With an Eye on Loyalty, Subscription Models Get a Post-COVID Refresh

Inflation is hovering around 8%, and the average consumer now subscribes to five different services. There’s also the factor of subscription fatigue weighing on matters.

Given these variables, is this a good time to add or launch a new subscription offering?

“Absolutely,” Sanjay Kamble, vice president of product management at subscription commerce platform sticky.io, told PYMNTS. His view is that now is the ideal time to launch or enhance subscriptions.

Rising acquisition costs are forcing more companies to rethink their customer retention strategies, he said, and many are finding that recurring merchandising models like subscriptions are an effective way to offset those costs while increasing customer engagement and lifetime value.

Saying that brands are benefiting from subscriptions by having “a way to innovatively drive growth by moving direct value of their offerings closer to their customers, and also helping build more predictable revenue models [with] upsell and cross-sell opportunities that drive value,” Kamble said those that don’t take advantage “may be disadvantaged” competitively.

“They will be competing against brands who have established stronger engagement with their customers,” he said.

As subscriptions become more of a fixture in consumer life, it is important for brands to differentiate themselves and deepen customer relationships. After deciding brand vision, finding the right merchandising model for their idea of subscriptions is the next most important step, with a powerful impact on results.

Kamble said “different merchandising models work for different brands. For some brands, subscribe and save with discounts may work. For others, building your own box … would help, more curated boxes might help for somebody else, and then [there is] Product-as-a-Service.”

Then, pick a Software-as-a-Service (SaaS) platform and get ready to rock.

See also: 12% of Consumers Use Retail Subscriptions to Gain Exclusive Access to Products

Know Thy Customer

According to the latest Subscription Commerce Conversion Index, a PYMNTS and sticky.io collaboration, 10 million people — or 12% of all retail subscribers — are using subscription services to access products that they can’t find elsewhere.

Get the study: The Subscription Commerce Conversion Index

That can be a powerful persuasion for firms looking to launch or enhance a subscription program. Pointing to verticals like fashion, beauty, health and wellness that have led the way in delivering curated, exclusive product selections to loyal subscriber bases, Kamble said responding to customer signals in a highly personalized manner “absolutely helps.”

“We have seen that the most successful subscription brands deliver convenience value, flexibility to their customers, and they’re not just selling high-quality products — they’re building communities and membership,” he continued.

This can move the nature of the transaction itself, with Kamble noting that sticky.io is seeing “customer purchasing habits shifting toward experience over ownership. We have been hearing about that quite a lot. And while product itself is critical, more than ever, subscription experiences that inspire customer trust seem the most effective retention plan over time.”

Another common attribute of successful subscription brands is a mission to deliver full value with their subscriptions, which comes back to knowing the customer so well they want to stay.

“As a consumer, I need the control to make sure that in case the subscription is too much, too little, if I want to change it, if I want to skip [a cycle] because I’m traveling, I want to change my shipping address because I’m visiting my family, that control has to be there,” he said. “It has to be offered in a way which is so simple, so easy, that it becomes part of my habits.”

Platforming Properly

You’ve got the vision part sorted out and moved onto to selling. Now comes the critical and never-ending job of sustaining meaningful subscriber engagement.

Confronting the matter of subscription fatigue, Kamble told PYMNTS that he’s not a big believer in prevailing notions around what causes this fatigue or how to fight it. To start with, he doesn’t think people get “fatigued” by too many subscriptions — rather, it’s the wrong one that hurts.

“Things like decision fatigue, reordering fatigue and restocking fatigue, [these] to me [are] more important,” he said. “Brands who are building trust [and] strengthening it with convenience-boosting experiences will continue to see increased loyalty and increased revenues.”

Personalization and engagement are taking subscriptions in new directions this year and into the near future, he said, as what started eCommerce and physical channels merge into each other.

“I see a world where there will be a widespread adoption in the physical retail stores,” he said.

Imagine, for instance, walking into Sephora, picking up what you need immediately and then setting up a recurring delivery every month so you never run out of the product. It’s all possible with the right technology partnerships that allow merchants to tinker with mixes and models on a path toward enduring customer relationships.

“From a [chief marketing officer’s] perspective or a brand manager or catalog manager’s perspective, you want the ability to experiment with multiples of these [subscription] models because you don’t know which model is going to work for you,” Kamble said. “You should be able to do that with flexibility, without adding too [much] IT overhead and enabling that to happen very quickly.”

Because analytics are the window into all of this, the chief information officer’s (CIO’s) viewpoint is also vital.

Calling it “the basics of experimentation,” Kamble said: “From the CIO’s perspective … leveraging a technology platform that does not lock you into one type of model, like straight sales, is super critical. Your technology should not limit your business strategy. I think that’s the mantra.”

Read more: Experimentation, Personalization and New Features Fuel Subscription Optimism