Subscription Commerce for Customer Retention

Subscription Commerce: The Future of eCommerce Retention Strategies

14 Jul 2023

Rakesh Kesavan

Senior Consultant

Customer retention is a crucial component for long-term growth in the fast-paced world of eCommerce. Businesses are always looking for new ways to engage and retain customers since consumers now have so many options. Subscription commerce is one such method that has experienced tremendous success. eCommerce platforms can access the potential of recurring revenue streams and create long-lasting relationships with their clients by providing subscription based services or goods.

Focused and practical shopping experience

Subscription commerce enables eCommerce platforms to offer customers a focused and practical purchasing experience. Businesses can curate tailored subscription boxes or provide individualized recommendations by looking at consumer interests, buying habits, and previous purchases. This degree of customization encourages repeat business and continuing involvement in addition to raising consumer pleasure.

Here are some key ways in which subscription commerce achieves this –

Customer profiling: eCommerce systems collect useful information on customers interests, purchasing patterns, and demographics when they subscribe to a service or purchase a good. Platforms can better understand their subscribers thanks to the extensive customer profiles that can be created using this data.

Customized product selection: eCommerce platforms can provide subscriber-specific product options using customer profiles as a starting point. Platforms can provide individualized recommendations that are in line with the customer’s interests by taking into account personal preferences, prior purchases, and feedback.

Personalized communication: This is possible with customers thanks to subscription based business models. eCommerce platforms can take advantage of this chance to deliver tailored notifications like product updates, special deals, or reminders. Platforms deliver a more personal and interesting experience by greeting clients by name and adjusting the material based on their preferences.

Feedback and iteration: Since subscribers have a continuing engagement with the platform, subscription commerce encourages regular input from customers. This feedback loop offers insightful data about customer preferences, levels of satisfaction, and opportunities for development. This can be used by eCommerce platforms to iterate and improve their products, which results in a constantly enhanced and tailored purchasing experience.

Exclusive perks and prizes: To improve personalization even more, eCommerce platforms can provide subscribers with exclusive perks and prizes. These can include exclusive member discounts, early access to new products, or personalized promotions. Platforms build the relationship between the customer and the brand by offering personalized benefits.

The success story of subscription commerce

Dollar Shave Club (DST) is a subscription-based grooming company that delivers high-quality razors and other personal care products right to customers’ doors at an affordable price. DST’s uniqueness lies in their disruptive subscription-based model, offering convenient and cost-effective grooming products, coupled with witty marketing campaigns that have garnered a loyal customer base and transformed the shaving industry.

Affiliation: DSC offers websites the possibility to earn commission through every subscription which is sold through a link which tracks the websites.

Cross Selling: After starting with razors and razorblades, DSC now offers all kinds of products from adjacent product categories such as grooming cosmetics.

Direct Selling: Dollar Shave Club only sells through its website, eliminating vendor margins, allowing to bring cost savings directly to the customer.
eCommerce: Dollar Shave Club is only available online through its website, eliminating the need for physical stores, in-person sales staff and paying vendor margins.

Experience Selling: Dollar Shave Club has a distinct brand image focusing on the bearded man. By focusing on the manliness also in its advertising campaigns it allows the customers to identify themselves with the brand.

Subscription: Dollar Shave Club sells subscriptions for their razorblades. Through this, the product is characterized as a consumable and offers the customer a simplification as he doesn’t have to reorder the product every time he needs it.

Revenue streams that are predictable

Subscription commerce delivers a predictable revenue stream, in contrast to conventional eCommerce models. Customers who subscribe to a service or product agree to make recurring payments, giving firms a consistent stream of cash. The ability to plan operations efficiently, invest in client acquisition methods, and maximize overall business performance is made possible by the financial stability of eCommerce platforms.

Here’s how it works –

Commitment: Customers who subscribe to a service or product agree to make recurring payments, usually on a monthly or annual basis. This dedication guarantees the company a steady stream of income.

Revenue forecasting: Compared to traditional eCommerce models, where sales might vary, eCommerce platforms can anticipate revenue more precisely because they have a subscriber base and fixed regular payments. This enables improved resource allocation, financial planning, and growth estimates. 

Better cash flow: Companies may better control their cash flow when they have stable revenue streams. Regular subscription payments provide a steady income that can be used towards operational costs, product development, marketing, and other growth initiatives.

Opportunities for upselling and cross selling: Opportunities for upselling and cross-selling extra goods or services to subscribers arise with subscription commerce. Businesses can raise average revenue per subscriber and improve the dependability of income streams by providing supplemental or upgraded choices.

Expansion and scalability: Companies can extend their operations and broaden their services as subscription commerce picks up steam and draws in more subscribers. The revenue stream gets more stable and reliable as the subscriber base grows, facilitating future growth and expansion.

Enhanced customer engagement

Customers are more likely to feel engaged and connected when using subscription based business models. Receiving handpicked goods or services on a regular basis inspires enthusiasm and anticipation. By establishing loyalty programme, special content, or member only benefits, eCommerce platforms can take advantage of this engagement. These programme encourage customers to renew their subscriptions for a longer period of time, in addition to strengthening the relationship between the client and the brand.

Subscription commerce ensures enhanced customer engagement through various strategies and features

Continuous relationship: Subscription based business models create a constant connection between the customer and the company. Contrary to one-time purchases, subscriptions promote ongoing dialogue and involvement, developing a deeper connection to the company.

Early access and benefits: Subscribers to subscription commerce frequently receive exclusive content, early access to new products, or other benefits. These services provide clients with a sense of exclusivity and value, which promotes continued engagement and loyalty.

Gamification and rewards: Gamification components and incentive programmes can be used in subscription commerce. This contains reward tiers, milestones, challenges, and point systems. Businesses may boost consumer engagement and encourage continuous participation by transforming the subscription experience into a journey akin to a game with milestones and incentives.

Increased customer lifetime value

eCommerce platforms can considerably raise customer lifetime value (CLV) by switching from one-time purchases to recurring subscriptions. The CLV statistic calculates the total revenue that an individual customer brings in over the course of their dealings with a company. Because customers are more inclined to renew their subscriptions and look into additional goods when they shop via subscription, firms can extend the client lifecycle. This prolonged involvement results in increased potential revenue and general profitability.

In recent years, the eCommerce sector has seen a considerable increase in the popularity of subscription commerce. Innovation, personalization, sustainability, and improved customer experiences are expected to characterize the future of subscription commerce. Businesses that adapt to these trends and provide value through subscription models will prosper in the changing eCommerce landscape as technology advances and consumer expectations change.

ShopSphere, a comprehensive eCommerce suite to increase client retention and foster long-term success. For eCommerce platforms, subscription commerce has become a potent tool for improving consumer retention. Businesses can establish enduring relationships with their clients by providing personalized experiences, encouraging participation, and establishing reliable revenue streams. The advantages of subscription based models are further enhanced by their capacity to make use of data-driven insights and increase client lifetime value. As eCommerce evolves, ShopSphere looks forward to providing long-term growth and enabling customers to embrace subscription commerce.

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