Recharge’s Ryan Forster on the Booming Subscription Economy
Did you know that Brits spend more than £2 billion every year on subscription services? Yes, we can’t resist a good subscription, whether it’s a regular razor delivery, bi-weekly biscuits or monthly make-up box.
Not only are consumers rather fond of subscriptions, but it seems that retailers can’t get enough of them either. And with good reason too - subscription services offer a whole host of benefits for merchants, including lower retention spend, better financial forecasting, and richer relationships with customers.
When it comes to implementing and optimising an ecommerce subscription, Ryan Forster, Partnerships Manager at Recharge, sure knows his stuff. He’ll be hosting his very own masterclass at September’s Ecommerce Unlocked event, delving into the ins and outs of customer lifetime value, churn and loyalty.
We caught up with Ryan for an intro to the world of subscriptions and to find out what he thinks about the ecommerce trends to watch this year …
To kick us off, can you tell us a bit about Recharge and the services you provide?
Sure. Recharge is the leading subscriptions payments platform, designed for merchants to set up and manage dynamic recurring billing across web and mobile. The platform powers the growth of 15,000 merchants across the world, serving over 35 million subscribers in more than 180 countries!
The subscription economy has well and truly boomed in recent years. What do you think is behind the rising popularity of subscriptions amongst consumers?
There’s a reason (actually several) customers flock to this model. In fact, subscriptions cater to major elements of human psychology that make them attractive, enriching and compelling. A few of these reasons are:
According to McKinsey, 49% of customers have a subscription. People are moving away from “things” in favour of holistic, engaging and joyful experiences. Subscriptions evolve products into pathways towards tangible presence, create fun anticipation, invite in community, and solve for cognitive overload.
And what about the benefits for retailers when it comes to offering a subscription?
The subscription economy has grown nearly 6x (more than 435%) over the last 9 years. There’s a multitude of benefits to businesses implementing this model - predictable revenue, reducing churn, forecasting inventory, valuable customer data, and increased average order value (and the list goes on). Needless to say, subscriptions are a strong move for businesses.
What's the most important bit of advice you'd give to a retailer who’s thinking of implementing a subscription program?
Good question. I’ll break this down into two main areas of advice:
1) Customer acquisition costs and retention
As important as it is to think about your customer acquisition costs, it’s also important to think about your retention strategies. After all, it’s far less costly for your brand to retain your current customers than it is to acquire new ones.
Tracking your customer behaviour through data and analytics can be pivotal here. This will allow your brand to form a deeper understanding of your customers, their behaviours, and their preferences - and in turn, to hone your approaches to both acquisition and retention.
Finally, you should always be sure to contextualise your lifetime value (LTV) as it relates to your customer acquisition costs - not just consider your LTV alone.
2) Risk of product fatigue
Depending on your business, you may be at risk for your customers experiencing product fatigue over time. Certain product types have a higher risk of this than others. For example, let’s say you’re a protein bar company offering your products on subscription. As time passes, your customers may become bored with your flavour choices.
To mitigate this, it’s important to do your research and offer not only the product types your customers want, but also the number of choices that strikes the right balance for your customers. Too few options? Your customers may tire of your product and switch to a competitor. Too many options? Your subscribers may become overwhelmed, and inventory management may become more complex for your business.
To determine the right balance of product offerings for both your business and your customer base, consider conducting A/B testing. You may also want to think about providing a product matching quiz to help your customers find their optimal product fit.
We've seen a huge acceleration in the growth of ecommerce as a result of the Covid pandemic. What can retailers do to try and differentiate their brand from the competition and optimise their subscription box in today's market?
When thinking about how to optimise your subscription business, it’s important to return to the reasons customers are drawn to these offerings: value and convenience. Here are a few strategies for optimising your offerings that tie back to that bottom line:
1) Make your subscriptions flexible
Make it easy for your customers to perform actions like swapping out one product for another, adding on one-time purchases to their subscriptions, and changing their delivery address. Making it easy for your customers to skip or reschedule a delivery can also be a highly effective strategy for reducing churn.
Regardless of the flexible options you choose to offer, think about ways you can empower your subscribers to manage their subscriptions themselves (without having to engage your customer support team). Your customers will then be able to make their desired changes with greater ease and speed, while your business will save valuable time and energy on the support end.
2) Consider loyalty programs and discount codes
Loyalty programs are an excellent strategy for retaining your current subscribers while providing them with added value. These programs can take a variety of forms. For example, you might consider offering a free gift or discount code to your customers after they’ve subscribed for a certain period of time. You can also consider offering your most loyal subscribers early access to new products, which both provides them with added value and allows you to test the viability of new product offerings.
If you do choose to offer these benefits, make sure your messaging is as clear as possible. This way, your customers will have a clear understanding of how to harness those added benefits.
3) Hone your omnichannel experience
For consumers, one of the major draws of replenishment subscriptions is their convenience. Therefore, it’s especially paramount that you fine-tune your omnichannel experience. This way, your customers can receive the same high-quality experience regardless of whether they’re shopping in a brick-and-mortar store or online, and no matter the device or platform they’re using. Consider allowing your subscribers to manage their own subscriptions via SMS. Make sure your customers can easily navigate your store from a mobile device or via a social media app so they can have an uninterrupted browsing experience.
Are there any ecommerce trends you think we should watch out for during the rest of 2021?
I may be a bit biased, but it’s definitely worth keeping an eye on RechargeSMS, a transactional SMS tool that lets your customers manage their subscriptions by text right from their messages app. By leveraging RechargeSMS for your subscription management, you give your customers the flexibility they need and meet them right where they are. The barriers of remembering log-ins to portals or dealing with a flooded email inbox are minimised by incorporating transactional SMS into your overall multi-touchpoint strategy.
With a phone number specific to your business, you can reach out via text to notify customers before their order ships, giving them options to swap, delay, add a one-time product, or even change their shipping address - all without them having to log in to their customer portal.
Let’s take a look at the stats of using RechargeSMS transactional messaging:
1.4% text opt-out rate (as opposed to double-digit unsubscribe rates with email)
40% customer engagement (that’s 13x the engagement rate of email!)
97% of customers want shipping updates via text
In fact, according to a Twilio survey of more than 6,000 consumers across 3 continents, 9 out of 10 subscribers are waiting for you to text them about their subscriptions.
There’s not long to go until Ecommerce Unlocked. What are you most looking forward to about this brand new event?
Getting to know some new faces and meeting ambitious brands that are looking to scale their business!
Why should people attend your masterclass session - what will they learn?
You’ll learn about the power and profitability of subscriptions, as well as learning how to increase customer LTV, reduce churn and increase average order value by implementing the Recharge solution.
Sign up to Ryan’s masterclass
Want to hear more about how you can transform your business with a subscription? Masterclasses are now open for booking, which means you can save your spot in Ryan’s session in just a few clicks! Remember, you can attend up to four masterclasses with your Ecommerce Unlocked ticket 🤓
Book your slot below!