How to Optimize Your Ecommerce Value Proposition
By Tom Wintaugh
Tap into the subscription ecommerce boom and generate recurring revenue with our guide to starting and scaling a successful subscription business.
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The explosive popularity and of the subscription ecommerce revenue model has prompted many online merchants to consider offering a subscription service. A monthly subscription business strategy can skyrocket customer lifetime value by turning one-time or occasional buyers into subscribers. But getting the ideal online subscription experience off the ground comes with a unique set of challenges.
In this article, we discuss what it takes for your brand to stand out and dominate the competitive ecommerce subscription economy and what you should think about before starting a subscription service.
Subscription ecommerce is an online business model that allows customers to buy products on a recurring basis. On top of a more convenient and personalized buying experience, subscriptions often provide customers with cost savings.
For sellers, subscriptions provide a predictable recurring revenue that they can use to scale their business and build a loyal base of returning customers. A modern subscription ecommerce platform can help merchants manage the details of these transactions, reducing the amount of resources it takes to generate this revenue.
There’s a reason why subscriptions have taken the ecommerce world by storm. Launching a subscription service can offer the following benefits:
Because they are paid for on a regular basis, ecommerce subscriptions provide your business with a recurring stream of revenue, which can help you plan inventory, predict sales, and streamline your operations.
Higher Customer Lifetime Value
A monthly subscription business strategy can skyrocket customer lifetime value by turning one-time or occasional buyers into subscribers. We wrote more about how to increase customer lifetime value here.
Lower Acquisition Costs
Since you’ll be getting repeat purchases from customers, you won’t have to spend as much on acquiring and retaining new customers to keep your business going. In this way, subscription platforms are excellent cost cutters for a sales and marketing budget.
Subscriptions boost customer loyalty by providing value and engaging customers. The service offers convenience and personalization—two qualities that modern shoppers value in an online buying experience.
Regular subscription ecommerce purchases also offer insights into customer preferences, interests, and habits. You can use these insights to optimize your marketing efforts and enhance your path to purchase. This will allow you to better engage customers and keep them coming back to your business, which goes a long way toward building loyalty and creating sustainable success.
In addition, subscriptions can open up opportunities for you to upsell and cross-sell products. Because they already have an existing relationship with you, your subscribers are more likely to buy additional products or services that you offer. This is another way for your business to drive sales and increase revenue.
To make subscriptions profitable for your business, the first step is to choose the right subscription model. This will depend on the type of products you sell, your costs, fulfillment capabilities, and your business objectives.
The following are examples of subscription services:
Before you set up a subscription service, you should define your objectives and motivations for doing so. Do you want to attract a new market? Looking to add a new revenue stream? Are you hoping to reduce purchase friction by automating the reorder process? Do you need to transition to an ecommerce subscription platform, or can your current solution support this type of business? Your goals will help determine how you design, promote, and measure the success of a new subscription program.
Ask yourself why a customer would want to become a subscriber. Would they be motivated by convenience, reduced cost, or both? Are they signing up to “set it and forget it” or for a curated product experience? Knowing what your customers need is crucial to the subscription creation process and can assist you in deciding which products, services, and solutions you focus on.
Once you know what your customers need, how will you let them know you have the solution? Will you use your current channels to announce the subscription option or branch out to attract new markets? Subscription ecommerce models tend to be popular among Millennials, so you might need to change up your current marketing strategy to focus on their preferred media and watering holes. A good value statement for your subscription service will provide an excellent starting point for your marketing efforts.
Do you plan to offer unique, curated boxes each month? You’ll need to reallocate time to accommodate this or hire additional personnel. Is your inventory management process ready to handle automatic reordering? Automatic reordering can put significant strain on a fulfillment structure designed for irregular orders. Launching a new ecommerce subscription service can take up a lot of time and strain your existing resources. Before you can start offering subscription options, take stock of your resources and processes. Some adjustments may need to be necessary to ensure scalability.
If your ecommerce platform doesn’t come equipped with the ability to offer a subscription option on every product, you might hit a few snags when it comes to launching a new service. A subscription-enabling plugin might suffice, but these can come with a host of stability and reliability issues and end up being more trouble than they’re worth. A great subscription ecommerce platform should provide native support which makes subscriptions easy to manage. Make sure your platform is robust enough to handle your new subscription service…and any others you hope to launch down the line.
An effective subscription ecommerce service engages customers, offers value, and delivers an experience that keeps them around. Here are the steps you need to take to build a successful subscription offering.
Some product categories are more competitive and saturated than others. Before starting your subscription service, evaluate your product offering and your target market. Make sure your product stands out in the industry and offers a unique value to customers.
When it comes to online shopping, customers want personalized experiences. Take some time to refine your messaging, understand your buyers, and leverage data to create highly tailored experiences based on their interests and preferences.
Once you’ve acquired a solid subscriber base, you’ll want to turn your efforts to customer retention. Give customers a reason to come back with an experience that extends the subscription—think of ways to dazzle customers, provide them with support, and treat them like a valued part of your online community.
A great subscription ecommerce platform can help you manage transactions, inventory, and fulfillment for subscription orders, but sSubscription ecommerce services cannot succeed without proper marketing. Leverage your marketing channels to promote the benefits and value of your subscription. Consider promoting your service through emails, social, paid ads, affiliate marketing, and influencers to attract new customers and engage with existing subscribers.
This blog was originally published on March 5, 2019 and updated on May 11, 2023.
Miva offers a flexible and adaptable ecommerce platform that evolves with businesses and allows them to drive sales, maximize average order value, cut overhead costs, and increase revenue. Miva has been helping businesses realize their ecommerce potential for over 20 years and empowering retail, wholesale, and direct-to-consumer sellers across all industries to transform their business through ecommerce.