Blog Posts How to Reduce Your Subscription Box Churn Rate
Maintaining subscribers is one of the most critical – and challenging – aspects of subscription box businesses. In fact, the median churn rate for subscription boxes is 10.54 percent.
Struggling to hang on to your subscriber base? Saddle Creek’s Director of Fulfillment, Nicole Lee, discusses effective ways to build subscriber loyalty in her latest blog for MultiChannel Merchant.
Following is an excerpt from the blog…
5 Steps to Increasing Customer Retention in Subscription Commerce
What can your subscription company do to retain subscribers? Following are five effective strategies and the fulfillment best practices necessary to support them.
- Personalize orders
Personalizing subscriptions to suit subscribers’ unique tastes will make them more loyal to your brand, particularly for curated subscription boxes. Offer choices based on personal preferences such as style of clothing or eyewear, size/breed of pet, etc. For additional customization, you could allow them to select one or more items from a list of options each month/quarter.
Personalization does require more sophisticated fulfillment operations. To sustain this model, you’ll need a customer relationship management system (CRM) to manage subscriber information effectively.
Since you’ll need to handle a variety of order configurations, it will be important to engineer strategic fulfillment processes. You’ll probably need to adjust your current fulfillment setup, perhaps setting up pick stations or kitting common items in advance.
The additional complexity and labor-intensive nature of personalized orders will likely require additional staffing and a larger footprint for processing. For companies with a high volume of unique customized orders, it may be helpful to adopt an anniversary model and ship orders daily instead of a batch model where all orders ship at the same time every month.
- Deliver value
Whether your subscribers are looking for unique new items or replenishing frequently used products, they want to get their money’s worth. In fact, “value for the money” is one of the most important drivers for subscription cancellation, according to McKinsey & Company research. Subscription companies typically have slim margins, so it’s important to keep a close eye on expenses.
Start by optimizing fulfillment processes for efficiency, incorporating automation as necessary to meet customer expectations. Be careful not to over engineer a solution. Over engineering an otherwise simple fulfillment process may drive capital costs up and impede your flexibility to change solutions quickly.
It is also important to control transportation expenses. Select shipping methods that align with subscription costs and customer expectations. For example, you may be able to utilize more economical ground transportation with a strategic DC network configuration. Negotiating rates, planning shipping volume and zone skipping to specific sortation hubs also can help to control costs.
- Cultivate your community
Engaged subscribers are more likely to stick around. Establish a sense of community by inviting reviews, feedback and social shares. If you utilize a batch subscription model, make your monthly deliveries a major social event for subscribers. Encourage them to post photos or videos of the un-boxing experience to generate excitement.
This approach is most effective if you can synchronize shipment arrivals. Coordinate deliveries according to customer location so that subscribers in different parts of the country receive their orders at approximately the same time.
To inspire social sharing, deliver the “wow” factor with thoughtful touches – tissue, custom inserts, ribbon, etc.
For more strategies to help reduce subscription box churn rates, read the full article.