How To Properly Plan For Launching Subscriptions

← Blog

Last updated:  April 24, 2023

Offering subscriptions is a surefire way to grow your business. Subscriptions offer a predictable form of revenue that make it easier for your business to plan inventory, forecast your revenue and operate more profitably. Additionally, adding a subscription offering to your ecommerce business is relatively simple to do and can create buzz among your current customers, without a huge time and resource commitment.

A recent study found that ecommerce brands that offer subscriptions grew 26% faster and were 14% more profitable than those that didn’t offer subscriptions. However, just offering subscriptions is not going to be enough to provide an ecommerce business with strong growth metrics. Taking the time to properly understand your business as a whole before launching a subscription offering is critical. By having a deep understanding of your business, you will be in a position to make subscriptions a critical key to your businesses success.

In this piece, we will provide you with three helpful tips that you should consider when you are ready to begin exploring launching subscriptions for your ecommerce business. While solutions like Upscribe make it easy to go live with a subscription offering in a matter of minutes, it’s critical that you take the time to learn about your business before just going live with a subscription option on your site.

Ready to start taking the first step towards generating profitable growth for your business? Read on!

Know your metrics and KPI’s

Understanding your business may seem like an obvious statement, but taking the time to really dive into the metrics that are driving your businesses success is an essential step towards evaluating the potential impact that subscriptions could have on your business. For example, if you just want to launch a subscription offering and don’t realize that only 1% of your current customers repurchase from you, you likely won’t have much success when you do launch subscriptions. If your current customers are not showing the propensity to repurchase from you to begin with, you likely won’t sell a lot of subscriptions.

Knowing what metrics to look at and understanding if those metrics lend themselves to a subscription business model is important. You may be asking, what metrics should you be looking at? And what should these metrics be telling us? We’re glad that you asked. Here are three key metrics that you should be looking at determining how they are trending for your business:

• The % of repeat purchasers: you need to understand what % of your overall customers are repurchasing from you. Generally speaking if < 10% of your current customers are repurchasing from you that’s a clear indication that your product may not be set up for subscriptions. In this scenario, customers are not habitually purchasing your product in a way that would lend itself for a regular replenishment. However, if say greater than 20% of your current customers are repurchasing from you, that could be a positive sign that there may be some demand for customers subscribing to receive your products on a more regular basis. The tldr on this is that the higher the percentage of repeat customers that you have, the more likely it is that your brand will have success if you launch a subscription solution.
• # of days between purchases: generally speaking if customers are repurchasing the same item from you at a high frequency (i.e. within 90 days of the original purchase) this is a sign that they see a potential need for a subscription offering from your brand. However, if you find that a large percentage of your customers are repurchasing from you every 6 months or a year, this may be an indication that subscriptions may not be the right fit for your brand.  You want to have a cohort of customers (say between 10 – 20%) of your customers that are repeatedly purchasing the same items within 90 days to feel confident in the success of your subscription offering. Having this strong cohort of customers will be a huge benefit for you as you look for your initial group of subscribers to capture.
• Know your most popular products: this may seem like an obvious statement but the last thing that you want to do is offer a subscription to a product that is not popular. You don’t need to (and likely shouldn’t) offer a subscription for every one of your products. When you first launch a subscription solution, it is advisable to only offer a subscription to your top one to three selling repeat purchased products. It may take some time for your business to get into the hang of the operations associated with selling and shipping these products on subscription so start slowly and ramp the subscription offering as you see fit.

Talk to you current customers

One of the benefits of launching a subscription offering around an existing business is that you have current customers that you can learn from; both in terms of digging into quantitative metrics as outlined above and by asking them qualitative questions. The best business operators, no matter their industry, build their businesses around their customers’ wants and needs. And how do they find out about their customers’ wants and needs? By talking to them.

Prior to launching subscriptions for your brand, reach out to set-up calls with your customers to ask them about a potential subscription offering. Don’t just reach out to your “VIP” customers to ask them what they would think about a subscription offering, reach out to customers who may not be at that “VIP” level yet. Conduct conversations with customers across the spectrum so you can understand what they potentially want (or do not want) when it comes to offering a subscription.

These conversations will help you understand how to price, package and overall shape your subscription offering. Rather than developing pricing and packaging in a silo and hoping for the best, actually talk to your customers so you understand what works for them. This will potentially help you sell more subscriptions when you first launch them because the offerings will be “battle-tested” from your actual customers.

Make it simple for existing customers to reorder from you

Perhaps you have dug into the metrics and seen that you have a high repeat purchase rate, but aren’t yet sold on offering subscriptions for your business just yet. Maybe you are worried about how your warehouse will fulfill the subscriptions for example. Or maybe you just want a little more proof that subscriptions are right for your brand. One way to further test a potential subscription offering is to make it easy for your current customers to reorder from you.

By enabling a single click reorder solution for existing logged in customers, you will be able to make it seamless for your current customers to reorder a previous order in as little as a single click. This allows you to unlock trapped value from your current customers while removing any and all friction for them to get what they want, when they want it. Enabling this feature not only allows you to capture more reorder seamlessly, but it also allows you to capture more insights and data around a potential subscription offering.

For example, if you see that a high percentage of your existing customers are leveraging the reorder feature on a regular basis, that is a good indication that a subscription offering may yield strong results for your business. The same way that we mentioned that you need to take the time to understand key metrics of your business, you may want to understand what percentage of your current customers are leveraging a single click reorder function prior to launching a full on subscription program.

To wrap it up, while subscriptions can be pushed live for any ecommerce business in a matter of a few clicks, to have success with subscriptions you need to take the time to understand your entire business. And once you do that, you will be in a better position to add a powerful, lasting and predictable form of revenue to your business that will drive profitable growth for it.

If you are ready to take the first steps towards growing your reorder and or subscription business, we’d love to talk to learn a bit more about your business. Set up time to talk with our team here.