Subscription Plans Must Be Simple and Streamlined to Scale

Scaling a subscription business is often a matter of growth through other means — and what first attracts consumers to a service may not be what keeps them engaged over time.

In addition to the products and services that first draw subscribers to a brand, factors like deep personalization, convenience and time savings add important dimensions to these recurring relationships, and top-ranked subscription merchants tend to figure this out quickly.

As Brian Bogosian told PYMNTS’ Karen Webster, when in doubt, streamline and simplify.

“It’s about simplicity and streamlining the process to getting people engaged,” he said. “If you’ve got a long [process], multiple website pages, logins, passwords and you make it cumbersome, people abandon things.

“Making it easy, taking advantage of impulse decisions that consumers might have on something that they’d like, it’s important to make that simple.”

That’s reflected in data. According to the “Subscription Commerce Conversion Index,” a sticky.io and PYMNTS collaboration, “Consumers awash in subscription choices and sign-up offers are now specifically seeking features that provide them with enjoyment and lasting, reliable convenience — things that make them happier and their lives easier.”

Get the study: The Subscription Commerce Conversion Index

PYMNTS’ research found that 65% of retail subscribers enroll as subscribers due to these two factors, with just 20% stating that they took on a new subscription primarily to save money.

It signifies a shift in subscriber thinking, as subscription products and the subscriber experience are increasingly viewed as distinct elements that add up to a satisfied subscriber — or a churner. Subscription brands that crack this code can then lean into activities that scale the business.

“We see all kinds of merchants that are selling one set of products that find complementary, ancillary areas, adjacencies that can increase the depth of their relationship with that consumer, extend that relationship, expand it to make it a larger, more meaningful relationship,” he said.

“Customers aren’t looking to go to 10 stores to buy 10 different things. If they can go to one place and they can get seven or eight of those 10 things, it just streamlines our lives. It streamlines the time it requires to make these decisions. That’s how you scale it, I believe.”

Predictability Power

Bogosian used a personal example, saying he ran out of his favorite bottled water and ordered it online instead of taking his chances with store shelves, even though it meant waiting.

“Convenience by definition means that you don’t make it cumbersome for the investment of time by the consumer,” he said. “Part of the reason they’re doing this online is to not do the alternatives that are available to them because of its simplicity, ease of use and speed.”

The caveat here is that convenience math must work both ways to scale a business. Webster asked how merchants offering all this costly convenience can still maintain margins.

Noting that margins may fluctuate, Bogosian said, “When you think about the profitability of extending an existing customer, the cost of customer acquisition is much lower, obviously, so you’ve got some additional margin dollars for maybe delivery and some other incentives.”

However, it’s the predictability of subscriptions and the ability to plan ahead during times of supply chain snags and product shortages that make it work.

Calling such dynamics highly advantageous to merchants, he said, “I think that for the merchant to lock consumers into high-value, interesting products, compelling bundles, things that make them engage and come back are absolutely critical and extremely profitable.”

Especially in uncertain times like these, it’s a mistake to underestimate the power that predictability has in retaining subscribers, giving them control over at least some variables.

See also: Study Suggests ‘Subscription Remorse’ May Be Bottoming Out

As Bogosian sees it, “I’d rather start the month of October knowing I have $1 million in revenue versus zero and doing it all from the ground up every month. The reality is with subscriptions, you don’t start at zero. You’re going to have some churn, but properly managed, you’ve got a very significant customer base. That’s highly valuable to that merchant.”

There’s also the element of making subscriptions feel indispensable when consumers are belt-tightening and cutting nonessential spend, even trading down grocery brands to save.

Maintaining the value of a subscription in this environment is a job for marketing, Bogosian said, adding “it’s how the products are presented.”

“It’s how they’re priced, the value that consumers are going to get, the ease of which I can make this decision, the timeliness of getting that gratification by delivery. All those things matter.”

Go for What You Know

As subscription businesses seek greater scale, it’s critical to understand how consumers perceive the relationship, and how easily they can become disappointed with a service. That’s often the kiss of death in subscriptions, but there are strategies to prevent it.

Perhaps the best line of defense is the data that subscription brands have on their subscribers. Knowing and anticipating their product preferences, the timing of when they pay, whether they have paused a subscription before, how often they engage online between boxes — all of these are vital data points in managing different subscriber personas at scale.

“There’s a lot of different things that merchants can do,” he said. “It’s coming down to knowing your client. Subscription data is among the most valuable. It tells you so much about the consumer. Merchants can leverage this data in many ways to extend customer lifetime value.”

When all else fails, proactive communications will often win a retention battle of wills with a dissatisfied subscriber. Subscription brands have the advantage of knowing when products are due months in advance and can pivot if faced with shortages and delays.

“It’s not to say the supply chain issues won’t still rear their ugly head. They are a basis for consumers terminating subscriptions. They’re disappointed. They didn’t get what they wanted,” he said. “To the extent that that’s a reality … having something that you know about months in advance certainly gives you time to find alternate sources of supplies of different products and services to not disappoint your customers.”

Mixing in higher quality products and differentiated products that can be bundled into more irresistible offers “compels me to take advantage of that offer,” he said. “All of these things are elements of what is a successful subscription business.”