The average US household spends $200 on subscription services. Ecommerce businesses compete for their share of this figure.

Eric Carlson, co-founder of SweatPants Agency, reveals his strategies to gain and keep customers, as well as layout techniques to stand out in the current populated market.

Tune in to this episode to learn:

  • The challenges of the ecommerce industry in 2023.
  • How to improve the customer experience for subscription businesses.
  • How to predict customers' needs.
  • Strategies to combat churn rate.

The state of the ecommerceindustry in 2023

There are various changes in the market that affect the growth of ecommerce brands. Some are consequences of previous events—mainly Covid—while others are new trials.

  • Increased costs: Ecommerce brands still experience the negative impact Covid has had on the economy. From expensive shipping costs to low demand but high inventory counts, businesses are scrambling to make a profit.
  • Paid media: Big brands like Amazon and Walmart are pulling out of paid media and advertising. So, the CPM (cost per thousand impressions) efficiency rate went down for smaller businesses in the first quarter of 2023.

Ecommerce brands view subscriptions as a business model rather than a revenue model. Better to realize soon that these equally apply to subscription businesses.

“From 2016 to 2018, we saw a lot of people creating businesses based on just stuff in a box. These businesses are losing money and efficacy in 2023. Instead, companies that offer an experience or value are winning in the current market.”

How to improve the customer experience for subscription businesses

The average subscription box features a bunch of random low-quality junk mixed together under a theme. These boxes disappoint the customer, generating a negative customer experience. If subscription ecommerce businesses wish to thrive in the current marketplace, they must build on their customer experience. Here are some key aspects to focus on when improving customer experience.

  • Ship when the product is needed. Consumable brands must understand how customers utilize their products and act accordingly.
  • Market experience and emotions. Most ecommerce subscription brands emphasize the product rather than the experience. Instead, businesses should focus on the positive emotions and memories created by their products.
  • Be relevant but not annoying. In an effort to be in touch and stay relevant, many companies spam their clients. Focus on building a habit out of your products. Not only does this prove that you understand your customer, but also allows you to stand out in this saturated market.
  • Encourage exclusivity. Rewarding existing clients for trusting a brand can be a great way to increase customer retention and loyalty. Service owners should offer member-exclusive deals as well as loyalty gifts to their customers.
“Understanding customer needs largely comes down to the communication style. It doesn’t require complex solutions like AI to figure this out. It can be good design where the client doesn’t have to think about it.”

How to predict customers' needs

A large part of offering quality service comes down to understanding the client. Yet, ecommerce brands—if not businesses in general—struggle to put themselves in their client's shoes. Here are a few techniques to accurately predict customer needs:

  • Seek feedback. A no-brain solution is to directly seek feedback from the clients. However, a common struggle is that some clients simply do not share their opinion. To ensure honest and frequent feedback, brands should ask for feedback during the second half. The second half is the final stage of the purchase process, where the client has received the product. Businesses should utilize this period to ask clients questions like:
    ◦ What are you doing with the product?
    ◦ How often do you use the product?
    ◦ When do you need the product the most?
  • Set realistic expectations. Being honest is the best way to connect with customers. Businesses shouldn’t oversell or over-market their products. Instead, they should set realistic expectations along with expected outcomes from the get-go. Additionally, this strategy also gives room for future pacing-based marketing.
“Future pacing is overlooked by a lot of people. If I hire a new employee, I’m putting them through onboarding. The same applies to products and customers.”

Strategies to combat churn rate

The churn rate is one of the biggest worries for ecommerce subscription brands. Businesses must keep a close eye on existing customers lest they unsubscribe and leave. There are a handful of strategies that lower this rate:

  • In-cycle upselling: Upselling can be a difficult technique to put in place with prospects. However, targeting pre-existing customers through email can be far easier. This category of clients is emotionally invested in the product, which makes upselling more efficient. On top of financial gain, in-cycle upselling increases customer retention and loyalty.
  • Minimizing involuntarily churn: Too often, brands forget to set up automatic subscription renewals or deal with credit card cancelations. But, these automatic renewals should only be activated with client consent. Businesses that involuntarily bill customers can lead to fines, legal trouble, and loss of trust.
  • Focusing on customer relations: A large part of minimizing churn rates involves strong customer relations. Luckily for brands, the smaller things contribute the most to fortifying customer relations. Some ideas that ecommerce businesses can use include:
    ◦ Present prepaid custom plans
    ◦ Include free surprise gifts in boxes
    ◦ Offer flexible subscription plans
    ◦ Improve the cancelation flow
    ◦ Reach out for feedback
    ◦ Make client-related processes easier
  • Analyzing data: When a client decides to unsubscribe from a service, it becomes more difficult to convince them otherwise. If ecommerce brands can predict when customers will leave, keeping them in the cycle becomes much easier. Successful businesses are able to forecast when customers are dissatisfied with their service. When that occurs, they react with strong solutions to keep the client. Moreover, in-depth data analysis allows brands to understand what resonates with customers.
“Brands that do not focus on customers run out of people to market to, leading to short shelf life. Whereas successful brands gain 20% to 30% of their customer base through referrals alone. If your goal is to extract as much value as possible from your client, somebody else is going to take your customer.”