Bean Box On Its Product-Driven Approach To Subscriber Retention

With more than one-third of consumers dropping their subscriptions within three months of sign-up, the pressure is on providers to engage subscribers and avoid steep losses due to churn. In this month’s Subscription Commerce Tracker, Matthew Berk, CEO of Bean Box, explains how emphasizing value and offering unique products can help subscription services brew long-term customer satisfaction.

The number of consumers who cancel monthly subscriptions to products or services in the $15 billion sector tells a story of the importance of retention efforts. Forty percent of customers who subscribe to a product or service cancel, and more than one-third cancel in 90 days or less, according to research. Customers often cancel to save money or because they use the product or service less.

The popularity of subscription boxes soared within the last 15 months as consumers spent more time at home in search of new experiences and ways to treat themselves. There is a box for every desire, from beauty products to food, wine, beer and flowers. Thirty-two percent of American consumers have enrolled in a retail subscription box and spend an average of $57 a month, research revealed. Another 10 percent spend more than $100 monthly on product or digital subscriptions, and 71 percent said they have or plan to enroll in a monthly product subscription.

Companies must strategize for ongoing personalized engagement if they want to maintain long-term relationships with this influx of subscribers. The challenge is mounting for retailers to hold subscribers’ attention as the nation gets vaccinated and consumers emerge to seek new retail and restaurant experiences. It is up to brands to encourage customers to stay with subscriptions that previously brought them joy.

Matthew Berk, CEO of Bean Box, discovered that enhancing retention was about focusing on the value, variety and quality of products the Seattle-based coffee subscription service offers to limit cancellations.

“Everyone should have access to freshly roasted coffee from world-renowned roasters … and great commodity coffees are kind of hard to come by,” Berk told PYMNTS.

Focusing On The Subscriber’s Perspective

The National Coffee Association reported 36 percent of Americans 18 years or older drink specialty coffee brewed from premium beans, a broad potential of customers. When Berk launched the subscription company in 2014 with Co-founder Ryan Fritzky, he was encouraged to prevent cancellations as they build their subscriber base.

“Quite frankly, the ideas all amounted to making it more difficult for a customer to cancel, but that approach is fundamentally wrong,” he said.

The secret, he said, is to offer products that consumers enjoy and to make sure they can enjoy these items in different ways.

“A subscription is not a product. It’s an economic format that many companies like because they get paid on a regular basis,” Berk said. “But consumers don’t care about that. If someone is a Comcast subscriber, they care about what’s being offered by the cable company. If someone doesn’t want to be a subscriber, that’s fine because we also know they’re going to come back and buy our coffees, and to us, that’s success.”

Offering Flexible Formats

It is crucial, Berk said, not to force an economic model on consumers when the product is incidental. Instead, he said companies should consider the customer’s perspective, have a great product and deliver it in a convenient, flexible way.

“If they don’t want to pay us monthly, maybe they want a package every two weeks,” he said. “Maybe they want to decide which coffee to buy instead of letting us choose, or maybe they just buy it occasionally. We’re all about great coffee: Come when you want. If you want us to deliver it regularly, that’s fine. If you don’t, that’s OK too. Instead of treating customers like they are turning against what we want them to do, make it easy for them to experience the product.”

Berk noted the number of subscriptions to Bean Box more than doubled during the pandemic. About 50 percent of those customers who canceled their subscriptions returned to buy individual coffee products. Cancellation processes should be made easy, he said, because customers who cancel often renew their subscriptions later or return to buy more because they left on good terms and had positive experiences. This is just one of a handful of suggestions on how to boost retention, according to the subscription management platform Vindicia. The company also suggests asking customers why they canceled and using those insights to improve the business, thus preventing future cancellations.