5 Loyalty Best Practices for Subscription Companies

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Subscription businesses have been growing rapidly during the past few years. In fact, there were over 2,000 subscription box services as of March 2016 and it’s estimated that the industry as a whole has been growing at 200% a year. In a highly competitive space with a business model based on recurring revenue, it’s crucial for subscription brands to create experiences that keep customers coming back. Engaging loyalty programs can help you acquire & retain customers, create personalized experiences, and increase your customer lifetime value. Here are some best practices to follow to ensure your subscription business is making the most out of its loyalty program.

1. Incentivize greater spend and engagement

Traditionally, loyalty programs have allowed members to earn points for purchase – 10 points per dollar spent on each box or product, for example. Beyond receiving points for their monthly or annual subscription fees, however, brands often do not facilitate or incentivize subscribers to make more purchases or share the brand’s content on social media. Rewarding points for engagement activities like connecting and sharing on social accounts, watching videos, taking surveys and referring friends, provides a low-cost opportunity to make your biggest customers your biggest advocates. By incentivizing engagement activities, brands can drive awareness, bolster credibility and fuel desire, helping increase customer acquisition and retention.

The Birchbox Loyalty Program not only awards members one point for each dollar spent, but they also award 50 points for each friend referral. By incentivizing subscribers to promote the brand to their friends, Birchbox has the ability to acquire new customers at a low cost. Referrals are a great source of new business for brands because consumers often trust recommendations from friends and family. If these new customers also enjoy the product or service, they will then be more likely to promote the brand to their own network.

2. Offer unique benefits for program membership

In order to keep members happily subscribed, it helps to acknowledge customers for their loyalty by offering a range of valuable rewards and benefits. The right reward and benefit mix will depend on what’s right for your brand and what will appeal to your subscribers. Subscription businesses are often based on making customers’ lives convenient, so perks like expedited or free shipping and easy returns can have a lot of value for this set of customers. Other benefits could include transactional rewards like discounted or free products with purchase, or experiential rewards like invitations to exclusive events and entries into sweepstakes.

Amazon Prime offers a wide range of perks, from free two-day shipping to special savings and in-store benefits at Whole Foods, to exclusive phone discounts for all members. Providing a range of reward options keeps subscribers interested and engaged. By offering relevant rewards to your most valuable subscribers, you can drive continued subscription, brand advocacy and referrals.

3. Build upon existing customer data for stronger personalization

Compared to other industries, the subscription business model is already set up to capture foundational customer data. By incentivizing consumers for data collection, subscription businesses have the ability to gather even more insight into the behaviors and preferences of their customers. After customers subscribe and sign up for the program, brands are able to offer points for completing in-depth profiles about their preferences, filling out surveys, and for engaging across channels. Companies can then use data collected from these activities to customize each member’s experience, increase their engagement, and maintain their subscription.

Stitch Fix sends subscribers five articles of clothing each month. Subscribers can then choose what they’d like to keep and send back what they don’t like with feedback. The dedicated Stitch Fix stylist takes note and works with the subscriber to create a “style profile.” This information is then used to help improve the subscriber’s next box. With each box becoming more closely aligned with a subscriber’s tastes and preferences, they are more likely to be satisfied with their subscription and maintain loyalty to the brand. To extend the value of consumer profile collection like this, offer your consumers loyalty benefits for providing more information.

4. Build a community through user-generated content

As technology becomes a bigger part of our everyday lives, it has become essential that businesses are present across all channels. Businesses can leverage their presence to encourage user-generated content to help deepen participation in their program. Rewarding subscribers for promoting the brand through activities such as recording a Fab Fit Fun “unboxing” video for Facebook Live or posting a picture of meal they’ve cooked from Blue Apron on Instagram, encourages members to be vocal about their experience with the brand, driving awareness and credibility. This helps to create a digital community of users that are actively engaging with your business and with each other.

To drive participation in their loyalty program, 24 Hour Fitness rewards members for following them on social media and sharing their blog content. Members can also earn points for posting about workouts they’ve completed and checking into the club. This drives customer retention by incentivizing members to participate in the program, and it helps drive customer acquisition by generating buzz across social networks. The brand successfully leverages social media to create brand awareness while fostering a 24 Hour Fitness community of brand advocates.

5. Encourage customers to write reviews and deliver feedback

Subscription businesses have a unique opportunity to develop an ongoing dialog with customers. Take advantage of this to identify their needs, pain points and preferences. By incentivizing loyalty members to write reviews, fill their profiles and complete surveys, brands can gather valuable data that they can then use to segment their customers and match them with relevant offers. Businesses can also capture and operationalize customer feedback to improve and optimize their products or services to be more attractive to their customer demographics.

Ipsy rewards subscribers with points for reviewing the products they receive in their glam bag each month, which they can then use to redeem for free products. By encouraging reviews and feedback, Ipsy gains insight into what their customers prefer so they can personalize experiences and feature the most relevant products. This helps to show customers that their feedback is not going unheard and will therefore drive emotional loyalty among members, which will in turn drive customer referrals and acquisition.

Engagement-based loyalty programs help subscription businesses create a more personal relationship with their customers, reducing churn and increasing emotional loyalty.

Subscription companies can build sophisticated customer profiles by adopting a multichannel loyalty solution that captures customer data across all touchpoints and leverage this insight to match customers with the right promotions, grow sales and drive retention. For more information on personalizing customer experiences, check out our ebook: Giving Customers What They Want.

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