Why Do CPG Customers Subscribe?
The State of the US Direct-to-Consumer Subscriptions Industry 2022 Report
PipeCandy and Rodeo collaborated on the most comprehensive report on the current state of CPG subscriptions. Download the entire report here. This blog post answers the question, why do CPG subscribers actually subscribe to products.
Summer’s here, and the first thing you want to do is stock your fridge with beverages. But that means going out every week in the scorching sun to restock or opening your fridge in the middle of a friggin hot day only to find it empty. We feel you. It’s a nightmare.
How about opting in for a subscription that automatically sends you a crate full of your favorite beverage cans regularly without stepping out of the house? That’s luxury.
From beverages and toiletries to fake eyelashes, you can get a subscription for almost every kind of product today. In fact, there are over 225 million subscriptions and 61 million subscribers in the US alone.
But why exactly do consumers subscribe?
In this article, we’ll take a closer look at some of the data we found when we collaborated with PipeCandy to create “State of the US Direct-to-Consumer Subscriptions 2022 — Industry Report.” If you’d like to go further on the insights, check out the report here.
We cover the buyer motivations that push consumers to hit the subscribe button and how you can tap into those reasons to build a well-rounded subscription program for your DTC business.
Why do consumers begin a subscription?
Consumers don’t enter into a subscription because the boxes look pretty.
There are different aspirations and triggers that push them to initiate subscriptions, stay subscribed to them, and even opt-out.
DTC brands need to understand these triggers and use them to create personalized experiences throughout the user’s journey to help boost retention and reduce churn.
Here are some reasons why consumers subscribe:
- Convenience
Consumers don’t want to pay for a subscription just because it’s the cool new thing. They want to pay for something that allows them to buy what they want, when they want and how they want with maximum ease and additional benefits.
Most subscriptions also offer you the choice of starting, pausing, or canceling the subscription anytime. This puts consumers in the driving seat to guide their purchases, and design their buying process how they want it, thus also catering to their needs.
Not just in receiving the products, subscriptions also make it easier to set up systems for recurring payments. You no longer need to enter your payment details every time you check out. Your products will routinely get delivered, and the expense will be cut from your preferred payment method every month. So, subscriptions are convenient from every front.
- Save money and time
Every time you leave the house to buy a routine item when it’s replenished, you step out, pay for fuel, reach the store and search for the product, make other impulse purchases along the way and end up spending more money than you actually intended.
Subscriptions help you avoid this.
Besides, when you buy in bulk and get a curation box delivered to your house, you get it at a discount. You also get enough product at once, so you don’t have to keep visiting the store repeatedly, thus saving you time as well.
- Quality and variety
Subscriptions give you access to highly niched products, which aren’t available locally or in massive quantities. In fact, 31% of subscribers say they invest in subscriptions because it’s their only way to get the product.
Additionally, subscriptions give you choices for bundled offers, access to exclusive perks, and also offer superior quality, owing to the exclusivity.
Why do consumers stay subscribed?
Subscription boxes face one of the highest churn rates in the B2C segment. Our report found that almost 90% of all churn is voluntary, meaning it’s outside the brand’s control. So, it’s safe to say that if you want to retain your consumers, which is far more profitable than acquiring new consumers, it’s important to work on aspects that help them stay subscribed to your program.
Let’s look at some of them:
- Personalized experience
After subscribing to a program, customer stickiness highly depends on how personalized consumer experiences are, especially with curation subscriptions where individualized preferences matter a lot, and personalization plays a key role in the “surprise and delight” factors.
In fact, 28% of curation subscribers rate personalization as the most superior factor in determining if they’ll continue a subscription with a brand.
- Value for money
In our report, we found that over 23% of replenishment subscribers rate value for money as an important factor behind retention. Eventually, consumers want the flexibility, product quality, convenience, variety, and exclusivity they’re getting with the subscription to justify the price they’re paying.
Why do consumers cancel?
Now that you know why customers subscribe and stay subscribed, let's also see what triggers them to hit the “cancel” button and stop being your consumer so you can take measures to ensure you’re not encouraging it.
Here are the top reasons consumers cancel their subscriptions:
- Non-recurring requirement
Would you pay money every month for a subscription that overestimates your demand and sends you more product than you need or underestimates and sends less quantity than you require? Not quite.
