How Subscription-Box Businesses Can Instill a Growth Marketing Framework
Businesses are constantly trying to figure out how to increase customer retention rates. But what if your business model is designed to create repeat customers? Essentially, that’s the beauty of subscription business models.
Subscription businesses get to profit from recurring purchases, and customers benefit from long-term savings and convenience. In a recent study, Zuora predicts that 74% of people will subscribe to even more services in the future. For businesses that are either in or are trying to get into the subscription game, those are rather promising numbers.
Subscription marketing is proving to be one of the most lucrative ways to market your business. According to McKinsey, effective subscription marketing has been responsible for billions in revenue over the past decade.
Both consumers and businesses alike love subscription services. It’s a surefire way to retain past customers and for those customers to receive more discounted products and services.
But a subscription business model requires a lot more than just setting up recurring billing. It forces you and your team to think about your growth marketing strategy in a new way. You need to tweak every growth marketing tactic to fit in with your overall subscription marketing strategy.
But before we get into the specifics of growth marketing strategy for subscription-box businesses, let’s first delve into the basics of subscription marketing.
What is subscription-box marketing?
Subscription marketing is essentially, ongoing marketing, and implicitly speaking, a business strategy designed to acquire new customers and retain long-term, repeat customers.
Subscription marketing is marketing a business’s products and services to repeat customers regularly. With subscription marketing, the main crux of the marketing strategy is acquiring new customers while also retaining your existing loyal customers.
Subscription services can run the gamut from monthly pet supplies orders to your door or your favorite digital streaming service, to software-as-a-service (SaaS) businesses. The challenge for these services is this: How do you nurture a customer-business relationship for a subscription business when the very nature of the business from the customer's perspective is to expect a product or service to arrive or be delivered with little to no variation or surprises?
For the purposes of this article, we will focus on subscription-box businesses. The core idea behind subscription-based marketing is not just acquiring new customers but keeping them on the platform for as long as possible.
Depending on the product, this can lead to various strategies. For instance, companies that offer complex tools may want to focus on better onboarding processes and acquiring enterprise clients.
Whatever the case, the main goals of marketing for subscription-based businesses are to:
Establish the product’s value.
Establish a clear edge over the competition.
Receive exposure to the maximum number of core audience members.
Make setting up your customer’s subscription easy
Invest your efforts to ensure that your customers stay subscribed (minimize churn)
Upsell a percentage of your core customers.
Both the repetitive nature of the business and the genuine risk of churn make crafting an effective growth marketing strategy for subscription-box businesses inherently challenging. Before you can dial in your subscription marketing strategy, you truly do need to find your subscription sweet spot. For example, when turning a one-time purchaser into a recurring customer, you need to determine the right price point, the right product features, and the optimal billing cycle to make customers want to subscribe.
However, once you figure it out, your subscription box business will reap the benefits. But how do you get to the point of figuring out your subscription model? That is where instilling a growth marketing strategy comes into play. However, before we get into how a growth marketing model fits into a subscription business, let us delve into some of the key leverage points inherent within most, if not all subscription businesses.
Just as a reminder, what is growth marketing?
Growth marketing is a long-term, strategic methodology that works to help brands achieve sustainable, measurable growth. It is a holistic and data-driven approach that leverages end-to-end funnel optimization to find, attract, convert, retain, and grow buyers into loyal brand advocates and evangelists.
However, it is worth noting that just because growth marketing is holistic and involves actions at multiple points in the growth marketing funnel, a number of tactics need to be layered to get the data needed to learn in order to be able to properly leverage growth. Growth marketing takes the traditional marketing model and adds layers such as A/B testing, value-additive blog posts, data-driven email marketing campaigns, SEO optimization, creative ad copy, and technical analysis of every user experience aspect. The insights gained from these strategies are quickly implemented in order to achieve robust and sustainable growth.
As mentioned, growth marketing goes way beyond the approach of traditional marketing by attracting users, engaging them (ex; with content), getting them to become members or try your services or make a purchase, getting them to keep their subscription or make another purchase, and ultimately if all goes well, getting them to make a testimonial or in other ways become a brand ambassador or champion of your brand.
For subscription-box businesses, growth marketing entails all of these things but also a number of complexities. Let’s examine some factors that make growth marketing favorable, and in some cases less favorable before delving into growth marketing tactics that should be part of an overall growth marketing strategy tailored to subscription-box-based businesses.
What makes subscription box businesses favorably aligned with a growth-marketing-oriented approach?
