Can Subscription Programs Drive True Customer Loyalty?
Over the last few years, subscription services have been on the rise. Driven almost exclusively by e-commerce brands, today’s subscription economy is rapidly growing—by more than 100% annually since 2013—and disrupting traditional retail expectations in fashion, cosmetics, grocery, and dining.
The appeal of subscription services is that each claims to offer a unique value to its subscribers: convenience, exclusivity, the opportunity to learn new skills, the discovery of products we may otherwise not find on our own. In return, these services help brands encourage regular purchases, build brand engagement, and foster brand loyalty.
But how effectively do subscription services achieve those goals? For brands to cultivate loyalty and customer retention, it’s important to ensure that participation in these services is less habitual and actually driven by a meaningful connection with the brand and its offerings.
Subscription services generally cater either to a customer’s needs or their indulgences. Below, we highlight how brands offering these services can build deeper customer loyalty.
Subscriptions in this category operate on the assumption—the hope, rather—that there are certain products that customers will always need that require continual replenishing. For example, recurring orders on weekly groceries, cleaning supplies, pet food, shavers, and so on. The need for these products is considered a fact of life; customers sign up for these subscriptions for the convenience of not having to think about restocking. Instead, these items are delivered to their front door right when the customer needs them.
Brands offering subscription programs for items that customers consider necessities are generally successful in providing consistent value. However, brands that want to cultivate deeper loyalty with their customers can do so by showing customer appreciation. Many brands overlook how simple it is to thank their customers for subscribing. Brands should reward their customers for longevity, nurture the relationship by celebrating milestones (like the customer’s birthday, or the anniversary of their initial subscription), and offer periodic exclusive add-ons to their subscription. Loyal customers who spend money on your brand each month should be acknowledged and appreciated.
Subscriptions that cater to customers’ indulgences are typically in fashion, beauty, and food. Convenience is certainly a factor in these programs as well, though in a different aspect from necessity-based subscriptions; instead of providing items that the customer needs, these programs provide the convenience of receiving new, exciting products that the customer might not have the time or access to find on their own. For example, personal styling services that help customers who don’t know what to buy, or meal planning services that offer interesting recipes and prepped ingredients.
These subscription programs are more uncertain precisely because they are indulgences—if they fail to deliver on their value proposition, customers might decide that these services aren’t worth the convenience after all. Many of these services have to deliver uniquely personalized experiences (what is the customer’s style? What are their food preferences or dietary restrictions?), which are difficult to deliver at scale. If the delivery isn’t accurate or relevant, customers may eventually choose to opt out.
To improve customer retention, brands that offer these subscriptions should focus on delivering a reliable, consistent product. Keep customers engaged by consistently providing well-curated, quality products. In addition, consider your brand values as an engagement platform; customers more readily support a brand when it reflects an ethos or identity that resonates with them—for example, sustainable fashion, environmentally-friendly groceries, or supporting small businesses. Brands should capitalize on shared values and make an impact in the areas that matter to their customers.
As more brands and industries continue to experiment with implementing subscription services, time will tell if they are worth the investment. For brands to succeed and retain their customers, they will have to ensure that they are delivering a meaningful, worthwhile product to cultivate loyalty.