A computer user about to subscribe to a web-based service.
When is time to to move to a subscription based model? PHOTO: Shutterstock

The ecommerce subscription model is growing at a rapid pace. According to Forbes, the subscription box industry grew by 890% over a four year period. Now, more ecommerce brands are left wondering how they can capture some of this value.

Why are some consumers drawn to subscriptions and regular deliveries of items? What is subscription management software, and how is it helping ecommerce brands adopt a subscription-based business model? We’ve turned to the experts to learn more.

Why Consumers Like Subscription Services

“Studies have long shown us that receiving a package, even when it's a consumer ordering for themselves, is seen from the brain's rewards center, like receiving a gift,” said Krish Iyer, director of strategic alliances at ShipStation. That means when a consumer receives a subscription box regularly, the excitement makes the habit hard to break. “The reality is that when we start to subscribe to things,” he continued, “we rarely cancel them.”

“Consumers are drawn to subscriptions and deliveries because everyone likes tasks to be automated,” added Avinash Chandra, founder and CEO of BrandLoom. One of the greatest benefits of subscriptions, therefore, is that they don’t require customers to make a decision every single time — this leads to predictability and steady revenue for ecommerce brands in the long run. The excitement factor along with convenience has fueled the adoption of subscription boxes.

What Is Subscription Management Software?

“Subscription management software is a tool that helps with making recurring payment for a service or product,” explained Chandra. These systems typically handle billing cycles, generate invoices, simplify taxes and bookkeeping, and streamline other administrative tasks related to the ecommerce subscription model. They’re all-in-one platforms that are essential for any brand looking to adopt the ecommerce subscription model.

“From a subscription management perspective the sales technology they’re using has to enable ease in adjusting, pausing, renewing and upgrading the subscription,” added Valerie Howard, solution strategy director at PROS. The software should go beyond this, however, and be able to track consumer data and identify customer buying trends. That way, Howard says, brands can determine “when a customer may need to consider upgrading their subscription or when they want to consider trying out a new product line.” Personalization is a crucial aspect of the subscription box model, and brands need the right software in place to be able to tailor their service to the individual.

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Getting Started With a Subscription Model

For ecommerce brands looking to make a transition, here are some of the top tips from our experts:

Offer Ongoing Value

When transitioning to a subscription model, providing ongoing value is critical. “The sales focus changes from driving larger singular transactions to ensuring customer satisfaction, personalization, and retention,” Howard said. She says smart subscription providers will recognize that what customers really value goes beyond the monetary worth of the products. Customer loyalty will need to take precedence over lead generation for the subscription model to work.

Find the Right Partners

“It is also crucial for the brand to work with the subscription partner to target the right consumer,” Iyer said. Many brands give discontinued products in their subscription boxes to move outdated inventory, but this is a missed opportunity to partner with other complementary brands that match your customer’s profile. “The key is to view the subscription-based business model as the driver for the type of product you want to sell,” Iyer explained, “not just an extension of the brand itself.”

Use Consumer Data

Using data, ecommerce brands can expand sales within their existing customer base, and differentiate themselves from competitors. “By paying attention to the cadence and content of each order,” Howard said, “savvy subscription providers get to the heart of what customers really value so that they can predict what other products and services their customers may enjoy.” And with the right subscription management software, Howard says brands can “continually refine that personalization as they gain a better understanding of each customer’s tastes and preferences over time.”

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Test the Waters

“Habits are the hardest thing for someone to break,” Iyer said. That’s why he believes it’s crucial for ecommerce brands to start investing in partners and software that enable subscription services. It’s a great way to capture more sales from existing customers by introducing them to more of your brand’s products.

“Ultimately,” Iyer concluded, “brands must consider subscription-based business models as part of a channel management strategy to drive consumer behavior for the purchases that are essential to business profits.” The subscription approach, therefore, isn’t mutually exclusive to traditional ecommerce, so brands should consider experimenting with the rapidly growing business model.