1. Guaranteed Revenue/Rate of Return: For subscription services, your customers’ repeat business is implied at the time of purchase. Providing you keep your subscribers happy, this model ensures a consistent source of recurring revenue from repeat customers, which if you can continue to build up is akin to having a recurring and growing revenue base.
The longer a subscriber stays loyal to your brand, the higher your retention rates and the greater their customer lifetime value (CLTV). This means you’re getting much better value for money when it comes to customer acquisition rate of return, which is great news for your profit margins.
2. Easier to Retain Customers: Of course, another benefit of having your customers automatically ‘buying’ from you on a regular basis is that there’s less need to target them with extensive remarketing. Subscribers who are committed to regular payments are less likely to churn, which means you don’t have to eat away at your budget with retention marketing.
i) Opportunities for Creating Close Relationships With Customers: Running a subscription-box business opens up opportunities to engage with customers on a regular basis across a range of channels. This is a valuable opportunity for merchants to build rich conversational relationships with customers.
From the standpoint of creating a comprehensive and efficient growth marketing strategy, what this means is that subscription retailers can use the comprehensive understanding they have of their customers’ preferences and usage behaviors to serve personalized content. Merchants can tailor messaging, recommendations, and ads to each individual subscriber, providing a personal, memorable experience that fosters loyalty and engagement.
What is more, is that one key element of building a growth marketing strategy for subscription businesses is that building a strong relationship with customers makes it easier to promote upsell and cross-sell offers. The bond of trust that’s hopefully developed over the course of the subscription means that subscribers are often more receptive to any additional and complementary services that you promote to them. A key here to instilling a growth marketing strategy for subscription-box businesses is to work to cement that tight relationship with your subscription-box customers.
What are some obstacles to creating a growth marketing framework within subscription businesses?
Churn: For any subscription service, churn is the number one fear. According to McKinsey, the biggest reason for churn is dissatisfaction with the product or service.
This is one area where the adaptability of growing businesses puts them at an advantage. Smaller brands can keep better tabs on their customer’s satisfaction levels and react much more quickly when they notice an issue.
Routine surveys are a great way to evaluate what your customers like and dislike about your service. Loyalty rewards are a great way to spur participation and engagement rather than forgetting it and ending up seeing it as just another expense.
On a related note, unexpected rewards are an excellent way to keep customers engaged since they inherently surprise and delight. Surprising customers with points and rewards make them feel genuinely valued, which goes a long way in reducing dissatisfaction and ultimately churn.
2)Increasing Average Order Value: The best way to increase the average order value of curation brands is through add-on items. However, curation brands can take a unique marketing approach regarding their product add-on strategy. Curation brands can utilize loyalty to offer even more points or higher-value rewards for adding on products a customer previously received in one of their curation orders, thereby increasing the customer’s monthly subscription recurring revenue. There are many other tactics that can help address this challenge, which we will address later. However, inherently this is what needs to happen.
3) Reducing Customer Acquisition Cost: Advertising saturation is the biggest factor that can impact acquisition, since this inherently pushes customer acquisition costs up since there are more businesses competing for customers. Referrals are one clear way to mitigate the pressure of rising advertising/acquisition costs. 84% of global consumers believe recommendations from friends and family are the most trustworthy sources of information to convince potential customers that your brand will bring them more joy and satisfaction than your competitors. There are many inherent ways of doing this, which will be discussed later.
Growth Marketing Tactics that Subscription-Box Businesses Can Use to Create an Efficient Growth-Marketing Strategy.
What are some Growth Marketing Tactics that Subscription Box Businesses can use?
Now that we have established what one needs to be aware of with regard to subscription-box businesses, let us examine 6 growth marketing tactics that absolutely should be part of the growth marketing strategy at your subscription-box business.
1) Referrals: Referrals are one clear way to mitigate the pressure of rising advertising/acquisition costs. 84% of global consumers believe recommendations from friends and family are the most trustworthy sources of information to convince potential customers that your brand will bring them more joy and satisfaction than your competitors. Given this, why not make it worthwhile for both the referrer and the referee?.
There are many ways to go about doing this. One is via exclusivity, whereby a link is passed from one friend to another. If that person joins, then they may get a discount on joining, and the referrer may receive a discount or a bonus product for sending a successful referral to the brand.
There are also more creative ways to do this. That’s an emotion a subscription brand can leverage with their referral programs by offering a higher tier of subscriber status if they refer a friend to the brand.
