Solve your subscription box churn problem with e-commerce store discounts

Posted on December 5, 2020 by Andrew C. Smith

By coupling subscription boxes with discounts, you can allow your customers the freedom to pause their subscription box while retaining their discount at a monthly cost — making it even easier to regain them as customers once they work through that pile of face cream.

In June 2017, Blue Apron, one of the major players in the subscription box grocery delivery service, went public at a valuation of $2 billion. Starting at $10 a share, the company dropped below $1 a share over the next 18 months. How did the bubble burst so quickly?

According to a McKinsey & Company Report, subscription boxes face a major problem: churn. In the consumable food and grocery sector, anywhere from 60-70% of customers can end their subscriptions within a year. One of the frequently cited reasons is a lack of “flexibility,” and a sense that groceries are piling up without the time to cook or consume them. Certainly, churn is a critical factor to solve for any subscription-based business; acquiring customers is difficult, so it’s important to keep them.

Why subscription box pausing is not the answer

When your valued customers pause their subscription boxes because the groceries pile up, they’re basically saying, “I like what you do, but I have too much of it.” They’re asking for flexibility, not for a total break. But the problem lies in what happens next: they might quickly learn that they can live without their weekly or monthly subscription supply. In essence, they have no substantive connection to your company or your brand while their subscription is paused. You’re facing an uphill battle for re-acquisition.

What’s more, your valued customers might enjoy the kale you’re sending them every week, but are still working through last month’s tahini dressing. Yet, a subscription pause becomes a one-size-fits-all solution that loses you revenue in the end.

Instead of a total pause, you might offer your customers the flexibility to purchase a la carte, at a discount. This allows the customer to retain a connection with your business and product while creating the flexibility to replenish certain items but not others.

Setting up your discounts to reduce subscription box churn

Instead of pausing subscriptions outright, you might suggest that your customers reduce the up-front cost of their memberships and retain their discounts on additional items. For merchants offering subscription boxes as their highest-valued, primary benefit on Withfriends, we suggest that they add the same e-commerce or in-store discount to both their middle and highest tiers. This effectively allows your members to reduce the amount they’re spending each month, while avoiding cutting ties with your business entirely.

In other words, your customers can gauge their orders based on their actual needs, rather than based on a predetermined schedule. It’s important to create a benefits structure that makes your members want to find an alternative to pausing their memberships — perhaps you might offer a “3-month member prize,” for example, as that is a churn milestone — but it’s also important to keep your members on board as it makes them easier to retain as customers.

Matching supply and demand with discounts

The McKinsey & Company Report mentioned above has one finding that applies to all subscription providers:

A key challenge for all subscription e-commerce providers is matching supply and demand; consumers are much more likely to cancel when products pile up or they can’t customize order volumes to match their actual requirements (for example, if they are going on vacation or need less product in a given week or month).

If you’re already running a successful e-commerce business, you know that customers can come and go. While subscription boxes can be an important part of your business, they don’t have to be the whole thing. Building subscription boxes into an overall system of benefits, and including discounts as one of those benefits, is an important way to ensure that you provide your customers the flexibility to purchase what they need, while also giving them the convenience with default benefits that a traditional subscription box provides.

One important takeaway is that many people who cancel subscription boxes do so not because of the cost, but because the products pile up. It feels wasteful to let your weekly grocery delivery rot in the fridge! In the end, flexibility is more important than cost for many purchasers.

Withfriends automates member tier discounts on Shopify, Square, and Eventbrite, ensuring that you can set up your membership program once and let us do the rest.

Questions? Let’s get started!

If you have any questions about this article, we’d love to hear from you! Drop us a line at team@withfriends.co, and while you’re at it get started setting up your own membership program. We’d love to hear what you think.

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