Editor’s note: Comments have been edited for length, context, and clarity.
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Check out Subscription Academy, a new video series by Ordergroove where subscriptions experts teach you how to solve today’s most pressing challenges.
In our inaugural episode, Scoutside Founder and CEO Thomas McCutchen offered up five ways brands can optimize their subscription experience to protect their margins and reduce churn.
1. Offer a build-a-box experience
A build-a-box subscription experience is an excellent way to protect your margins.
A build-a-box experience is when a brand offers a subscription that includes multiple products for a set price. In this instance, a subscriber can pick and choose exactly what they want to receive in every order.
A similar experience is a preconfigured bundle subscription. This is when a brand offers a subscription experience that includes a set number of products that cannot be changed by the consumer.
Thomas said that brands should prioritize a build-a-box experience instead of a pre-configured experience. This is because there is a major psychological difference when a discount is involved.
With a build-a-box, you’re discounting the bundle, not individual products. As a result, subscribers don’t attach a decreased value to an individual product. In the long run, this protects your product’s value, Thomas said.
A build-a-box subscription experience is also a superior acquisition tool compared to a pre-configured box.
“Build-a-box is better than a preconfigured kit because not all kits are liked by all customers,” Thomas said. “It gives them the control to choose from your product catalog what is most important to them.”
2. Incorporate a loyalty program
To keep subscribers from churning, Thomas recommends incorporating a loyalty program into your subscription experience.
“Subscribers have loyalty built in,” he said. “They’re certainly your most valuable customers by definition. They are already in a very special class – reward them.”
However, Thomas cautioned that not all loyalty programs are equal. He said brands should be intentional when developing and launching a loyalty program.
“A loyalty program shouldn’t be hard to use,” he said. “If it is, then it’s not building any kind of loyalty.”
He added: “If it’s easy to earn and easy to spend – like virtually effortless – then it’s highly valuable.”
Two table stakes loyalty program features are the ability for subscribers to convert points into dollars and the inclusion of multiple tiers that offer greater value as subscribers advance.
High-performing loyalty programs go beyond the basics, Thomas said. For instance, you can offer subscribers discounts and rewards on birthdays and the anniversary of when they enrolled.
“Think of other ways to reward the customers that are meaningful for them,” he said.
3. Enhance your subscriber portal
Subscribers spend the majority of their lifetime with a brand inside the subscriber portal. Making it engaging and easy to use will increase trust in your brand and keep subscribers from churning.
Thomas said brands need to “enhance the post-purchase experience” to make subscribers feel comfortable and confident interacting with their relationship.
Examples included housing gated content like blog posts and videos in the subscriber portal. Subscribers should also be able to easily control all aspects of their orders, including swapping products, adjusting delivery frequencies, and pausing.
“We know that these works,” Thomas said. “The more that a customer is inside the (subscriber) portal, the more they feel in control and the longer they’ll stick around. They’ll start taking actions other than cancel.”
4. Meet subscribers where they are — with SMS
Another way to bust churn is to give subscribers more awareness of their subscriptions through proactive communication. When subscribers have more awareness of their subscriptions, they will feel in control and have more trust in your brand.
Thomas recommends brands meet their subscribers where they’re at, which is on their phones.
“Email is good but it’s crowded – SMS is better,” he said.
Events brands can send to subscribers through SMS include upcoming charges and orders. Thomas emphasized that proactive messages should reinforce that subscribers can control important aspects of their orders like changing delivery frequencies.
“Give them more control,” Thomas said. “Give them more awareness.”
5. Harness artificial intelligence
Artificial intelligence (AI) is an underutilized subscription capability, according to Thomas.
Two ways you can use AI to optimize your subscription experience are through predictive reordering and churn mitigation.
Predictive reordering uses aggregated data to anticipate when a subscriber might need more of a product and prompts them to reorder.
For churn mitigation, Thomas pointed to Ordergroove’s Anticipate AI capability.
Anticipate AI anticipate when a subscriber is at risk of churn due to overstock and sends them a message offering them the option to skip their next order. Our data shows that this preemptive communication can reduce churn by as much as 17%.
“That is a very, very positive experience,” Thomas said.
For more insights from Thomas and other subscription experts, watch Subscription Academy.