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Creating Long-Lasting Relationships in the Subscription Economy

By: James Gagliardi
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This article was originally published in TotalRetail.

With more customers desiring a shopping experience that’s equally convenient and flexible, we’ve seen a massive shift from an ownership to subscription model in the retail space. Modern shoppers are taking on recurring costs and companies are adapting their business models in response to this trend.

We’re now even seeing shoppers gift friends and relatives with their own subscriptions for periods of time. Businesses are increasingly feeling the pressure to retain customers who learn about their brands under these circumstances.

Let’s take a look at a few important factors that can help companies turn these short-term subscribers into long-term customers.

Answer the Question, ‘What’s the Value?’

Businesses must not assume consumers will automatically understand the benefits of a subscription offering. If they’re receiving a subscription as a gift, for example, it may be their first experience with a service of this type. Throughout the allotted period, gift recipients are constantly debating whether they will keep the service and take on the recurring costs themselves. While marketing to these new customers, subscription providers should be precise on what value they provide and the customer experience they offer.

If brands are able to showcase why their value outweighs the cost, they can begin to forge long-term relationships with consumers. This elevates the subscription model to be more than just a new way to buy, but a better way to buy.

Selling Experiences vs. Selling Products

The nature of a subscription model requires more communication between a brand and its shoppers. Customers want to feel appreciated and know that their personal preferences are understood if they intend on investing their hard-earned dollars for the long term. With that said, it’s critical for subscription sellers to emphasize service over product.

It’s known among retailers that the idea of convenience plays a major role in today’s world of commerce. Customers enjoy products and payment processes that are simple and easy. If one doesn’t have to worry about gathering payment information, but rather “sets it and forgets it,” it’s a win. Even though convenience is a key element brands should take heed of, additional value must be offered beyond it.

The great thing about subscription services is the level of opportunity for personalization. Brands have access to a surplus of consumer data due to the increased number of touchpoints, which provides endless possibilities. For example, these insights give businesses the chance to share both tailored promotions and products with shoppers, and in return build stronger connections. An opening for brands to extend services and promotions down the line is provided by these fortified relationships.

Technology is King

Disruptions in subscription services related to delivery or payment processing can be a hindrance to a brand’s reputation. If services aren’t carried out flawlessly, then consumers are likely perceiving the subscription as an inconvenience and unreliable. Any company seeking to capitalize in this market area should be maintaining the required IT and e-commerce infrastructure to support this kind of business. By creating and maintaining robust e-commerce channels and systems, companies can bolster product offerings and reap the benefits inherent in the subscription model.

When brands address issues associated with the technology, it has direct influence over their profitability. The outcome of service disruptions is often the increase of churn levels. To tackle this problem, businesses need accountable vendors by their side that can help manage e-commerce, payments, customer care, and more. Technology must be paired with end-to-end strategy and solutions. Without this, brands are at a serious disadvantage moving forward.

The perfect balance of strategy and technology will be the differentiator for a subscription service, and will positively influence the business overall. Providers must learn to simultaneously communicate their value, present an elevated customer experience, and ensure they have the proper systems in place. Only then are opportunities to innovate amplified.


Connect with us to learn how Digital River can help your brand with both the strategy and technology behind a successful subscriptions business that creates lasting relationships with your customers.