How to Leverage Data to Scale Your Subscription Program

The demise of third-party cookies makes it more difficult for brands to track website visitors, improve user experience, and advertise. But subscription brands are in a more fortunate position than others because the subscription business model creates unique opportunities to collect, track, and learn from customer data.

If you are a merchant looking to scale your subscription program and build long-term brand loyalty, then you must leverage the data available to you to unlock the next phase of your business.

Subscription Data Drives Results

Subscription data empowers you to gain a better understanding of how your customers want to buy, bolster personalization initiatives, and reduce churn.

Know Your Customers

The changing privacy landscape is transforming merchants’ methods for collecting customer information. Targeting online consumers with specific ads then tracking ad performances is not as effective of a strategy as it used to be, and it’s becoming more costly. For example, the cost per click for paid search ads increased 13% year over year in Q4 2021, according to Merkle’s quarterly Digital Marketing Report.

Subscription programs provide those much-needed insights that are becoming more difficult to obtain. Since subscription data tracks the same shopper over a period of time, merchants can learn the changing expectations and buying behaviors of individual consumers while also analyzing group trends.

Deliver Hyper-Specific Deals and Offers

More consistent data leads to more accurate buyer personas, which enables you to deliver personalized offers that will land more effectively with consumers.

Merchants can group customers based on their buying patterns, lifestyles, purchasing intent and more, then make enticing offers based on that information. For example, pet-supply merchants can ask for a pet’s age, birthday, and breed (if known) when the customer signs up for a subscription. Those data points help the merchant make personalized offers based on the dog’s age, such as joint support supplements for senior dogs or teething toys for puppies.

Identify and Save Unsatisfied Customers

Bigger might be better, but not when it comes to churn rates, which is why customer retention should be your primary focus.

Using data, merchants can study common behavior of customers who churn to discover what may have been the root cause. By tracking churn indicators, you can spot the signs of an at-risk customer before they jump ship so you can focus on reengagement through personalized offers. Moreover, identifying a common demographic and behavioral pattern among churning customers will help you learn your ideal customer profile.

Subscription Planning for a Promising Future

Merchants can create a bright future for themselves when utilizing data correctly. From collecting customer reviews to tracking buying-journey trends, brands can update their products and services according to the feedback they receive. Data also allows you to see which campaigns perform best so you can optimize your marketing efforts to attract high-value customers.

Top Metrics to Grow Your Subscription Program

While there are many metrics involved in subscription commerce, here are six you need to monitor closely if you want to scale your subscription program.

Customer Lifetime Value (CLTV)

One of the biggest mistakes a merchant can make is investing in the wrong customers.

When building a brand, merchants should focus on customer lifetime value (CLTV) to decide which consumers are most profitable to target. CLTV is the projected revenue that a customer will generate during their relationship with the merchant — the higher the CLTV, the more revenue that customer will generate for the merchant over the course of their lifetime.

While gaining new customers is important for your business’ growth, fostering a mutually beneficial relationship with your current subscribers is also crucial to your success.

Order-Conversion Ratio

Although you may be getting plenty of traffic, a website visitor has no monetary value if they never place an order. That’s where order-conversion ratio comes into play. This metric identifies the percentage of website visitors who actually click “buy” or “subscribe.” Oftentimes, this number sits around 2% of website visitors, leaving merchants to wonder why the other 98% slipped through the cracks.

In many cases, users are quick to leave a website if it’s difficult to navigate. Increasing your conversion rate may be as simple as making your website more user friendly — both on desktop and mobile — by improving page load speeds and eliminating distractions to simplify the buying journey.

Pay close attention to where you’re placing important call-to-action (CTA) buttons. Moving a “Subscribe Now” or “Buy Here” CTA from the bottom of a webpage to the top could make a world of difference.

Shopping Cart Abandonment Rate

A more specific key performance indicator within the buying journey is the cart abandonment rate, which tracks customers who added items to their cart for checkout but never followed through.

A customer may abandon their cart for several reasons, including costly shipping fees or a complicated checkout process.

To lower abandonment rates, keep the checkout process as short and simple as possible and avoid giving shoppers time to rethink their cart. Enabling guest checkout and accepting digital-wallet payments deliver the convenience consumers expect during the checkout process.

Trust is a major influencing factor for many consumers. Offering features that inspire trust such as in-depth product descriptions, customer reviews and money-back guarantees may provide consumers with the assurance they need to place an order. Our latest Subscription Commerce Conversion Index, a collaboration with PYMNTS.com, found that only 57% of merchants offer guarantee or refund policies.

Rebill Rate

Subscriptions are meant to be recurring — if a customer cancels after the first rebill, that’s likely an indicator that they were unsatisfied. The rebill rate indicates the percentage of initial orders that convert to a recurring order.

If you’re dealing with a low rebill rate, see if there’s a common pattern among these buyers. Are you giving consumers false expectations that lead to disappointment? Make sure your marketing efforts align with the subscription and user experience — customers are quick to cancel if they feel they’ve been misled.

Chargeback Rate

Chargeback rates can vary by industry, but if a merchant racks up an unusually high rate, they’ll likely have to follow more stringent measures created by card issuers, such as Visa and Mastercard, including paying higher chargeback fees.

To avoid these costly requirements, you’ll need to lower your chargeback rate by using fraud prevention methods like real-time transaction monitoring and other data tools. On the other hand, chargebacks can happen if a customer is dissatisfied with the product or feels like it was falsely advertised.

Churn Rate

This metric indicates the percentage of customers who unsubscribe or stop purchasing. A high churn rate could indicate a large-scale problem such as products failing to meet customer expectations, ineffective customer support, or a misaligned market fit.

In many cases, customers who churn have similar characteristics like the amount of time they’ve been subscribed or their usual buying habits — these are called churn indicators. By looking out for indicators, you can spot the signs of an at-risk customer and nurture them with specialized offers to prevent them from churning.

Using Data to Strategize

Data might not tell you what you want to hear. Oftentimes, it’s what you need to hear. Once the metrics reveal your subscription program’s performance, it’s up to you to strategize accordingly.

Today’s consumers are looking for solutions that offer them convenience and quality, from a seamless and personalized user experience to excellent customer service. Retail subscription commerce providers could lose as much as $2.2 billion per month by failing to offer a better subscription commerce experience that includes refunds and other trust-building features of importance to consumers right now.

Consumer trends are different for each merchant. The only way to effectively cater to your consumer base is to keep track of your specific key metrics. In an information-driven industry, subscription merchants who take advantage of data will have the greatest chance at a successful future.

Read the November 2021 Subscription Commerce Conversion Index courtesy of sticky.io and PYMNTS.com.