Brands can invite these select customers to a special club with exclusive benefits, such as early access to sales, free products, or invitations to VIP events. Gamifying the status of subscribers can be sticky: when fans are elevated on a publicly visible leaderboard or in a way that allows them to receive regular communication from the brand in terms of their status, they can be more loyal to a business that appreciates their work as part-time brand ambassadors.
2) User-Generated Content: For subscribers, receiving their regular product or service is something they look forward to every month. There’s often a build-up of anticipation before receiving subscription packages, particularly if it’s a curated box with surprise items.
The subscription becomes something they want to shout about to their friends and family. With regular subscription packages, recommendations are fast and frequent – great news for raising your profile.
Often, people will also share pictures of the contents of their subscription box on social media, spreading the word about your brand to their followers and beyond. Indeed, unboxing videos have taken YouTube and Instagram by storm in recent years. This is a great way to raise awareness of your brand and build your subscription base without astronomical acquisition costs.
Because of the role curation brands play in customers’ lives and the nature of social media, the internet is rife with customer-generated content. From blogs to Instagram posts and Youtube videos, customers are regularly creating content about their latest box or monthly delivery. Collating this content and collecting permission to use it in marketing is an excellent way to convince customers of the value of your curation subscription.
3) Subscription Box Bloggers/Influencers: You have probably seen the thousands of social media influencers scattered across Instagram and YouTube offering reviews of their favorite subscription boxes. This is a great place to start, after all, people listen to their favorite social media celebrities. Start here but go beyond reaching out to social media influencers to market your box.
There are actually subscription box bloggers out there that do this for a living. These bloggers or influencers focus on only subscription box businesses and offer authentic reviews based on topics they love. Research bloggers with an established following and don’t forget to engage with their audience through contests, hashtag campaigns, and other means to ensure enhanced brand recall for your business.
4) Build a Loyal and Engaged Social Media Following: As a followup to the previous point, this involves providing content that provides value above and beyond the actual subscription package. Subscription boxes go beyond just the package. It’s about building a loyal community where you can share ideas, inspiration, and new products. That value should flow through to your social media channels, too.
Your channels should do more than post about a monthly box and what’s inside. Instead, the key is to engage and get your subscribers involved. It’s absolutely necessary to acknowledge your customers, but it goes far beyond responding to reviews, comments or online inquiries. Your blog and social media channels can go a long way to addressing this, in terms of addressing pain points, ideas of how to better use the products they get from you, using products that complement what they currently receive (which of course you happen to be able to offer as part of an upsell).
5) Long Tail SEO Keyword Tactics: having competitive SEO measures in place will help you stand out and get found on the internet’s top search engines.
That means thorough keyword research that also differentiates you from other subscription services. For example, if you’re a curation makeup box, going beyond a keyword like a makeup subscription box and instead using a monthly makeup subscription box with full-size products, for instance, not only distinguishes your brand from others but also lowers the level of keyword-specific competition due to the level of specificity.
Think about what your target audience is looking for and how they’re looking for it on search engines.
Use long-tail keywords, give all of your landing pages proper meta tags, and don’t shy away from powerful imagery on your site.
6) Invest in Amazing Customer Service: This goes beyond instilling live chats and answering questions about terms and conditions or shipping times and rates. The understanding subscription box businesses should have about their target audience can always become more refined and perfected to improve your overall marketing strategy. In many cases, companies don’t have a solid understanding of who their customers are.
Can you truly answer which proportion of your customers are female? Do you know how many are over the age of 24? This is where an audit comes into play.
An audit gives you an understanding of not necessarily who your audience is, but more of an idea of how to better market to them. Marketing works differently across all ages and gender.
For example, 54 percent of women have purchased a product after seeing it in an influencer’s post but men are not as easily persuaded. Women are attracted to brands while price tends to impact men’s decision-making.
So auditing your audience isn’t only about understanding them, but more so understanding how to resonate. Start by looking at your social followers. You can also send out customer surveys to understand who follows you and learn more about their habits and their motivations for purchasing from you.
Growth Marketing for Subscription Boxes: Scalable but Nuanced
Subscription boxes are here to stay. But if you want to gain a competitive advantage in a saturated market, you need to execute a growth marketing campaign that sustainably scales your business. What’s more, you need to use the right growth marketing channels to pull that off.
Hopefully, with some of these tactics (which by no means run the gamut of the full range of possibilities), you are on your way to initiating and leveraging a powerful framework for growth marketing within your business.
That being said, if you are looking for help in terms of embedding a growth marketing framework within your subscription-box business, why not arrange a meeting with our growth marketing consultants? We will take a closer look at your business to see what can be leveraged to generate the type of business growth that you are looking to create.