Similarly, consumers need the flexibility to order what they want, in how much quantity, and also pause when they don’t need it.
- Unsatisfactory experience
The experience you offer consumers right after they hit “subscribe” truly guides your relationship forward. If any element of this experience, be it their app navigation, subscription flexibility, checkout, or product quality is less than satisfactory, they will take off.
4 ways brands can increase LTV?
Selling subscriptions and retaining consumers is not just about creating a fancy app or employing innovative marketing techniques. You need to understand your consumers, make them feel like more than just subscribers, and offer personalized experiences every step of their journey with you.
This will eventually help you enhance the Lifetime Value (LTV) while reducing churn.
Here are some strategies you can use to do the same:
1. Implement flexible subscription models
Subscribe and cancel aren’t the only two options.
Sometimes subscribers may even want to pause their subscription. They may be going on vacation, shifting places, facing a personal issue, or just want to take a break from the products.
For this, you need to give consumers a “pause subscription” option as well.
Your aim should be to design a subscription program that gives consumers enough flexibility to tailor their subscription as per their individual needs and preferences, but not too many choices that they end up being confused.
It's important to follow strategic flexibility and understand your consumers deeper to personalize those flexibility options, like allowing them to swap products at checkout, skip one month, or even make a one-time purchase. This will also improve their overall shopping experience.
2. Leverage the power of integrations
You can’t do everything on your own.
The most successful businesses rely on tech integrations to streamline operations, analyze data, and better serve their consumers.
More than anything, you need tools to remove points of friction and bridge gaps that pose potential reasons for your consumers to unsubscribe. These can be for improving checkout, product assortment, managing consumer databases, analyzing first-party data, or facilitating smooth subscription flexibility.
Here are some integrations DTC subscription businesses can benefit from:
- Customer engagement: Tools like Klaviyo can help you communicate with your consumers better through emails and SMS. You can also reduce their time to support with tools like Gorgias that give you a host of options to engage with consumers.
- Personalization: Tools like ReBuy that allow you to implement full-scale personalization with up-sell and cross-sell features can help you deliver unique experiences to the consumers at the right time with the right messaging, thus enhancing LTV.
- Operational success: Data-driven decisions stand at the heart of a strong subscription business, and tools like Google Analytics can help you uncover rich insights.
- Churn prevention: Tools like Churn Buster can help you minimize churn by automating failed payment recovery.
- Fraud prevention: Tools like NoFraud can help you detect potential frauds without slowing down the checkout process, thus ensuring maximum safety without causing any performance issues.
3. Highlighting USP and strengthening brand positioning
A brand stands for more than just its products. And it’s important to define the “why” behind your story and use your purpose to drive the brand’s narrative forward. This purpose will strengthen your messaging and positioning, enhance brand recall value, and boost customer stickiness.
This can be sustainability, diversity, charity, exclusivity, or anything that helps you stand apart from the noise. For example, brands like EarthBreeze have a straightforward mission: Clean Laundry, No Plastic.
Customers will eventually identify your brand and subscribe to your products based on your purpose, which plays a strong role in humanizing your brand.
4.Create loyalty rewards
To retain consumers, you need to treat them as more than just subscribers.
This means additional perks and even loyalty rewards to keep them engaged.
A loyalty program is also a great way to encourage a consumer to stay subscribed to your program even if they “pause” and don’t need your products at this time. It can also help consumers feel like they’re a part of something bigger by imbibing a sense of community.
For example, Black Rifle Coffee is run by veterans and ships free coins to its long-standing customers, promoting exclusivity and a sense of belonging.
Ride the CPG subscription wave!
Garret Camp, Uber’s co-founder described subscription businesses with the potential of 10xing the lifetime value of a customer. And given the growing interest of consumers, from older people to GenZ, we know that subscriptions are here to stay.
So, use this article to understand the triggers and motivations of consumers to initiate, pause, and cancel a subscription and use these insights to iterate on your subscription programs and offer a delightful experience.
Want to create a seamless subscription experience for your consumers?
Rodeo helps brands create flexible and unique customer experiences with one easy-to-integrate tool.
