Three Reasons You Need to Be Rewarding for Subscriptions

Why and how you need to be rewarding subscribers

Subscription businesses have come a long way since the days when magazines and newspapers were the only things a customer could subscribe to. Now customers can access almost any product or service via subscription. From curated fashion to ready-to-eat meals, there’s an entire ocean of products just waiting for customers to subscribe to.

How the subscription economy is disrupting the traditional business model

With this type of expanding market, it’s no wonder more brands than ever are adopting subscriptions as part of their business model. Subscriptions also create opportunities to decrease customer acquisition costs and generate recurring revenue. However, looking at subscriptions from a purely analytical lens doesn’t tell the full story – there is a subjective side to the argument that is equally important.

Subscribe means to express or feel agreement

The word subscribe actually means “to express or feel agreement”. In other words, to identify with. This definition illustrates the emotional truth behind subscription-based relationships. A subscription is a pretty big mental commitment for a customer, more so than most regular purchases. A customer who subscribes to a product is deciding to integrate that offering into their life on an ongoing, and sometimes indefinite, basis. The customer is essentially saying: “For the foreseeable future, my life works better with your product as a part of it.”

Sweet Tooth and ReCharge Integration

With such quantitative and qualitative value to be gained from subscriptions, it’s easy to see why brands should be devoting resources to acquiring and inspiring subscribers. One of the time-tested methods of achieving these goals is through rewards and, lucky for you, brands like ReCharge and  Sweet Tooth make it easier than ever. So let’s jump into some of the reasons and ways you should be rewarding for subscriptions, and hopefully it’s an idea you can subscribe to.

 

Rewarding For Subscriptions is Effective for Acquiring Subscribers

Life is a game of give and take, and converting customers into subscribers works in much the same way. Whether your subscription model involves upgrading from a free version in a freemium plan, registering for a recurring delivery of products and services, or even a subscription pure-play, your target customer has to take action to become a subscriber. Any additional action that a shopper has to take creates friction which can result in failure to complete a process or purchase.

Customers are less likely to complete an action that requires more effort

Think about the last time you purchased something online. From the moment you saw the product you wanted, each click required to complete the purchase added a layer of friction which gave you the opportunity to abandon the purchase, or decide it wasn’t worth it. That’s why brands like Amazon, the largest ecommerce retailer in the world, offer services like one click ordering which stores your payment and shipping details to make the purchase process dangerously easy (trust me, I know from experience).

As you can see, guiding a customer through an action can sometimes be easier said than done, but when the action is as important as subscribing, you can’t afford to fumble the process. Enter rewards. Rewarding customers for registering for a subscription lessens the effect of friction by heightening the value a customer expects to receive upon successful completion. Following the required steps becomes less of a hassle when your customers know there’s a reward on the other side. The opportunity cost of not rewarding your subscribers can make the difference between a lifetime of recurring revenues or lost sales.

Birchbox offers rewards to convert shoppers into subscribers

Birchbox provides a great example of this principle in action as they walk potential subscribers through the basics of their service. The Birchbox homepage is structured to make sure customers are immediately and repeatedly made aware of the rewards waiting for them as soon as they complete the registration process. In fact, the top banner alone promises free lipstick and a free pocket mirror to customers who “join now”.

Birchbox offers rewards to customers who convert other shoppers

A closer look reveals you can also receive a discount at a partner website by gifting a subscription to someone in your life. So if a customer helps convert another subscriber they get rewarded yet again! A quick glance down the page reveals that once subscribed, Birchbox customers are sent five personalized beauty products a month and don’t have to worry about shipping as Birchbox provides free shipping for its customers.

The Birchbox homepage is working overtime to convert site visitors into subscribers and for good reason. The rewards Birchbox has tied to their subscription help reduce the effect of friction in the conversion process and ultimately converts more casual shoppers into loyal elevate subscribers.

Birchbox subscription explainer

Key Takeaway: rewarding subscribers allows you to acquire subscribers

Rewarding Subscribers is a Smart Investment

Using rewards to improve the conversion of your subscription program can drive significant returns for your business. Converting just one customer into a subscriber drastically increases their customer lifetime value by opening up a recurring revenue stream instead of fewer isolated purchases. Think of the rewards you provide for your subscribers as an investment, and much like a financial investment, it pays off over time. Like life, converting subscribers is a game of give and take so take it from me, you want to give rewarding your subscribers a shot.

Learn how to calculate and improve Customer Lifetime Value

 

Rewarding Your Subscribers Inspires Affective Commitment

Rewards aren’t just great for turning customers into subscribers. Once they subscribe, rewards are also an integral part of retaining and delighting this valuable customer group. As discussed earlier,  subscribing is both a rational and emotional decision. When a brand garners this kind of affect from its customers, the potential to impress them increases. Just be aware that customer expectations increase as well!

Subscription is both rational and emotional

To illustrate, imagine it’s your birthday. If you walked by a stranger on the street would you be upset if they didn’t stop to wish you happy birthday? Likely not. However, if your best friend or a member of your family neglected to wish you happy birthday, that might hurt a little more. The heightened emotional commitment implicit in intimate relationships creates a higher level of expectation and failure to meet these expectations is met with disappointment. This is why fan favourite brands like Starbucks not only wish their loyal customers “Happy Birthday” but also do their best to make birthday wishes come true with special birthday rewards.

