Subscription box services have ballooned in popularity – offering weekly or monthly deliveries of goods from clothing to food. One of the key challenges that such services have faced however is high customer churn – the tendency for a large proportion of customers to sign up for an initial box and then cancel their subscription.
This article explores approaches to consider for reducing customer churn.
Providing clear value for customers
Possibly the clearest way of reducing customer churn is to offer clear value for customers as part of the subscription service. If the deliveries bring substantial value, then the tendency for customers to cancel their offerings substantially diminishes.
Being successful at providing clear value for customers in part relies on your subscription box business model and careful consideration of how you provide additional value for customers. For example, being able to acquire products contained in your subscription boxes at a reduced rate, potentially from buying in bulk or getting sample products at a discount from manufacturers, may allow you to provide genuine value to customers.
Differentiating your offering from other firms
If your service is very similar to other subscription boxes, then part of the reason for churn may be customers cycling through different providers (potentially taking advantage of the initial signup offers of each). The more unique your products and services are, the harder it is for customers to switch to competing offerings.
Customizing your offerings to individual customers
Connected to the need to differentiate your product, is the possibility of locking customers into your service by gradually learning their preferences and targeting your boxes to meet their needs. While this may not be possible for all subscription boxes (buying in bulk may mean you need to offer all customers the same box) if you are able to gradually personalize your offerings, you may be able to increase the reasons for customers to maintain their subscriptions (rather than moving to a different firm, which lacks the built-up personalizations and understanding of preferences).
Increased targetting in your customer acquisition strategy
Another change to reduce customer churn is better targetting of customers to sign up for your service. Signing up customers who only have a tangential interest in your product or service is unlikely to be successful in the long run. If you have high customer churn, it is important to systematically consider where you are promoting your products and service, and narrow down your targeting on channels that result in long-term subscribers.
One approach that can be particularly successful is to encourage existing subscribers to promote your service. Increasing word-of-mouth advertising, potentially through targeted offers where subscribers can offer trials to their friends and family, can be a good way of gaining long-term customers. Your existing loyal customers are not only likely to be able to vouch for your service, but also know others that may also be likely to value your company’s offerings.
Reducing your use of initial sign-up discounts
Another component of reducing customer churn is to consider reducing sign-up discounts. While signup offers can be a quick way of growing your subscriber base, they may be particularly prone to attract customers that only maintain a subscription during the offer period. It is not uncommon for customers attracted by high initial bonuses to circle through a set of subscription box servers – taking advantage of each of their initial introductory promotions.
When considering your marketing approach, a key consideration is how best to attract customers that will be loyal. Ultimately, it is most important to acquire customers that will maintain their subscriptions, than to simply grow your subscriber base with a large number of customers, the majority of which will quickly churn and leave the service.
Final thoughts: Consider your business model
Something final to keep in mind when designing a subscription box service is the fundamental economics of your subscription service. Having a clear understanding of your business model, the value that it provides customers can help ensure that you have a sustainable model that attracts and retains subscribers.
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