Cost Isn’t the Real Reason Consumers Bail on Retail Subscriptions

Retail subscription merchants win over and retain high LTV customers in order to survive — but some aren't offering features consumers want from the services.

Loyal subscribers are worth their weight in gold to retail subscription merchants. A subgroup of loyal customers we called “loyalists” yield higher lifetime value (LTV) to providers than other groups of customers.37%: Share of loyal subscribers who would cancel if free shipping were discontinued

PYMNTS’ research finds that loyalists make up 30% of the client base but generate 79% of projected revenues. Merchants that know how to cultivate a loyal clientele can reap the benefits.

Merchants focused on customer retention must take consumers’ preferences to heart and do what it takes to keep loyal subscribers from canceling. Free shipping is a crucial factor in retaining loyal customers, for example. PYMNTS found that 37% of loyalist retail subscribers would cancel if the merchant did not offer free shipping.

Merchants also have a group of persuadable customers that could potentially convert to loyalists if provided with their desired features. Those in the persuadable category, for example, were especially likely to turn away after experiencing poor customer service.

28%: Portion of loyal subscribers who would cancel due to excessive promotional materialsThese are some of the findings detailed in “How Retail Subscription Merchants Can Win and Retain High LTV Customers,” a PYMNTS and collaboration. We surveyed 2,094 consumers about the features they value most in a subscription. We explore the relationship between loyal customers and merchant revenues and the best practices to expand this lucrative customer group.

Other key findings from our research include the following:

Short-timer subscribers are plentiful but do little for the bottom line.

As the name suggests, short-timer subscribers have a low LTV. While they represent nearly half of all subscribers, short-timers generate just 7% of projected revenues for subscription merchants.

Persuadable subscribers offer potential, but it will take work to convert them.

$2,500+: Projected LTV of loyalist subscribersPersuadable subscribers already spend big on retail subscriptions, and providers can convert persuadables to loyalists with the right strategies. Merchants not taking their preferences and needs into account risk losing these subscribers.

Underperforming retail subscription merchants can catch up if they can give more control to their subscribers.

What separates the top performers is the level of control they give their subscribers. While top-performing merchants allow subscribers to update delivery frequency or product selection, few of the lowest-performing providers allow this.

Retail subscription merchants must revise their customer-facing strategies to survive in an increasingly competitive space. Those struggling to foster a loyalist base, in particular, must do so. Download the report to learn how retail subscription merchants can win and retain high LTV customers.