Convenience, brand loyalty, and price are just a few of the reasons why shoppers sign up for subscriptions from their favorite retailers.
Whether they’re monthly or seasonal, subscription-based sales are on the rise. Since 2017, the number of monthly visitors to subscription company sites has grown by a whopping 800%, with food and beauty products being the top sellers.
Thinking of introducing a subscription-based plan for your store? Demand is there, but so is fierce competition. Amazon alone has made over $1.4 billion in subscription-services revenue in a single quarter.
Before launching your own plan, it’s important to ask a few important questions: What do your customers need? Do you have their trust? How will subscriptions be priced? How can you make your plan stand out from the crowd? And most importantly, how can you retain members by keeping them happy? According to a study by management consulting firm Bain & Company, it can be anywhere from five to 25 times more expensive to get a new customer than to keep a current one.
To help inspire you, here are four retailers that have built successful subscription-based plans by solving pain points and building customer loyalty.
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Calgary, Alberta retailer WineCollective saw how many people struggled to choose a single bottle when it launched its subscription service in 2009.
“There’s a lot of throwing of the dice when buying wine,” says President David Gluzman. “We wanted to offer a solution.”
Wines are shipped each month and members choose crates of two, four or six bottles with most members sliding into the middle of the price mix. The company retains customer loyalty by being diligent about quality. It tastes hundreds of bottles from around the world but less than 1% are chosen.
“For any given person, we are increasing the hit rate because our wines are carefully vetted,” says Gluzman.
The main goal for this retailer’s subscription service, aside from offering great tasting wine, is creating unique experiences for its members. Each bottle includes information about the producer, the grapes, tasting notes, and food pairings.
We provide something that allows the receiver to be smarter or more savvy about wine,” says Gluzman.
“If you have a dinner party [you can share the] notes we give with the bottle to make the experience more special and improve everyone’s experience.”
Word of mouth has been crucial to WineCollective’s growth, and so has monitoring what members have received by using apps they’ve created themselves.
“We keep track of every bottle we’ve sent and we have deep knowledge of what wines people like so we can adjust and improve our business constantly.”
Another crucial aspect of the service has been not to make people feel tied down. “We’re the antithesis of a cell phone contract plan. You can cancel anytime,” says Gluzman. “We’re not for everyone, we know that, but if you’re willing to be a bit adventurous and try new things then WineCollective works really well”.
Words of Advice:
“Get [your subscriptions] into the market and then start measuring. In digital there’s no shortage of knobs and levers to get information,” says Gluzman. “What’s the feedback? What are people clicking on, talking about on social media? Let the experiments run, then listen, learn, iterate. We never stop doing that.”
Frank And Oak
Since Frank And Oak was founded in 2012, it has broken new ground around selling clothes. The Montreal-based brand launched a men’s line before women’s, built its business online before adding brick-and-mortar stores (16+ stores to date), and was one of the first Canadian fashion retailers to offer a subscription service.
While this is only part of Frank And Oak’s business model, it has said that subscriptions helped “put it on the map” and sales grew by an impressive 243% in its first year alone.
The retailer’s subscription service has evolved since its early days when it was called Hunt Club. For an annual fee, members were sent up to five items monthly, given cash-back incentives to shop for other pieces, free shipping, and copies of the brand’s in-house Oak Street magazine.
Today the service is called Style Plan and includes women’s apparel and members-only pricing. The monthly fee can be applied to purchases and any unused credits carried over. What makes Style Plan stand out is that it doesn’t rely solely on user preference surveys to determine what members get. Instead, customers can choose their own items based on stylist recommendations. For this information, it relies on an AI retail purchase prediction tool called Propulse that has resulted in 2.5-times the conversions.
In an interview with TechCrunch, CEO Ethan Song stressed how crucial these recommendations have been to boosting sales.
“The marketing is key to drive the customer to go to that page but product drives conversion,” says Song. “If you recommend the wrong products you could convert less, not more.”
While still hush-hush on the details, changes to Frank And Oak’s existing subscription plan is in the works. What certainly won’t change is the retailer’s ongoing commitment to giving customers exactly what they want through personalized style recommendations backed by solid data.
Words of Advice:
Frank And Oak currently has over 2.5 million members. Aside from design and quality, it has always put a strong emphasis on giving customers a seamless shopping experience. The market is very competitive, so it's primordial to look for that little thing that will hook the customers while differentiating your offer from the others.
While many lifestyle retailers like Frank And Oak feature subscriptions as add-ons to one-time payment sales, Montreal-based hosiery brand From Rachel launched its business solely with a membership plan.
Looking to offer convenience to women who often need to replace worn-out tights, I Subscribe boxes includes two pairs shipped monthly, bi-monthly, or every three months for a flat fee.
