Retail

Making Subscription Commerce A Means To A Much Bigger End

When most people think of subscriptions, they tend to mentally flip to the “set it and forget it” model that characterizes a lot of subscription interactions. The paper towels that are set up to deliver once a month, the dog food that rolls in every 60 days and the Netflix subscriptions that ensure one is only a click away from a movie, all of which quietly charge one’s debit or credit card in the background.

But increasingly, Recurly CEO Dan Burkhart noted, the ability to offer subscriptions and recurring sales is becoming more than a one-and-done destination for businesses — and more than the starting point in an ongoing relationship with a consumer.

“I think merchandising is evolving. Ten years ago you saw a real uptick in filtering and presenting adjacent purchases. For example, if a retailer saw a consumer buying a high-end TV, she would show some brackets or HDMI cables in the footer. What we are seeing now is a more refined approach applied to consumables, because retailers now realize that consumers have a good in front of them and can offer the convenience of a repeat purchase.”

That’s if — and Burkhart noted this is actually a very big if — they can get the timing right. Which means the retailer can hit the right moment on the sales continuum so that they can appeal to both the consumer’s rational and emotional impulses when they shop.

The rational consumer, Burkhart said, cares about the value they get from the subscription in terms of time or money saved. The emotional appeal is a bit more nebulous — but very important because the pleasant experience of opening the box is what keeps them coming back.

“Knowing how to appeal to the consumer at the peak of her emotional response is how retailers are most likely to sign them into a repeating and continuous commerce experience,” Burkhart said.

So how to hit that right moment for appeal?

Keeping It Real … And Simple  

The classic case of positioning a recurring service often doesn’t feel very “classic,” Burkhart said. For instance, selling a customer a protection warranty at the moment they are purchasing a relatively expensive good may not sound like the best time to hit someone up for an extra $25 to $100 — but, he said, it’s actually the perfect moment to ask.

“The moment when the customer has actively decided she is parting with her dollars is the moment the consumer is most attached to that purchase — and most likely to want to protect it against something happening to it.”

To leverage the recurring purchase model, retailers have to get into the mindset of trying to find that moment of ideal attachment to try and tap into as well, Burkhart noted. For a department store, that might mean selling a cosmetic good, querying a customer who has had the item for a few days for feedback and offering to let them set up a recurring buy. For a media services provider, it might be trying to upsell the “skinny bundle offering” by granting access to other channels à la carte that are a natural fit with what they’ve chosen as part of their bundle. The customer is buying more — which the merchant likes — but the customer, Burkhart noted, also likes it because they are able to build out a custom package for their price and viewing needs.

The point, he said, is to reach the customer both at the emotional level — by making them an offer that taps into the goodwill they are currently flooded with for the product — and the rational level — by offering a product that is more time-efficient and possibly less expensive as well.

“The ability of customers to curate their own journey allows for [a] cross-sell and upsell opportunity. From the post-purchase perspective, it is an emotional response that the merchant is trying to tap into, because they want to make sure that customer continues to be engaged and intrigued by the promise of what they offer — and then inclined to come back again and again because they over-deliver on that original promise. The role and responsibility of merchants is not just at the point of purchase, it also requires a whole constellation of actions to keep customers coming back.”

“This sensitive relationship with the customer requires that the subscription provider must continue to strive very hard in order to keep all of these satisfaction variables in check — which is ultimately a good thing for consumers,” he continued.

“Gone are the days of marketers painting the big promise for whiz-bang value propositions. Subscription commerce reinforces the need to continually delight and over-deliver against expectations. Great communications, customer service, packaging, storytelling for anticipation and, of course, a great product or service.”

And apart from being customizable, Burkhart noted, the transaction also must be easily and almost seamlessly so.

Knowing When To Say When

A subscription service that brings a consumer something — goods or services — that she wants at the right rate is a great benefit.

But if that good or service misses — either by delivering too often, not often enough or by just not being the right thing — it can make life much harder.

“It has to be easy. Customers need to be able to make the decision to tailor or refine the level or quantity of consumption in a way that is very accessible very quickly. If there is any friction there, it becomes an annoyance very quickly.”

Customers who have boxes piling up or a dog that is starving because the subscription service is running three days behind the dog’s appetite are not happy customers — and they will churn right out of the system if the retailer can’t fix that problem very quickly.

“If there is any friction in the design, it becomes an annoyance very quickly. If the service is slow or buggy, you don’t have a lot of chance to recover from that. Subscribers will leave…. You also have to eliminate the number of clicks and make it simple and short. It can proceed as a positive moment — not a burden.”

The good news, Burkhart said, is that when it is done right — particularly when used as part of a relationship with a customer and a business — everyone really can win with a better experience.

The challenge, he reiterated, is in doing it right.

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