Why Your Ecommerce Subscription Model Isn’t Working

ecommerce subscription box feature

Well-designed ecommerce subscription offerings are a win-win for brands and consumers. On the business side, they enable brands to accurately forecast demand and revenue. Customers pay upfront, gaining peace of mind knowing that their order will arrive like clockwork every month.

But not every ecommerce subscription plan is well designed. In fact, some can result in customer experience (CX) failures that lead to dissatisfaction, churn and brand detractors. This in turn hurts your bottom line, transforming a win-win into a lose-lose scenario. Even mighty Amazon sees an attrition rate of about 25% per year for monthly subscribers to Prime.

Poor Subscription Experiences Create Customer Friction

Companies that rely on ecommerce subscriptions need to watch out for these customer experience pitfalls that cause retention issues and damage your brand’s reputation.

Customers can’t take full advantage of their subscription

Imagine new parents sign up to get a shipment of their preferred formula every month. But due to supply chain issues, they end up receiving a substitute — one that might not even be suitable for their baby — or having to find what they need elsewhere. Either way, they’re not getting what they signed up for.

Misalignment between customer needs and the offering

A customer has an ecommerce subscription for a recurring pet food delivery, and they end up getting too much or too little of the product. They either start stockpiling food and may not need the next month’s shipment, or they have to go to a store to find more in between deliveries.

In either scenario, the onus is on them to meet their own needs, and to determine whether they’re paying for more than what they’re consuming, and do something about it.

The process of canceling is overly complicated

While most brands make signing up for an ecommerce subscription easy, the same can’t be said for cancellation. Some bury the option to cancel online. Worse yet, others require customers to cancel over the phone and speak with an agent who is incentivized to try and get them to stay.

This is such a widespread practice that the Federal Trade Commission has proposed a new rule that would require companies to offer an easy online “click to cancel” option.

Consequences of a Poor Brand Experience

When ecommerce subscriptions create friction for customers, your business inevitably suffers. This not only impacts customer satisfaction and retention, but referrals to friends and family are far less likely. Word can also spread on social channels and review platforms, causing further harm to your brand reputation.

Optimizing Ecommerce Subscriptions

If subscriptions are integral to your business success, then it’s imperative that you lean into figuring out what’s working — and what’s not — with your offerings, and uncover every opportunity to improve the experience for customers, giving them more reasons to stick with their plans.

At the end of the day, brands that succeed are those that adopt a laser focus on understanding and meeting customer needs, which above all else fosters long-term loyalty. This requires truly listening to customers on an ongoing basis, continuously adapting to meet their shifting expectations.

The good news: because the majority of consumers use digital to interact with brands, it’s easier than ever to unlock insights related to the subscriber experience. Digital behavior analytics solutions can be used to detect on-page user behavior, such as comparison browsing behavior or frustrated clicks. Session replay technology provides recordings of interactions with websites and apps and customer journey mapping charts the paths users take when engaging online.

These tools shed light on when app and website users can’t find what they’re looking for, highlighting areas of high user drop-off during the subscription sign-up or cancellation process. They can also be used to measure which subscription plans are driving the highest engagement and sales.

In addition, brands should gather qualitative and quantitative feedback to understand the why and the sentiment behind user behavior, such as why users are canceling or downgrading their subscriptions, and the words they used to describe how they feel about a given plan. Customers may even offer actionable suggestions of how brands can make subscriptions more useful.

Until recently, it’s been hard to gather the same wealth of information from subscribers’ experiences in physical locations, but that’s changing thanks to the use of digital apps and websites as part of the store journey. When users opt in to sharing their location, you can track which subscribers are visiting your stores, their visit frequency, how they’re navigating the store, what they’re looking for and what they’re purchasing, offering further clues to aid the overall health of your subscription offerings.

The future is looking bright for the opportunity to capture 360-degree insights, both analog and digital, about the overall subscriber experience. Together, insights from across digital behavior analytics, digital customer feedback and in-store experiences can be leveraged to uncover opportunities to attract and retain more subscribers and capture a greater share of wallet.

Of course, simply capturing the data isn’t enough. The most effective organizations are those that act on these insights in the moment to optimize and personalize the subscriber experience.

Final Thoughts

Removing friction from the ecommerce subscription experience is important. But the number-one strategy all brands need to leverage is understanding customer behavior, what they’re doing and why, and reacting in the moment across channels. Harnessing information to meet subscribers’ needs is key to getting ahead of the competition, building brand loyalty and driving profitability and longevity.

Mike Debnar is principal, retail and digital innovation for Medallia