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Optimising Customer Retention for Subscription Brands

Top 3 Tips for Increasing Your Subscription Customer Retention Rate

You’re probably familiar with subscription brands like Dollar Shave Club and Barkbox but beyond these eCommerce tyrants the subscription market as a whole has grown more than 100% every year and we’re seeing the effects of that as more and more subscription models pop up across Australia.


For consumers, it means we can get anything from live plants to razors at the interval of our choice delivered right to our doorstep, but for merchants, it means intense competition for monthly recurring revenue. Get it right, you’ll be seeing record highs for customer lifetime values, get it wrong and you may as well send a monthly check to your competitors.


So how can you ensure that once you acquire a new customer on a subscription basis, you keep them coming back? We’ve put together our top 3 tips for increasing your subscription retention rate!


1. Spend Your Money on Long-Term Customer Retention Strategies

It’s expensive to acquire new customers. In fact CPA’s have risen 50% in the last 5 years so we need to maximise our marketing budgets by attracting customers who will be in it for the long haul. A common gimmick subscription models fall down with is offering a free trial. While it can work for some big brands who might have lower CPA’s, high volume of customers and high margin of profits like Hello Fresh, Harry’s or Book Of The Month, for most brands offering a free trial attracts short term customers with acquisition costs leaving you high and dry. It’s important subscription brands understand their customer lifetime value and work back to their allowable CPA to know what incentive for first purchase is feasible.

When it comes to prospecting, segment your customer database to find customers who have the top 10% customer lifetime value. Upload this segment to your Facebook Ads Manager for lookalike targeting to create prospect audiences with high intent. Avoid using gimmicks in the ad copy including free trials, instead offer first purchase incentives like 10% off (or whatever is feasible with your allowable CPA). Having consumers commit to a financial obligation means you’re not using your marketing budgets to attract customers who have no intention to spend a cent with you post the free trial.

2. How to increase customer loyalty? Surprise and delight!

Wowing customers once they’ve made a financial exchange with your brand is key to reducing churn.  UK based men’s grooming company manscaped, attribute their high subscription retention rate to delighting customers with full sized gifts worth $30 – $50 every 3 months. It’s 7 x cheaper to keep an existing customer than to acquire a new one so at this point, it’s worthwhile investing in surprising your existing customers with gifts but it’s also a great way to get your customers trying new products which they may opt to add to their subscriptions later on.

3. Have a Carefully Planned Win-Back Strategy for Customer Retention

It’s true, some good things do come to an end and inevitably your customers may decide to cancel their subscriptions. When the time comes, merchants should have a win-back strategy in place. Hunt A Killer is a murder mystery subscription box brand that gives customers the chance to crack a fictional crime case—and they’re a great example of a brand who’s winning with their win-back campaigns via email automations on Klaviyo. If a customer cancels their subscription, Hunt A Killer sends them a survey to find out why. They then segment their customers based on their answers so they can send relevant win-back emails. So if a customer cancels for financial reasons, they’re sent a discount or promotion for cheaper products; or if a monthly subscription doesn’t fit, customers are sent suggestions for non-subscription products. Strategies like these have resulted in a 58 percent increase in email conversions for Hunt A Killer!

With 75% of D2C brands set to go subscription by 2023, use these 3 tips to acquire customers with long term value, surprise and delight them along the way and win them back with a clever customer retention strategy.

Improve Your Customer Retention Strategy with Reload!

Contact us to chat more about your subscription strategy and getting the most out of your customer base.

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