The value of subscription programs for eCommerce retailers has doubled each year out of the last five, according to McKinsey research. Since 2011, this represents an increase in value from under $60 million to over $2.6 billion.
Some of the most valuable and well-known subscription services today include Amazon, Dollar Shave Club, and Netflix. At the same time, even smaller online sellers can benefit by improving their revenue and customer lifetime value by adding subscription programs to their own e-Commerce platforms.
B2C and B2B Companies With Successful Subscription Programs
Almost any company that offers products or services that customers will reorder might consider a subscription model. To understand how various companies maximize their benefits by attracting customers, it should help to look at some successful examples.
- The Vitamin Shoppe: This B2C online retailer focuses upon supplements, vitamins, and other natural or health-related products. They have a program called Spark* Auto Delivery that serves as a subscription and discount and loyalty program.
- Dollar General: In order to help attract more people to their online store, this discount brand has the DG Auto Delivery program. They encourage subscriptions with $5 discounts and free shipping for orders over $25.
- Mrs. Meyers: This niche retailer emphasizes the convenience for customers of the Clean Day Subscription. They also offer free shipping on orders over $30.
B2B companies also offer subscriptions to their business customers:
- Grainger: This B2B company sells electrical and other supplies to business customers. The Granger Auto-Reorder program to make it easier for buyers to manage orders and keep from running out of frequently used items.
- Graze: Graze sells healthy snack subscriptions to both individuals and businesses. Their subscription program was highlighted as a case study by Magento. This example is a bit different than the others because Graze actually started out with a subscription model and then later, wanted to offer more traditional retail sales.
- Allegro Medical: Allegro Medical promotes its Monthly Delivery option as a way to avoid out of critical supplies. In addition, they offer free shipping to customers with orders over $75.
Online retailers will need to customize, test, track, and tune their subscription program to maximize effectiveness. Software may need to integrate with other systems in order to make the program run as automatically as possible. These are some things to look for in a platform that can meet current needs and evolve in the future.
Naturally, companies need to promote the benefits to customers of signing up for a subscription program. Almost all of these programs can ensure customers receive regular supplies on schedule without extra effort, so it’s worth emphasizing convenience. In addition, most B2C and some B2B companies promote their programs with discounts and free shipping offers. Making sure that customers have a transparent way to cancel auto shipments and subscriptions can help give them the confidence they need to subscribe in the first place as well.
Subscription Management Technology
These are the two vital pieces of technology needed to manage subscriptions:
- Subscription engine: The subscription engine manages orders for both customers and sellers.
- Payment options: Customers also need a way to store their payment information and have it automatically billed.
With the right software, the subscription engine and payment should integrate with each other in a seamless manner. A good subscription engine should also integrate with other related software, like the entire eCommerce site, accounting systems, and so on.
Logistics for subscriptions refers to those features that ensure the supply, delivery, and timing. Naturally, they will fulfill orders on the planned shipping dates for auto shipping. In addition, sophisticated subscription engines can merge multiple orders to reduce delivery costs. They may also integrate with inventory systems to make sure that businesses have stock available to ship at the right time. Automation of as many of these functions as possible will help improve efficiency and reduce errors.
User Experience Design
User experience, often called UX, has become one of the most critical elements of a successful eCommerce site. Some critical factors that can help convert shoppers into subscribers include:
- Subscription calls to action on landing and detail pages: Pages need to remind site visitors about the benefits of subscribing and of course, tell them how to get started.
- Subscription upsells in shopping cart pages: Once the customer has selected items, remind them again about the advantages of signing up for a subscription rather than just ordering one time.
- Communications: The subscription software should automatically send customers information about their new subscriptions, deliveries, and any details they may want to attend to.
- Analytics: Sophisticated subscription engines should integrate with predictive analytics to identify customers who are likely candidates for subscription offers.
Choosing Subscription Technology
Today’s online sellers can choose from a number of tested subscription technology options. Some businesses might base their choice partly upon the eCommerce systems that they already have in place. Each of these products works well, but some may be better or worse in individual cases.
- OrderGroove: This SaaS, or hosted, subscription option works with Demandware / SFCC and Magento and can be customized for other platforms.
- Recurring Payments: Recurring is a hosted option for businesses with Shopify stores.
- Other Magento and Magento 2 options: Subscribe Now and Adaptive Subscriptions are two more shopping cart products for Magento.
Any of these choices can work very well for some online sellers. Businesses should consider their own business goals and existing eCommerce software in order to come up with checklists of essential features.
Naturally, implementation timelines can vary a lot between businesses. Some factors can include software complexity, business processes, and required features. Here are the typical steps:
- Devise the strategy: Companies need to decide what they hope to achieve with their subscription program and the features that are likely to attract their customers. They can use this information to devise a strategy, set goals and metrics, and create offerings.
- Design: At this point, the subscription service will need to design that various features that customers and employees will see and work with.
- Development and testing: Software engineers will use the design to incorporate the subscription engine into the eCommerce site and then do QA to make sure it works as planned.
- Launch and evolve: Finally, it’s time to offer the product to customers. At this point, companies need to watch their metrics in light of their set goals.
Getting Started With a Subscription Program
As major online retailers continue to demonstrate, subscription programs can offer companies the benefits of more predictable and higher revenue, improved customer experiences, and better customer retention. Accorin has the experience to work with a number of different platforms and subscription products at any stage of a project. Contact us today (617) 859-7900 or [email protected] to tell us about your vision for a subscription program for your business, and we’ll let you know how we can help.