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Strategies, research, industry trends — your pulse on the marketplace
The   Bazaar   Voice
Strategies, research, industry trends — your pulse on the marketplace
subscription commerce

If you aren’t already thinking about starting a subscription business for your brand, you really should be. The subscription business model, or subscription commerce, has been booming for a few years now. With busy schedules and mindful budgets, more consumers are looking for convenient ways to save money. The subscription commerce market is growing so quickly, it’s expected to reach a market size of $2227.63 billion by 2026. That’s more than the GDP of Turkey.

Another shopping trend that really boomed is the uptake in subscription businesses. In 2022, the subscription commerce market is valued at $26.9 billion and is predicted to reach $74.2 billion by 2028, according to global research. So if you hadn’t been considering a subscription business for your brand, it might be time to start.

Chapters:

  1. What is subscription commerce?
  2. Benefits of subscription commerce
  3. Subscription commerce best practices
  4. Subscription commerce FAQs
  5. Personalize your subscription commerce experience


What is subscription commerce?

Subscription commerce is a business model where your customers pay a set recurring price to receive your products or services on a regular cadence. The three most common types of subscription commerce model:

  1. The curation model: This popular model provides subscribers with pre-selected items based on their personal needs and preferences. This option offers an element of surprise with each subscription box and is particularly good for helping your customers discover new products!
  2. The replenishment model: Commonly known as the “subscribe and save” model, this type of subscription allows customers to automate the purchase and delivery of everyday consumer products, such as vitamins, cosmetics, or hair products, for a discounted price
  3. The access model: With this model, customers pay a regular fee to attain desirable member-only perks, such as select discounts and early access to new products. Subscribers to this model are often attracted to the exclusivity that membership offers

For consumers, subscription commerce offers convenience, high-quality products, reliability, and great value, while brands and retailers benefit from locking in higher recurring revenue — more on that to follow.

Benefits of subscription commerce

Subscription commerce is riding a high right now. When done well, this service provides brands and retailers with some wonderful advantages.

  1. Recurring revenue: Subscriptions bring in consistent income that makes it easier to forecast sales and plan for the future — handy in a time when 77% of consumers have changed spending habits. And since you get paid upfront monthly, quarterly, or annually, you’ll be able to map out your fulfilment operations way easier
  2. Higher customer lifetime value: One of the best things about subscription services is that retention is built into the business model. By offering personalized discounts and membership perks, you have a better chance of attaining long-term customer loyalty, which increases the lifetime value of your customer base
  3. Lower customer acquisition costs: As we just mentioned, a higher CLV from subscription services means lower customer acquisition costs. All you have to do is keep your subscribers happy, and you’ll be able to significantly decrease your customer churn, lower your new customer acquisition costs, and watch your profit margins grow
  4. Easier Inventory Management: Unlike the pay-once model, a subscription commerce model removes the uncertainty about how often you’ll need to replenish your stock. This tells you how many customers are going to buy specific products in any given period of time, making it way easier to assess your stock levels properly
  5. Enhanced customer service: Shoppers love having control over their purchasing decisions. A subscription service offers this, plus the added benefit of discounted pricing. Toss in some personalization and incredible customer service, and you’ve got a recipe for an awesome subscriber experience.

Subscription commerce best practices

You can have the best products in the world as part of your subscription service but if it doesn’t come with the right criteria to wow your customers, it really won’t matter. To make a positive and lasting impression, you need a customer-first mindset.

1. Choose the right subscription model

An obvious starting point, but don’t trip up at the first hurdle. Depending on what you offer, select the subscription model that fits your e-commerce business best. It’s also worth testing two or more models with a select few of your shoppers so you can get a feel of what works and what doesn’t.

2. Figure out your USP

Any good subscription revolves around a very specific niche. Without a clear unique selling point, your brand won’t be well-positioned to spark curiosity around your subscription or deliver the tailored experiences consumers expect.

Ask yourself what makes your subscription different from your competitors. Next, ask what your customers stand to gain from your subscription instead of taking the more conventional course. Shoppers value specialized products and services. Being selective about what you choose for your subscription service will help you carve out your niche.

3. Make signing up easy

Once a customer decides to subscribe, signing up should be as simple as possible. Consider offering a streamlined registration process that asks for essential information only, like name, email address, and password.

Customers should also be able to sign up on your e-commerce website, app, or even through social media channels like Instagram, Facebook, or TikTok.

You’ll also want to make sure subscribers can choose the frequency of their subscription deliveries, as well as the ability to pause or skip any they may not want. Studies show that subscribers who can skip an order last 135% longer than those who can’t.

4. Optimize the subscriber journey

When a subscriber visits your website, they should be welcomed with a seamless experience that provides valuable information, effortless navigation, and easy checkout. Focus your efforts on:

  • Tailored subscription options. Provide different types of subscriptions for your different audiences so they can choose the service that fits them best. You could even include a quiz to help them uncover which option perfectly meets their needs! 
  • Intuitive navigation. Ensure subscribers can find what they’re looking for easily by including distinct menus, logical categories, and a search functionality. Have people in your organization test user journeys, too
  • Swift website speed. Maximize your website’s performance by minimizing page load times — nearly 70% of consumers say that page speed impacts their willingness to buy from an online retailer
  • Clear and compelling product information. Include detailed product descriptions and high-quality images. You’ll also want to feature any customer ratings and reviews — 88% of shoppers use them to evaluate products before making a purchase
  • Streamlined checkout process. Simplify the checkout process by removing unnecessary steps, offering guest checkout, and providing a clear snapshot of the purchase summary. Include secure payment gateways and flexible payment options as well

5. AI-Driven contextualization

Subscribers are more likely to engage with content when it’s personalized to their specific preferences and needs. Artificial Intelligence (AI) platforms help you deliver contextualized shopping experiences by leveraging customer data like browsing and purchase history to provide tailored product recommendations.

