Insights

Slash subscription churn with the power of conversations

With more customers than ever signing up to eCommerce product subscription, stores are sensing a gold rush. But with delivery overload and high churn rates remaining a problem smart brands are investing in SMS to build long-term loyalty.

Robi O'Cleirigh
Content Manager @ Blueprint

Subscription models are poised to play a major role in determining which eCommerce brands thrive and fail in the next five years.

Already, 15% of online consumers are willing to pay monthly for recurring deliveries of a physical product. And with 9 in 10 subscription brands either maintaining or substantially growing their customer bases in the last year, the subscription gold rush is unlikely to slow any time soon.

It’s an opportunity which many eCommerce stores are waking up to - by 2023, 75% of all online merchants will sell products on a subscription basis. With recurring payments promising a (more) guaranteed revenue stream, improved CAC:LTV ratios and increased operational predictability, it’s no wonder many are keen.

Expect it’s not quite as simple as hiring a courier and watching the cash roll in. With so many brands launching their own subscription plans, competition for consumer attention and wallet share is skyrocketing. 

Innovate to convert 

Simple ‘subscribe and save’ offerings, whereby customers benefit from lower prices in return for committed spending, are now largely table stakes in the market. And while some consumers are increasingly prepared to sign up to subscriptions, their patience with brands who fail to deliver upon expectations is perishingly short. 

“[Subscription] churn rates are very high, and consumers quickly cancel services that don’t deliver superior end-to-end experiences." McKinsey

To differentiate their offerings, and to deliver enough value to keep subscribers engaged long-term, the best brands are getting innovative. Membership and community incentives which run alongside traditional reorder cycles have become increasingly popular. 

It’s a powerful play which fashion brand Italic typifies by offering subscribers exclusive access to discount pricing, free shipping, 24/7 support, personalized gifting and a VIP community of fellow buyers. 

Italic’s monthly subscription membership is proving a hit | Source: Italic 

But creating such a compelling offering alone is not enough. The proliferation of subscription models means it’s a buyers market - and under those circumstances, customers call the shots. 

High subscription churn

As we’ve seen, consumers are now more prepared to initially sign up to a subscription plan, but many remain commitment-phobic when it comes to staying enrolled long-term. In total, 46% are put off by permanent financial commitments, whilst 34% find it difficult to keep track of regular payments. 

Scarred by experiences of lengthy phone tariffs and difficult-to-cancel cable TV packages, buyers are demanding a more transparent and flexible transactional relationship with brands. Stores that don’t optimise for this, will suffer high subscriber churn as disengaged, unsatisfied customers cancel after one or two deliveries. 

"The best subscriptions mimic the personalized shopping experience of a physical retail store." Gabriella Yitzhaek - Co-Founder, Smartrr

The challenge for brands, therefore, is to manage relationships with subscribers in such a way that keeps them coming back time and again.

Churn-busting conversations

For that to happen successfully, stores must build loyalty by actively engaging customers over the long-term. This means consistently making subscribers feel invested in the brand they’re buying from, beyond a simple financial transaction. It means effectively capturing qualitative feedback from users and rapidly iterating on it. 

It also means giving customers the flexibility to easily skip a delivery (as opposed to cancelling entirely) when they’re overloaded with product, and providing recurring charge updates in a convenient and timely manner. 

And the only way to do all that, is by having two-way conversations with subscribers via SMS.

Unlike traditional email flows, social ads or spammy SMS marketing campaigns, conversational text messaging enables the kind of reciprocal brand-buyer relationships needed to keep subscriber churn low long-term. 

"Our customers love the feel of texting a brand. SMS really brings Daring closer to the community and vice versa." Donald Mendenhall - Senior CX manager, Daring

Customer response rates to SMS messages are 8x that of email, meaning you can better optimise your subscription service based on audience feedback. You can also deliver personalised, loyalty-building touch points that customers don’t experience with any other brand, and tackle churn caused by product oversupply with flexible delivery skipping functionality. 

With the battle to convert and retain subscribers set to dictate who lives and who dies in the eCommerce world, those brands that can build payment models which create compelling reasons for customers to sign up, then minimise churn long-term are best placed to survive.  

Blueprint now integrates with reCharge to allow merchants to send subscription activation, upcoming charge and recurring charge messages via SMS, whilst enabling two-way brand-customers conversations and flexible payment skipping via SMS. Thumbnail image courtesy of Stitch Fix.

Are you all CAC and no win back?

Start building sticky customers today with:

Customer feedback

Flexible subscription management

Intelligent replenishments & cross-sells

"The results have been staggering. Blueprint has massively increased our LTV."
Donald Mendenhall
Senior Customer Experience Manager
,
daring
Are you all CAC and no win back?

Start building sticky customers today with:

Customer feedback

Flexible subscription management

Intelligent replenishments & cross-sells

"The results have been staggering. Blueprint has massively increased our LTV."
Donald Mendenhall
Senior Customer Experience Manager
,
daring
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