Tips for Running Subscription Commerce Services

3 Min READ

So you have just started using subscription commerce (SubCom) for your eCommerce business. What now? How do you know if it's an effective strategy and how does it compare to what you were doing before? We have put together some tips for you on running an effective SubCom strategy. 

Track KPIs and data. Here's a list of the top SubCom KPIs.

Average order value (AOV): Average order value measures the amount of revenue brought in per subscriber for every order. This allows you to see if you're having an uptick in upselling and cross selling with the new strategy. 

Lifetime value (LTV): Customer lifetime value is calculated using the average revenue per subscriber or (ARPU). To get this number you take the subscription revenue and divide by the number of subscribers per month. 

Example: $100,000 in monthly subscription revenue/10,000 subscribers = $10 per subscriber per month

Churn rate: Your churn rate is the rate at which your subscribers are canceling subscriptions. If you notice your churn rate start to increase, you can work to identify the source of the churn and allow for a specialized focus on why customers are leaving or not subscribing.

Make sure you have the right platforms to support your goals. 

When it comes to the tools we use for any job, you are only as good as the tools allow you to be. If you choose a shovel to dig a 50 foot ditch, while it will still accomplish your goal, it will take too much of your time, effort and resources to effectively complete. The same can be said about your software. Using technology to support your business should be at the very least:

  1. Cost effective
  2. Connect with your other platforms (through things like Open APIs or pre-built connectors)
  3. Can seamlessly integrate with your staff (offer resources, training, and implementation partners)
  4. Can be implemented in a relatively short time. 

 Regarding point number 4 above, our team at Fortuitas can setup and implement a mission critical system such as an ERP within 90-120 days. 

Create cross-selling opportunities.

One of the best and most widely used strategies is to use subscriptions for cross selling your other products or services. Cross selling is a very effective way for you to provide your customers opportunities to see and buy related products or services while they are searching for their original product or service. For subscription commerce this means you have an opportunity for the following strategies:

  1. Personalized shopping experiences
  2. Segment the customer base
  3. Offer a "frequently bought" section
  4. Use bundles and discounts

Make sure the subscriptions are flexible to the buyer's needs.

The most important tip we can provide is to make the experience simple to understand, relatively quick to implement, accessible to all users and flexible enough to meet the buying habits of your customers. By providing your customers with all of these things, you are effectively tailoring the buying experience to any new or returning customer. 

According to the State of Subscription Commerce Report (by ReCharge):

"For some verticals, like Health and Wellness, adding a one-time purchase option increased the average order value by over 71% ($46.21 compared with $33.79). Merchants capitalizing on these options create stickiness with customers, meeting them where they are for a moment in time."

The more opportunities you create that add flexibility to your subscriptions, the more you create happy and loyal customers that drive up your average order value and the value of your subscriptions. If you ever want to know more about SubCom or how to get started, please feel free to set up a time with one of our experts in eCommerce Implementations. 

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