🟣 Issue No. 29: The Mechanics of a Well Run eCommerce Subscription Business

COMMERCE TIPS

The Secret Sauce to Running a Successful Subscription Business

Earlier this week, I was speaking to a friend of mine who runs a thriving luxury car valet service. He shared something fascinating: his customers don’t just use his service once or twice; they stick around for the long haul. Curious about his secret, I asked what he attributed this incredible level of loyalty to. He said it came down to two key things:

1. The unparalleled level of comfort his team provides. He described how his drivers deliver an experience that’s closer to a spa than a typical car service. Customers already lead quite stressed lives, so his team ensures they feel mentally and emotionally relaxed whenever they interact with his company.

2. Flexibility for customers. Whether it’s changes or cancellations, his company makes every process simple and clear. Customers feel a sense of calm and control that keeps them coming back.

This got me thinking about subscription businesses. If you’re running a health and wellness consumer brand, subscriptions and repeat business aren’t just nice to have; they’re essential. But while it’s one thing to say you’re in the business of subscriptions, it’s another to truly embody it.

There’s a science to keeping customers in your subscription program, and this guide aims to take you through the mechanics of a well run subscription business with 10 essential steps for operating and growing eCommerce subscriptions.

1. Track Subscription Metrics

Knowing your numbers is foundational. Key metrics include:

• Active subscriptions: Measures subscription growth month on month.

• Churn rate: Tracks how many customers leave each month, helping you understand how many new customers you need to maintain growth.

• Customer Lifetime Value (CLV): Calculates long-term profitability.

• Average Revenue Per Account (ARPA): Divides total monthly recurring revenue by the number of subscribers to show how much each subscriber contributes.

• Average Margin Per User (AMPU): Subtracts costs like COGs, shipping, and handling from total revenue, then divides by average subscribers to assess profitability.

2. Understand Why Subscribers Churn

Not all churn is the same. Some customers leave because the product doesn’t meet expectations; others may find the subscription inflexible. Regularly collect feedback and make improvements to address these pain points.

3. Never Run Out of Stock

Stockouts can break trust. Your supply chain and forecasting must be solid. If a stockout occurs, communicate proactively with subscribers, offer clear timelines, and provide solutions like discounts or substitutes.

4. Embed Flexibility in Purchase Frequency

Not every customer needs the same delivery schedule. Offer flexible options—like monthly or quarterly—so they can adjust as needed. Your Product Detail Pages (PDPs) and post-purchase tools should make it easy for customers to change, pause, or skip orders.

5. Empower Customers to Manage Subscriptions

Provide user-friendly tools to modify, pause, or cancel subscriptions. A self-serve portal and aligned email flows can make all the difference. For example, if a customer skips multiple deliveries, automate a follow-up to check in and address potential issues.

6. Over-Communicate to Avoid Surprises

No one likes unexpected charges or deliveries. Proactively inform subscribers about upcoming renewals or changes through email, SMS, or WhatsApp reminders.

7. Use SMS for Subscription Management

SMS is a straightforward way to keep customers engaged. For instance, send a heads-up text about an upcoming shipment with the option to reply “skip” to delay delivery. Businesses using Loop Subscriptions can integrate with SMS apps like Postscript for seamless SMS management. .

8. Reward Loyalty Through Subscriptions

Tie subscriptions to loyalty programs. Reward customers with points or perks for each renewal, creating an added incentive to stay subscribed. You can for instance use Influence.io alongside Recharge subscriptions to automatically set up loyalty customer accounts for you subscribers.

9. Leverage Subscriptions for Product Discovery

Include samples or new product offerings in subscription boxes. Collaborate with other subscription brands to cross-promote through postcards or samples, expanding your reach and adding value.

10. Incentivize First-Time Subscriptions

Discount initial subscriptions or offer a trial month to reward new customers for committing. Highlight how subscribing saves money compared to one-off purchases. A strong first impression reduces churn.

Bonus: Address Billing Issues Proactively

Billing errors like expired credit cards are a common reason for churn. Automate notifications to remind customers to update payment details before issues arise, ensuring continuity.

Running a subscription eCommerce business is about more than recurring revenue; it’s about creating a seamless, customer-first experience. By implementing these strategies, you’ll keep customers engaged and build long-term success. It’s not just about saying you’re in the subscription business—it’s about living it.

When selecting a subscription management app for your Shopify store, it's crucial to assess each option's features, pricing, and support to determine the best fit for your business needs. Here's a comparison of three prominent apps: Recharge, Skio, and Loop.

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Lastest episodes:

• Scaling Meta Ads: An Advanced Playbook for eCommerce Growth → Marin Ištvanić

• $40M in 5 Years: The Profit-First Obvi Playbook for DTC and Retail Domination → Ronak Shah

• How to Turn Consumer Neuroscience Insights into eCommerce Growth → Dr. A.K. Pradeep

• How to Land Top Media Features Without Hiring a PR Agency → Gloria Chou

• How to Automate and Streamline Your Shipping Processes for Growth → Gitika Jain of ShipAccel

• How to Optimize Your eCommerce Team with High-Level Outsourcing → Ian Myers

• The Highest Impact Meta Ad Creatives Types That Are Driving Results Right Now → Lachezar Voynov

• How NIFT Offers Consumer Brands A New Way to Acquire Customers at SCALE → Elery Pfeffer

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