Understanding the different types of customer expectations

This experience is mirrored when subscribers interact with brands. The deep level of commitment a subscription elicits raises customer expectations considerably and rewards can help you meet and exceed those expectations. Rewarding your subscribers is an excellent way to maintain your relationship with them in a scalable way because when it comes to building relationships, actions speak louder than words. Rewards allow you to put your points where your mouth is and not just tell your customers they’re valuable but actually show them how valuable they are.

Allowing customers to earn reward points by engaging in your subscription and giving them the opportunity to apply rewards to the subscription allow you to motivate and delight your most valuable customer segment. Rewards like free shipping, free products, discount offers, and of course birthday rewards, will ensure your customers never regret the decision to subscribe to your brand.

Frank and Oak Elevate Header

Frank + Oak brings this idea to life through their Elevate subscription and rewards program. Like Birchbox, they’ve structured the Elevate explainer page to highlight the benefits customers can expect by subscribing to the service.  The explainer page keeps value front and center by moving directly from “How It Works” to “What You Get”, demonstrating a commitment to providing subscribers additional benefits over and above those available to regular customers.

Frank and Oak Elevate Subscription Steps

In its simplest form, Elevate provides subscribers with monthly personalized style recommendations based on their previous purchases at a reduced price.

Frank and Oak Elevate Benefits Overview

The benefits don’t stop there, though, as the Elevate explainer page lets customers know that subscribers also receive 5% cashback on all personalized purchases AND free shipping on all of their orders personalized or otherwise. Forget customer interest – these rewards move past curiosity and dive head first into customer excitement.

Frank and Oak Customer Experience Spotlight

Key Takeaway: rewarding subscribers allows you to acquire subscribers

Rewarding Subscribers is a Gateway to Valuable Customer Actions

Using rewards to delight your subscribers can be a huge asset to your business model. Earlier we discussed how acquiring a subscriber is also acquiring a higher lifetime value than a single purchase, but the converse is also true. A churned subscriber is a much greater loss than losing an individual purchase, which is why delighting subscribers is integral to continued success. Businesses should be doing everything they can to understand and decrease their customer churn rate, and that goes double where subscribers are concerned.

Lean how to calculate and reduce churn

Additionally, retaining subscribers allows you to gather attributable data from your customers which you can use to create buyer personas that will help you better target and reward your customers in the future. Subscribers provide information that allows you to trace customer behaviours and patterns back to individuals. By being able to track and relate which customers bought and enjoyed certain products, you can strengthen your future product offerings. The best part? The longer you retain your subscribers, the more valuable data you’re able to collect.

Developing buyer personas helps you better target and reward customers

Lastly, as a customer group that identifies strongly with your brand, subscribers are often easier to convert to brand advocates than isolated purchasers. A positive experience like receiving a reward could be all the push a subscriber needs to begin promoting your service to their family and friends.

 

Creating Subscription Rewards is Easier Than You Think

It’s now clear to see why brands should endeavour to reward their subscribers but it might be a little less clear how you might go about doing so. That’s where brands like ReCharge and Sweet Tooth come in.

ReCharge believes in the strength of the subscription model and Sweet Tooth believes in the value of rewarding customers. Together, we believe in the power of rewarding your subscribers and the impact it can have on your business. We also believe this process should be as easy as possible for brands and have integrated our services to ensure that it is.

Working with Sweet Tooth and ReCharge, brands like Knitcrate are able to encourage and empower their subscribers through their rewards and subscription programs.

Knitcrate Subscription Explanation

Knitcrate allows knitting enthusiasts so subscribe for monthly deliveries of everything a knitter needs to stitch up a masterpiece. Their seamless integration with ReCharge allows them to manage the recurring billing and shipping logistics required to bring this subscription to life with ease.

Knitcrate Subscriber Benefits

Knitcrate’s integration with Sweet Tooth allows the brand to reward their customers for their purchases with points that can be spent on additional discounts and offers from the store. Knitcrate can use these rewards to incentivise valuable actions and delight customers for completing them.

Knitcrate loyalty program explanation

ReCharge and Sweet Tooth are both knockout services on their own, but when combined brands can reap even more benefits from each service. This value is illustrated in Knitcrate’s rewards breakdown. Customers earn points for every purchase they make via subscription, so the recurring revenue stream they provide to your business earns them consistent progress towards the reward.

Once they earn enough points, customers can actually redeem them on discounts that can be applied directly to their subscription! Rewards and subscriptions working hand in hand to deliver an exceptional customer experience – it doesn’t get much better than that.

 

Rewarding Your Subscribers is a Win – Win

With more products and services than ever before being offered through subscriptions it’s time to start thinking about what makes some subscription services stronger than others. Rewarding your subscribers is a great way to acquire new members, inspire existing ones and strengthen your subscription service as a whole. Structuring your business to include and incentivize subscriptions is an investment that will pay dividends for your brand in the years to come.  

Learn more about rewarding for subscriptions from Sweet Tooth and ReCharge

demi author photo

About the author: Demi Oba is Customer Loyalty Analyst and Retention Specialist at Sweet Tooth. He is fascinated by consumer behaviour, the ecommerce industry and all things superhero.

Add him on Twitter@demioba