Harness the Potential of Subscriptions for your E-commerce Business - #ARM Worldwide



Revenue flows linearly from marketing to sales in a traditional business model. However, with a subscription model, E-Commerce marketers gain the opportunity to lock the customers in for the long haul, ensuring a steady, recurring revenue stream. Subscription marketing brings exceptional perks, and offering it to your customers can enhance their UX, help diversify your income streams and improve your capacity to forecast demand. There are several abilities that D2C E-Commerce businesses in the ‘new normal’ will need to build & acquire.

Here’s how you can implement subscriptions marketing that allows you to leverage and future proof growth opportunities:

What is an E-Commerce Subscriptions Service? 

Implementing a subscription model provides consumers with various choices over their consumption decisions and the ability to alter their subscription preferences — encouraging long-term customer loyalty. With an E-Commerce subscription strategy, businesses provide customers with ongoing services on a regular basis in exchange for regular payments. For example, Dollar Shave Club and Netflix use this as their primary business model.

Subscriptions turn customers who see your company’s value into loyal followers, thus becoming reliable sources of recurring revenue. A business is 60-70% likely to sell to an existing customer versus a 5-20% chance of selling to a new prospect. E-Commerce Subscriptions allow businesses to increase repeat purchases since they don’t have to win the business ad hoc every time if they have a loyal, subscribed customer base.

Varieties of Subscriptions

Different businesses offer different subscription services on the basis of their industry, target audience, and other similar factors. However, there are mainly three broad types of subscriptions services offered by businesses: 

  • Replenishment subscription enables users to automate their purchases of commodity goods. Typical products that are offered in this manner include toiletries, skin-care cosmetics and groceries or food items. 
  • Curation subscriptions work to delight and surprise customers by providing highly personalised experiences. It creates an excellent opportunity to enter the space to supplement their current online strategy or curate something entirely new.
  • Access subscribers pay a monthly fee to get members-only perks or lower prices, mainly in the food and apparel categories. Customers need to purchase memberships to gain access to the company’s offerings.

Benefits of E-Commerce Subscriptions

A subscription business model requires marketers to think about their strategies uniquely. As a result, they need to tweak every business tactic to fit in with their overall E-commerce marketing strategy. Here are the top three reasons why subscription commerce is so trending among leading brands across the globe: 

  • With a subscription E-Commerce, you can retain many customers and consequently increase revenue by upselling and cross-selling relevant products. Higher customer retention means better business stability and loyal customers.
  • It offers improved forecasting of replenishing inventory. You can identify which items need to be renewed, in what quantity, and how frequently. Additionally, consistent revenue flow becomes an added perk.
  • Irrespective of your offerings, adopting the subscription business model increases the chances of the customer ‘staying’. It will help you maximise your revenue and also increase customer satisfaction and loyalty.

Ultimate Subscription Marketing Tactics

A subscription business model requires marketers to think about their strategies uniquely. As a result, they need to tweak every marketing tactic to fit into the overall business strategy. Free trials and premium offers are great ways to attract new customers. It allows them to try your offerings for a limited time before their credit cards are charged. They can obtain richer functionality for a genuine subscription fee.

Focus on differentiation to carve out a section of the market, establish your brand & stand out from the crowd. Find what makes your subscription better than your competitors? Better quality? Ease of using? Etc. Lastly, work with influencers to build trust & leverage their reliability to promote your offerings. Try to create mutually beneficial partnerships and expand your reach by using their social footprint to target new customers.

Vital KPIs for Measurement

Meticulously tracking KPIs offers numerous benefits for subscription companies. Firstly, these are essential, widely used metrics to measure the overall health of your company. Secondly, you can even use this data to forecast accurately. 

  • Calculate your Monthly Recurring Revenue (MRR) churn. It is the loss of revenue when customers leave your company/opt-out of a subscription. It can quickly become damaging for companies and should be the most sharply observed among all KPIs.
  • Tracking Average Revenue Per User (ARPU) highlights how much value your customer base provides to your company as a whole. It helps in reinforcing your understanding of different buyer personas. 
  • Customer’s Lifetime Value (LTV or CLV) is the net profit you’re likely to receive from a customer over the life of their account. It allows you to evaluate profitability by checking if LTV is higher than the cost of customer acquisition. 

Final Words

Subscriptions are becoming an increasingly popular means of buying online products and services. Over a couple of years, E-commerce businesses have multiplied on the subscription marketing model to monetise their relationships with buyers. However, customers desire a great end-to-end experience and are enthusiastic to subscribe only where automated purchasing gives them substantial benefits, like lower costs or enhanced personalisation. To invite them into subscribing, you need to find the special offer and combine advertising with attractive aesthetics, added to a compelling CTA. Therefore, companies in this space must develop great experiences to avoid high churn rates and accelerate growth and profitability. 

Subscription-based E-Commerce business models have seen tremendous growth, which is only expected to rise. It is profitable for both sellers and customers when adequately implemented due to its convenience and recurring revenue stream. Marketers can add a subscription service with almost any product or service. With the right strategies by your side — you can create a thriving business using minimum time and effort!

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