Picture this: You’re working really hard on developing great products and creating flexible subscription models for your customers and you begin to see the subscribers coming in.

But after some time, the churn rate starts increasing, cart abandonment comes knocking on your door, and the subscriber count starts dwindling.

While there could be a million and one reasons behind this, not being able to estimate your customers’ product usage is a big one. After all, who loves getting more product when you didn’t need any?  

Although sending too much product might look like an inconsequential operational hiccup at first, when customers receive products in higher quantities than what they require every month, it’ll take a severe hit on your brand reputation and lead to a high churn rate with cancellations, impacting your bottom line. 

This article will discuss why and how you should estimate product usage to provide an excellent customer experience and improve your retention rate—one subscriber at a time.

Why Should You Care About Consumer Product Usage?

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Let’s be real—product usage isn’t so straightforward to anticipate. Many factors go into a customer’s buying behavior and consumption patterns. 

However, it’s an important metric to identify, especially one that can prevent you from being right where you don’t want to be—in the middle of dwindling subscriptions, rising customer support tickets, and a downward graph of customer base and revenue.

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Here are some other reasons why estimating product usage should be your priority:

• Provide a better customer experience

Almost 49% of consumers left a brand in 2021 because of a poor customer experience. With a subscription model, consumers want to give up the hassle that comes with shopping, but when a box full of products shows up at their doorstep when they still have two unopened boxes in their cabinet, it leaves them frustrated and annoyed with both the brand and the product. By estimating product usage, you can provide an excellent customer experience that’ll keep them coming back.

• Enhance customer retention and boost loyalty

A good customer experience correlates with retention and loyalty. In fact, 60% of consumers say they became repeat customers after a personalized customer experience. So, if you can estimate your customers' product usage, you can tweak and automate your supply chain processes to serve them better and ensure you cater to their needs in a more personalized way. 

• Improve brand reputation

If you’ve subscribed to a CPG brand like Dollar Shave Club, you’ll receive a curated box of shaving essentials every month. Now, if they estimate product usage and send you shaving cream every three months, and a 6-pair razor every month, you’ll get a shaving cream bottle as soon as the previous one is about to run out without having to go to the store. 

Because DSC sent you exactly what you wanted when you needed it, you aren't frustrated looking at an overwhelming amount of toilette products, you aren't scrambling for space in your cabinet or looking at an empty shaving cream bottle. 

The experience is seamless for you, which leaves you with warm and fuzzy thoughts about the brand, not annoyance and frustration.

If the opposite happens, and the brand doesn’t consider how quickly you’ll go through their product then you’re stuck with more product than you need and overwhelmed by shaving cream bottles piling up in your bathroom cabinet. The brand is anticipating your needs which will improve your perception of the brand. 

‍Bottom line: This translates into repeat purchases, a better experience, and even referrals. ‍

How Can Subscription-based CPG Brands Estimate Product Usage 

We've covered why it's important to measure how much product your consumers use, now let's dig into how to measure their product usage to reduce churn and avoid losing customers. While there are many ways to do this, here are the top four strategies that you can begin implementing right away:

1. Track Data From Consumer Purchases To Understand Behavior

Most DTC brands have a significant yet underutilized advantage—access to first-party customer data. Since all purchases, subscription edits, cancellations, and checkouts happen from your site, you can track customer behavior and crucial KPIs, like on-site shopping behavior, delivery preferences, subscription edit frequency, and repeat purchases. 

You can easily access these KPIs using behavior analysis tools like Hotjar, where you can use heatmaps and session recordings to understand drop-off points and anticipate their buying needs. Add to that a business intelligence tool like Tableau, and you can gather rich data about your customers, and convert them into actionable insights to estimate product usage.

To do this ethically, ask customers for permission to collect their data to improve their overall experience. A 2019 Accenture survey confirmed that over 75% of consumers are willing to share personal data for a more personalized experience, efficient and intuitive processes, and competitive pricing—so use it as leverage.

‍Pro tip: Rodeo integrates with sophisticated business intelligence tools like Tableau to simplify granular data and help you deliver tailored offerings to your customers—when they want it, how they want it.

2. Understand Consumer Preferences

Suppose you’re a DTC brand offering toiletries to your customers. Products like toothbrushes, toothpaste, and body washes are among your bestsellers. And while it’s important to understand which products are your customer's faves, that’s not going to be where you want to look to understand which products should become subscriptions.

To turn their preferences into a subscription, look at which products have the highest re-order rates. When customers are ordering the same products over and over again, they’re more likely to want to automate that entire process with a subscription. 

And to start that subscription in a way that focuses on delivering just enough products at the right time, ask them to answer a few survey questions while they're checking out their re-ordered products. 

Questions like these will help your brand understand the consumer's usage and timing. 

• How many people will use this box’s products?
• How often do you change your toothbrush?
• How often do you buy body wash or body butter?
• Do you prefer receiving a curated box every month or going to the store to purchase?

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To take this a step ahead, you can also cross-reference your survey findings with first-party data through behavior analytics and business intelligence tools to rule out consistencies and estimate product usage based on data and not assumptions.

3. Allow Customers To Edit Their Subscriptions And Preferences Seamlessly

The last thing you want is to give customers the flexibility to manage their subscriptions, but not enough to actually edit seamlessly. A glitchy experience and mismanagement of online subscriptions and supply chain issues doesn’t create a great customer experience.

The solution? Remove all friction points, reduce the number of steps to edit subscriptions or preferences, and encourage your customers through in-app communication, push notifications, and marketing materials to tailor subscriptions according to their needs.

With Rodeo, you can create a simple checkout process for your subscribers, where they can easily edit their subscriptions and add additional products. You can also send them strategic updates with reminders to upgrade their subscriptions or add their preferences, so you can factor that while sending them products every month. 

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Rodeo allows your customers to edit and modify their subscriptions, and receive reminders to upgrade their subscription based on product usage estimation.

4. Optimize Your Supply Chain Operations Using Data

You can’t just collect product usage data, store it in your database and wait for it to do its magic.

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Convert first-party data, customer data from surveys, and category preference insights into actionable information to guide your supply chain modifications. 

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For example, Jot, a coffee brand offers seasonal flavors to their subscribers along with other perks like a 25% discount, and free shipping. Let’s say from all the data they collected, they find out some customers finish the seasonal flavored coffee bottles in 90 days. So now they know how often they should create, dispatch, ship, and manage their supply chain to send seasonal flavored coffee boxes to their customers. 

But for this, you’ll have to manage inventory and your supply chain operations to ensure the products reach the customers at the right time.

The best way for this to happen is to combine all the data and optimize each stage of your supply chain to provide customer satisfaction. 

Start Estimating Your Customer Product Usage 

Subscription models give CPG brands an edge to offer customers convenience and flexibility in shopping and receiving the products they want at the right time. But it also gives them enough information to address consumer needs and ensure they can make the most out of their subscriptions. Add an excellent customer experience to that, and you can significantly improve your retention rate, and, eventually bottom line.

So, start rewiring your operations to study customer preferences, specifically product usage, and create a modification plan to record and address their needs accurately.

Rodeo helps you provide a great subscription experience with flexible and customizable tools that boost retention and drive incremental revenue. Book a demo today!

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