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Creating the Best E-Commerce Subscription Business Model in Three Steps

  • Nadine Ghiran - SUBTA
  • Oct 21, 2021
  • 4 minute read

 

Ordergroove, a Software as a Service platform that provides merchants with tools to create relationships with subscribers and drive profitable recurring revenue, held a webinar titled “How to Build the Perfect eCommerce Subscription Strategy” on Tuesday, Oct. 19 in partnership with Chelsea & Rachel Co. 

Photo credit: Ordergroove

Co-CEOs Chelsea Jones and Rachel Saul joined Jamie Johns, Senior Strategic Client Director at Ordergroove, in a value-packed discussion surrounding the best strategies to launch and scale a successful subscription business model.

The trio outlined three steps during the webinar that will help you optimize your subscribers’ experiences with your brands.

Step #1 Use Consumable Products 

When launching and scaling a subscription business model, it’s important to clearly identify which products fit best with the subscription experience. Saul challenged the audience to think, “What is consumable?”

The answer will be something different for every subscription business, depending on its stage and which of the six subscription segments it falls under. There are many options to choose from. Saul suggested subscription entrepreneurs think critically while browsing through a product catalog.

“Look at the products that have a consumable nature of 30 days, 60 days, perhaps 90 days,” she said.

Chelsea & Rachel Co.’s data shows that the average consumer usage for a product is about 45 days. 

“With consumable products, you’re giving [subscribers] the ability to swap or change to something different,” said Saul. Those consumable products, she explained, really have to be organized and available “in order to create that fundamental subscription program.”

Johns provided a clear example of ways to facilitate the flexibility of consumable goods in the beauty industry. “[Ordergroove’s clients] probably don’t want a palette that no one’s ever going to replenish to be on subscription, but you definitely want your best-selling mascara to be on subscription.” 

Consumable products that don’t fit within the box of subscription replenishment are perfect for add-on and one-time purchases. This provides a variety of options for customers to choose from and creates a personalized experience.

Step #2 — Implement Holistic Strategies

Photo credit: Ordergroove

Subscription businesses rely on their communities to grow and succeed. Your subscription business model should be tailored to your community and the engagement it provides your consumer, according to the webinar’s speakers. 

Saul explained that subscriptions aren’t for everybody but they are for a core group of people. A critical strategy for a successful subscription is to identify the key target market and what makes the service relevant for those people, according to Saul.

Once a core market is established, look at the data. 

“Data informs decisions,” said Saul. “When creating, analyzing, redrafting your program, have as much data as you can.”

Study what products customers are buying, how often they’re making a purchase, and their lifetime value, recommended Saul. 

The next step is to integrate specific messaging in email ads and text-automation flows. Likewise, tailor the messaging on your homepage, product pages and landing pages to attract your target audience. 

“Craft your message uniquely to your subscribers,” she said. “Create a program that’s not just about discounts but a membership program that ties directly into the subscription.”

Step #3 Have a Stand-Out Subscription Business Model 

Creating a great user experience from start to finish will help you stand out against competitors. Start by defining the reason why a subscriber would want to buy a product or service over others on the market. What will resonate with the core segment of shoppers? 

“Differentiation isn’t necessarily in the tactics,” said Saul. “[It’s] what the customer gets at the end.”

She continued to identify key components for making the subscription experience much more valuable for customers:

  • The physical box
  • The products inside the box
  • The touchpoints between boxes arriving each month

A few valuable touchpoints are offering free gifts, free shipping, and exclusive access to new products.  

Furthermore, flexibility is key in keeping subscribers happy and retaining them for longer (thereby increasing their lifetime value), according to Johns.

Flexibility can be provided in two different areas: minimizing an overstock of products and streamlining the sign-up/cancellation process.

It’s important not to overwhelm subscribers with products. “If [subscribers] are canceling, a lot of the times it has to do with an overstock of products,” said Johns. 

The sign-up process for your subscription also needs to be easy and convenient. If a customer does get to the point of wanting to cancel, make it easy for them while offering a pause option. Setting up too many roadblocks for customers to cancel is ineffective, according to Johns, and will deter them even further from staying long term.

Subscriptions provide convenience, something nearly everyone seems to crave right now. The three speakers featured on Ordergroove’s webinar agreed that this demand will grow in 2022 and merchants need to focus on delivering a luxury subscription experience.

Watch the Webinar

Key Takeaways:

  • Subscription entrepreneurs should strategically use consumable products.
  • A critical strategy for a successful subscription is to identify the key target market, analyze the customer data, and craft a message that’s unique to its subscribers.
  • Focus on the physical box, the products inside the box and the touchpoints between boxes arriving each month to stand out against competitors.

Are you looking to discover more ways to grow your subscription business? Join SUBTA! We’re a community of doers, excited to share insights, make connections and grow your subscription brand.