While subscription commerce is up, many subscription box companies are challenged to maintain their subscriber base. The median churn rate for subscription boxes is 10.54%.
What can your company do to retain subscribers? Here are 5 effective strategies and the fulfillment best practices necessary to support them.
Personalizing subscriptions to suit subscribers’ unique tastes will make them more loyal to your brand, particularly for curated subscription boxes. Offer choices based on personal preferences such as style of clothing or eyewear, size/breed of pet, etc. For additional customization, allow them to select one or more items from a list of options each month or quarter.
Personalization does require more sophisticated fulfillment operations. To sustain this model, you’ll need a customer relationship management system (CRM) to manage subscriber information effectively.
Since you’ll need to handle a variety of order configurations, it will be important to engineer strategic fulfillment processes. You’ll probably need to adjust your current fulfillment setup, perhaps adding pick stations or kitting common items in advance.
The additional complexity and labor intensive nature of personalized orders will likely require additional staffing and a larger footprint for processing. For companies with a high volume of unique customized orders, it may be helpful to adopt an anniversary model and ship orders daily instead of a batch model where all orders ship at the same time every month.
Whether your subscribers are looking for unique new items or replenishing frequently used products, they want to get their money’s worth. In fact, “value for the money” is one of the most important drivers for subscription cancellation, according to McKinsey & Company research. Subscription companies typically have slim margins, so it’s important to keep a close eye on expenses.
Start by optimizing fulfillment processes for efficiency, incorporating automation as necessary to meet customer expectations. Be careful not to over engineer a solution. Over engineering an otherwise simple fulfillment process may drive capital costs up and impede your flexibility to change solutions quickly.
It is also important to control transportation expenses. Select shipping methods that align with subscription commerce costs and customer expectations. For example, you may be able to utilize more economical ground transportation with a strategic fulfillment network configuration. Negotiating rates, planning shipping volume and zone skipping to specific sortation hubs also can help to control costs.
Cultivate Your Community
Engaged subscribers are more likely to stick around. Establish a sense of community by inviting reviews, feedback and social shares. If you utilize a batch subscription model, make your monthly deliveries a major social event for subscribers. Encourage them to post photos or videos of the unboxing experience to generate excitement.
This approach is most effective if you can synchronize shipment arrivals. Coordinate deliveries according to customer location so that subscribers in different parts of the country receive their orders at approximately the same time.
To inspire social sharing, deliver the “wow” factor with thoughtful touches such as tissue paper, custom inserts, ribbon, etc.
Maintain High Standards
Your subscribers want to buy from a company they can count on, so make it a priority to understand their expectations. For example, accuracy will be more important for replenishment subscribers than for curation subscribers who don’t know exactly what they’ll be receiving each month. Whatever level of quality and reliability they’re anticipating, you need to deliver. If you fall down on service, they can be quick to share dissatisfaction via social media where word spreads quickly.
Make inbound component inspection and outbound quality programs part of the routine. Lean/Six Sigma methodologies help optimize fulfillment processes for increased efficiency and consistency in subscription commerce.
Fulfillment technology solutions further improve order accuracy. RF picking, barcode scanning and order management systems (OMS) are a few of the most commonly used options.
Always be on the lookout for opportunities to improve your fulfillment operations. Competition is stiff in the subscription marketplace, so never let your guard down.
Offer Buying Options
If they’re satisfied with their subscription, customers may be interested in getting more of a good thing – maybe a full-size version of a sample they tried last month or another item in the product line. Adding an ecommerce component to your subscription offering can give them an additional reason to stay with you.
Of course, there are a number of factors to consider when adding an online channel. You’ll be fulfilling a high volume of individual orders on a daily basis in addition to your routine subscription orders. Your customers will want more detailed information (i.e. product availability, order status and shipment tracking) as well as fast, low-cost deliveries and hassle-free returns.
Investing in an OMS will be a priority to ensure optimal visibility and velocity. Streamlining processes and incorporating automation will also be necessary. Effective network configuration and parcel management become even more critical.
Strategies like these will go a long way toward helping you retain your subscription commerce customers. If you lack the expertise or resources to incorporate them, a third-party provider can be a valuable resource.
Nicole Lee is director of fulfillment for Saddle Creek Logistics Services