In turn, subscribers feel more valued and better connected with your brand.

6. Valuable incentives

Consumers love deals, discounts, or any other offer that saves them money. Who doesn’t? By offering this to your subscribers, you’ll strengthen their desire to save on their purchases.

Typically, subscription commerce incentives revolve around a monetary reduction, but don’t feel like you have to limit yourself to just that! Providing free products (or samples) or access to exclusive services or events are other great ways to increase subscriber loyalty.

7. Social proof

Social proof like customer reviews and other forms of user-generated content, can significantly impact purchasing decisions. To help build trust with your customers, encourage subscribers to leave reviews and share their positive experiences so you can highlight on your website, social channels and everywhere your shoppers are.

Influencers are another effective way to build loyalty with your subscribers — 71% of consumers are likely to buy products from an influencer they trust. Just make sure to find the right ones that fit your subscription niche.

8. Effective communication

Customer communication is a key element of a fantastic subscription commerce experience. Start by establishing a cohesive communication plan that helps you keep subscribers informed and excited about new products, special offers, and other related news. Just don’t overdo it!

Then make sure to correspond regularly and segment your subscriber audiences so you can tailor your messages according to specific preferences and interests.

9. Exceptional customer support

Subscription commerce goes far beyond selling products or services. It requires excellent customer service that addresses issues quickly and efficiently. 

91% of shoppers say they won’t willingly do business again with a company that left them unhappy. Avoid dissatisfied subscribers by prioritizing your customer support with these tactics:

  • Offer multiple channels such as live chat, email, or phone to ensure customers can reach out through their preferred method
  • Utilize chatbots for support during off-business hours or for commonly asked questions and pain points
  • Include self-service resources such as a thorough FAQ section that encourages customers to find answers on their own
  • Make every effort to reply quickly to customer queries by addressing their questions or concerns promptly
  • Respond to negative reviews and turn negative experiences into a positive that creates advocates for life

10. Retain subscribers through customer feedback

Listening to customer feedback is key to enhancing the subscription commerce experience and ensuring customer retention. Analyzing data, reviewing ratings and reviews, and sending out regular customer satisfaction surveys to subscribers are all useful ways to understand their needs and expectations better.

Another way to retain customers is to ensure you’re surprising and delighting them with every package you send. Don’t let your subscriptions go stale. Continue to find new ways to impress people, like providing new brands and products you know they’ll love. 

Subscription commerce FAQs

Thinking of starting a subscription business for your products? Ask yourself these questions to determine if the subscription commerce model is a good fit for your brand. 

1. Would my product lend itself to a subscription business?

Popular categories for subscription boxes include food, beverages, electronics, health and fitness, fashion, and beauty.

If your business falls into one of these categories or if you notice certain products you offer get repurchased over and over again, you’re probably a good candidate for a subscription model.

2. Would my shoppers want to subscribe?

You need to ensure consumers continue to find value for the long term. Insights from customer purchase data can help tailor and personalize your services from delivery to discounts.

Which products do customers frequently repurchase? How often do they repurchase them? The answers to these questions could help you set the right cadences.

3. What would costs look like for my subscription service?

Calculate how much it will cost to send the customer the most value possible. Include shipping costs, marketing costs, labor, and any other costs in this.

4. How should I price my subscription?

First, check out your competition. What do they charge? While you might not be able to match their prices, it’s important to know what your customers are comparing you against. Another way to figure out what customers would pay for a particular service is simply to ask them.

Subscription commerce models often use tiered pricing depending on what the customer signs up for. If the customer chooses an option with more value, they’ll pay more money per month. 

5. How do I build interest for my subscription business?

Tell your customers! Beta test your new model(s) to your most loyal shoppers and re-purchasers. Gather their feedback in the form of UGC — like reviews and social posts — for display on your product pages, subscription pages, social content, and other marketing collateral. 

Also, consider influencer marketing to drum up excitement. Tapping into an existing social community like the Influenster App will create authentic buzz amongst shoppers and provide opportunities to create positive word-of-mouth about your subscription.

Personalize your subscription commerce experience

The subscription commerce opportunity is ripe for brands and retailers to truly understand shopping habits, adapt to consumers’ new ways of buying, and instill trust to create long-lasting relationships. Not to mention, the recurring revenue stream it will provide.

As shopping behaviors continue to change, you might have to alter how you get your products in shoppers’ hands, and a subscription commerce offers a great way to do that. If you aren’t already thinking about starting a subscription service for your brand, you certainly should be.

But the difference between an okay service and one that delivers a wow factor is personalization. You need to know your audience better than you know yourself. Bazaarvoice AI tools can help you deliver personalized experiences that drive repeat business and higher customer satisfaction. Get in touch below to learn more.

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