Subscription Box Models – The New Stars in E-Commerce?
Published on 20 June 2018 | Author Maximilian Hermann0
If you look at the simple growth rates of this business model, the answer is quickly formulated. Statistics such as 3,000 percent increased web traffic in the last three years and 200 percent annual growth since 2011 are basically speaking for themselves. So it’s no wonder that there are now subscription boxes for each and everything coming from so many different industries: from fashion and textiles, cosmetics, jewellery and fitness, to office supplies and pet food. There are suppliers from almost every sector. More than 10,000 of them are currently on the market. However, all that glitters is not gold. Here, too, shops have to struggle with many challenges such as the fast pace of the market. We Show you ways and means to improve your business with subscription boxes through automated dialogue marketing.
What are Subscription Boxes Exactly?
First things first – despite the immense growth rates, subscription boxes are still relatively rare, a niche product and therefore not familiar to everyone. So what exactly are they? Subscription boxes are a type of subscription model in which packages (boxes) are sent to subscribers at regular but often freely selectable intervals (week, month, quarter, etc.). In addition to the frequency of shipping, the costs also vary. However, in most cases these range between 10 and 100 dollars.
The special thing about subscription box models is that – unlike a “normal” subscription – the customer often does not know what to expect. Although information provided by the user (depending on the sector), such as clothing size or weight class and breed, e.g. in the case of pet food, will be taken into account, but what is in the package is not entirely known to the user in advance. Thus, among others, the company Hello Fresh always sends other ingredients with ever news recipes to its customers.
Challenges of the Business Sector
Unfortunately, even the breathtaking growth of this business segment cannot hide the fact that the sector is facing major challenges. In general, a survey by McKinsey in the USA showed that only 15 percent of online shoppers use a subscription box model. In particular, the following reasons were mentioned as explanation:
- The product / experience is not the customer’s satisfaction
- The customer prefers to buy the product when it’s actually needed
- In the customer’s opinion, the product is not worth the money
- Lack of flexibility
- There are “better” offers
In particular the last point turns out to be a “problem”. Many providers offer their customers trial memberships lasting several month, and relatively short cancellation periods, making it extremely easy for customers to switch to another provider. Generally every third customers cancels his subscription within only three month. Customer loyalty is therefore one of the biggest problems for the shops. However, this is particularly important, as it is well known that retaining a customer is significantly cheaper than acquiring new customers.
Help Through Automated Dialogue Marketing
Of course, all digital channels are important in the pursuit of such a business. Starting with a conversion-oriented website, through tutorials and unboxing videos on YouTube, to facebook ads. Never the less, dialogue marketing and especially marketing automation on an omnichannel basis can be particularly helpful in winning, retaining, or winning back customers. There are three points you should keep in mind:
- Use welcome campaigns
- Foster the re-engagement of your customers
- Offer mobile as real added value
Let’s begin with welcome campaigns. These can consist of more than just welcoming new customers. Customers who have just registered for your service are particularly interested in your offers. Use this attention to communicate your offers and further information in a mail sequence lasting several days, for example:
- Explain the options for managing the customer profile (self-service) and, if necessary, configuring the subscription box offer.
- Present past subscription box content, along with matching customer comments. If necessary, enable repeat orders for particularly popular content from the past.
- Emphasize other digital services, e.g. your app, your newsletter, or your community.
- Offer rewards for attracting new customers.
- Ask the customer for further information in order to be able to make him even more individual offers.
- Ask for satisfaction and suggestions for improvement after the first shipment.
Furthermore, a welcome campaign should also serve to “familiarise” the customer with your corporate communication. So be consistent, which means: design the welcome emails in the same look as newsletters or transaction emails and use the same sender ID.
In terms of re-engagement, the best solution is to avoid unsubscriptions in the first place. Of course, the best way to do this is to score with a great product and good service. Regular surveys on the quality of your product can give you information on what may be missing and how you can make your product even better and more attractive to the customer. With the right marketing automation technology, you can easily automate the regular conduct of surveys. If the customer still wants to unsubscribe, you should try everything in a last email to dissuade him again from his intention for a last time:
- Offer the customer in-house alternatives to the previous subscription box service. These do not necessarily have to be other subscription boxes, but also other offers. In any case, try to keep the customer at least as a newsletter recipient in order to be able to reactivate him as a subscriber at a later point in time.
- Maybe the customer has received too many subscription boxes? Allow them to change frequency or pause the subscription temporarily. Generally draw the customer’s attention to the self-service options in their profile.
- Ask him why he wants to unsubscribe. Depending on the answer, you can react automatically with a suitable e-mail and offer him e.g. to discuss problems again personally with a service employee.
Finally, you should also offer your customers mobile services, not least because a large part of your traffic already comes from mobile devices. Offer your customers apps to manage their subscriptions and to facilitate access to services and information flow. Shipment tracking and information about new offers can thus be communicated in an uncomplicated manner. Push Notifications can also be a supplementary factor by means of which you can approach your customers quickly and easily. In addition to push notifications from the app, you can also send current information via SMS, which can also add value. However, it is important to speak with one voice and not send the same content on all channels, so that the user may feel disturbed by too many messages. Further advantages are:
- Users can find their way into your shop from the home screen with just one click, which is more convenient and faster than via the classic desktop.
- The app can be used at any time to specify when a customer is at home, when deliveries can be accepted, or whether the shipping address should be changed.
- Quick access makes it easy to change shipping frequencies or rhythms, or to suspend deliveries (for example, in the event of one’s own absence over a longer period and when perishable food is delivered).
- Another interface between products and the digital world can be created, for example by means of QR code scanners, with which received products can be scanned and additional product information can be called up.
The additional offers can give you a real competitive advantage over your competitors, which ultimately has a positive effect on customer loyalty.
Subscription box models are in a big upswing. With so many suppliers on the market, however, it is difficult to stand out from the competition and stand out from the crowd. Automated dialogue marketing can be a great help in addressing customers according to their preferences and delivering the right offers at the right time.
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