough resources in place to provide a high level of service. Putting yourself in the customer’s shoes will help you understand the response they want and the respond they need (sometimes these are different) and then set your service level agreements (SLA) accordingly.
When it comes to putting your customer service into action, always remember that customers want to be listened and responded to by another person, not a machine. People can show empathy, while an automated system can’t. With great customer service, a negative customer experience can be turned around, a relationship strengthened, and a brand new, loyal customer created. You can also view this as a subscription retained, and an LTV that has grown because of their newly formed brand loyalty.