Data Key to Turning ‘Short-Term’ Subscribers Into Brand Advocates

The year is half over.

Looking out at the balance of 2023, Brian Bogosian, CEO of sticky.io, said subscription models face a test as consumers re-examine their budgets, and, as ever, churn is a significant challenge.

Joint research between sticky.io and PYMNTS found that 48% of subscription merchants’ customers are “short-timers” generating only 7% of their sales. The goal for merchants is to get those consumers to commit beyond the short term, to make the leap into becoming “loyalists.”

The opportunity is there, said Bogosian. In traditional eCommerce, a transaction or online relationship can be a one-and-done proposition — log onto a site, find what you want, click, buy and leave.

The savvy subscription firm, however, can stretch out those short-term relationships to everyone’s advantage.

There are some cues about what to do. Amazon stands out here, Bogosian said, where the PYMNTS/sticky.io research showed there’s a high affinity for Amazon Subscribe and Save. Most subscription merchants can’t match Amazon, but they can borrow ideas.

The Amazon Effect

“Amazon’s done a great job and has been able to acquire a lot of customers,” he said, with discount pricing, flexible delivery schedules and easy subscription management.

“Merchants can integrate some of these ‘basics’ that Amazon has proven holds on to customers and generates significant scale,” he added.

The Need for Flexibility

As Bogosian noted, when it comes to providing a continuum of flexibility, “there are some obvious things” that merchants can tackle, “and then there are some things that are not all that obvious.”

The baseline flexibility that enterprises need to offer their subscribers rests with the ability and option to set their monthly or weekly deliveries to “pause.”

“But flexibility is more than that,” he said.

Forward-thinking merchants need to give their customers enticing ways and offers that lead them to mull “swapping up” or even swapping “out” into other goods and services, tied in part to loyalty points or other rewards, he said.

The swapping up, however, means that complexity is introduced into the mix for the provider because different offerings carry different margins or may impact revenue with some volatility.

Data, no surprise, is the conduit that leads to flexibility, said Bogosian, who noted that many merchants have not been able, until now, to collect and analyze the data they need to truly fine-tune their offerings — and turn short-term customers, and “persuadables,” into loyal individuals with a long, lifetime value of steady (or increasing) revenue.

Effective use of data “requires a platform,” such as on offer from sticky.io, that gives granular insight into how much customer acquisition costs and where to add incentives for those short-term customers to stay a while, he said. Examples include added value, more flexibility or breadth of products.

“You need to understand what it is about what you are offering that appeals to them and ensure that your front-end-loaded investment to acquire a customer is in balance … along with cross-sell and upsell opportunities,” Bogosian said.

Along the way, he said, a positive relationship with a short-term customer can translate into that subscriber becoming a “brand advocate … spreading the word” and generating new business without customer acquisition costs attached.

Short-term customers may value the free trial at the outset, or the low-cost introductory option (that lasts a few months). But down the line, “there are a lot of different things you can do to appeal to that customer,” he said.

Points, promotions and “free” gifts as a reward — offered proactively — for longevity can go a long way toward cementing customer satisfaction, he said.

“Short, concise messages and content can pique curiosity and interest in maintaining relationships with a vendor,” said Bogosian.

He contended that sticky.io has found success with services such as “smart dunning,” which uses data and analytics to re-bill customers if a transaction fails. The company has also set up an offering (via third-party partnership) that will approve transactions even in the event of a decline — so the merchant gets paid, and the subscription remains intact.

“Simplifying the payment process and reducing friction is quite important,” said Bogosian.

As Bogosian related to Webster, when it comes to subscriptions, “there are still economic challenges out there. The pressure is on retailers to up their game and provide great value and flexibility … that will appeal to consumers.”