The Benefits of a Subscription Program

If you own a small business or you’re thinking about starting one, you know you face daunting odds.  To give your company the best shot to succeed, you’ll need to use every tool in the box.  One important tool that small companies sometimes undervalue or overlook is a subscription program.

A subscription/loyalty program is one of the most effective ways to develop and expand your core audience while generating a steady cash flow that your company needs to survive and thrive.  In exchange for subscribing (either for free or for a fee), your customers receive offers that reward them for doing certain things — e.g., repeat orders, customer referrals, etc. — that help your company achieve its goals.

Loyalty programs are used in every retail category and in companies of all sizes.  Your neighborhood deli, for instance, probably offers you a free sandwich after every fifth or tenth purchase.  If it works for them (and it does), it can work for your company, too.

If you haven’t yet created a subscription program, or if your program isn’t performing as well as you’d hoped, here are a few tips to keep in mind.

Find and focus on your customers’ interests — again and again.

A loyalty program isn’t a “set it and forget it” endeavor; it requires constant attention and effort.  Your members are your best customers, and to retain them, you need to know what they want — not just today, but tomorrow, next month, next year, and beyond.

For optimal results, you have to understand your products and/or services, your industry, your customers’ needs and interests, and your own needs and goals.  Keep testing and analyzing every aspect of the program; solicit and act on member feedback; continually study competitive and consumer trends; and update your offers and messages according to the data.

Determining and delivering on your customers’ interests can result in extraordinary dividends:

  • In its first five years, Amazon Prime enjoyed solid membership growth, thanks to the power of its free (well, prepaid) 2-day shipping offer on all Amazon purchases.  In 2011, though, when Amazon saw the growing interest in online streaming videos, it added that service to the program and began cross-promoting it with the Kindle Fire.  Prime membership numbers soon “exploded” as a result.
  • In 2013, expanded its program benefits to include 5% cash back on purchases at over 400 top online retailers.  Members reacted so strongly to the new benefit that the program doubled the cash-back payout to 10% in July 2014 and increased the network to over 1,000 popular retail sites.  The response was phenomenal:  Members’ average order values increased 11% within two months, and their average number of orders per day went up an astounding 65%.

You have to give something to get something.

Loyalty is a two-way street.  Today’s consumers have shown that they’ll respond to and engage with retailers when they receive something of value in return.  According to The 2013 Maritz Loyalty Report:

  • The average shopper has joined 7.4 loyalty programs.
  • 57% will change when and where they shop to maximize their rewards.
  • 94% want to receive communications from programs.
  • 57% “always read” those messages.

Give your subscribers quick, easy access to exclusive savings on your products or services, and stay in constant touch with them.  The more engaged they are, the more you’ll learn about their needs, interests, and actions.  Monitor every possible behavioral metric you can find, and use this knowledge to personalize your offers and messages to them.  This will help you demonstrate how much you value their satisfaction, and you’ll be rewarded with their loyalty — and the increased business that comes with it.

Invest upfront to reap long-term savings.

Everyone wants more convenience and savings.  Your best customers, though, are particularly eager to receive and respond to your exclusive deals, personalized messages, and updates, and a subscription program delivers exactly that in a single package.

You can widen the program’s appeal via an introductory offer of instant savings on a recent or future order, which will attract cost-conscious shoppers.  A series of follow-up messages about the ongoing savings and other benefits of your program can help you persuade otherwise tentative customers.

Depending on your industry and audience, acquiring customers can cost anywhere from three to 10 times more than it costs to retain customers.  Subscribers to your program are essentially locked in for at least their subscription terms, providing you a variety of opportunities to influence them.

You’re also gaining valuable knowledge about your audience — especially high-LTV customers, the ones you most want to keep.  This information will help you personalize their offers and messages, as well as the vehicles you use to reach them, further increasing your competitive advantage.

Done right, a subscription program can increase your chances of success, whether you’ve already opened your business or you want to start one.  Just remember that, in subscription programs as in every other aspect of your business, your customers’ needs and interests are your top priority.

About the author

Tom Caporaso is the CEO of Clarus Marketing Group, which builds and customizes subscription programs, including FreeShipping.comReturn Saver, and others. Tom has over two decades of direct marketing experience, specializing in e-commerce, subscription, and custom loyalty programs.


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