“Working in an office we were always having to go buy new tights,” says CEO Carolyne Parent. “We thought this would be a better shopping experience and you can’t try-on tights in stores anyway.”
Since 2015, From Rachel has tripled its subscriber-base by fulfilling more customized orders. When it launched everyone got the same two pairs of tights each month but a survey revealed members wanted something more personalized. The retailer now sends a very detailed, conversational-style questionnaire where new members are asked by their friend “Rachel” to share their favorite colors, patterns, and style.
“We put a lot of energy into the experience of the user. It’s a really dynamic questionnaire,” says Parent. “We have someone full time in our company who answers them all and takes the feedback to our development team.”
Members are then sent a selection of tights chosen specifically for them and answer a survey about their satisfaction. All of this information has helped From Rachel refine its product while keeping shoppers loyal and engaged.
Based on data from [surveys and] Facebook, our subscribers are actually helping us co-create our next collection.
Since refining its questionnaire, the retailer is seeing a lot fewer returns. “We used to send items based on color or inventory but we’d sometimes get it wrong,” says Parent. “Now we have a lot more information to take into consideration and we’re able to make it so that all the things they tell us in the questionnaire matches with our inventory. It’s pretty precise.”
Another new addition to its store has been single-payment sales. “It was kind of surprising. At first, we only wanted to be a subscription-based company,” says Parent. “But we found that some [customers] wanted to try the products first by buying a single pair so we made this an option”.
To convert these single-payment shoppers into members, From Rachel offers discounts on new subscriptions.
“It’s easier to get a person to buy from your shop one time, but it’s harder to get them to subscribe even though they can cancel anytime,” says Parent. “[Subscriptions] require engagement on their part, but once you have this they are more valuable than a basic shopper”.
Word of Advice:
“What made us be able to grow has been to change and be flexible on our first idea,” says Parent. “[With subscriptions] you need to offer something people actually need. If you do it for the thrill of getting something in the mail, this may be good in the beginning but it has to be something practical for the long term.”
Chou La La
Sometimes the key to launching a successful subscription service is to know when to hold back. Launched in fall 2017, Montreal-based Chou La La sells its children’s ‘wardrobes in a box’ according to season. Geared to busy parents, each box contains 10 pieces, tops and bottoms, that add up to 30 carefully curated outfits.
Founded by former marketing professional Rola Amer, the boxes are geared to busy parents (like herself) who want durable, well-made clothing and prefer to spend quality time with their kids instead of shopping. Chou La La was modeled after meal-prep services that send ingredients to make a recipe.
“We do all the thinking and work for you,” says Amer. “We assemble collections so you can stretch the use of each piece of clothing to the max.”
Currently, the retailer offers two boxes per season for toddler boys and two for toddler girls. And like most subscription-based retailers, it has made the presentation a crucial component to its shipments. Each package contains an outfit builder guide, measuring tape and crayons. The cardboard and tissue paper can be repurposed into kid-friendly crafts.
So, why not kick off with a subscription-based service right out of the gate?
“We considered it prior to launch but decided to start with one-offs, for now,” says Amer. “Box services are a really hot thing, but we’re still an unknown brand.”
In order to build that vital brand awareness, Chou La La has eschewed the traditional questionnaire and relies heavily on heat map app Lucky Orange for insight into the user experience.
“We spend a considerable amount of time viewing recordings of customer visits and making tweaks to our site as a result,” says Amer. “We also use it to have live customer chats with new and returning visitors.”
For marketing, Chou La La has been focusing on mommy bloggers and social media.
“Our target demographic lives on Facebook and Instagram so we’ve put a significant portion of our ad spend towards those two social media outlets,” says Amer. “We spend time reviewing the dashboard provided in their business manager ad accounts to help us not only drive traffic to the site but understand how relevant we are to who we are targeting.”
Feedback has been positive and the company intends to double its seasonal boxes and expand sizing to kids aged 6 to 8. They also plan to officially launch a subscription service where customers are offered a discount incentive to enroll.
“Our model will always be based on a box whether it’s one-time payment or automatic,” says Amer. “I think with any subscription model where your credit card is automatically being charged, you need to build people’s trust first.”
Words of Advice:
“Spend a good amount of time honing down what it is that your business is offering in comparison to others and how it is that you are different from the rest,” advises Amer. “This can be as simple as ‘we are replicating this business but offering it at a cheaper price point’ or ‘our service is exceptional, faster shipping, free shipping, better return policy, etc.’ and making sure that is really clear in your branding and ad campaign copy.”
Moving Forward With Subscription-Based Products
Subscription boxes fulfill a consumer desire and they don’t seem to be going away. Having more retailers interested the space only validates how much they’re in demand, but it’s also a sign that competition could be stiff. However, if you do your homework, you may be surprised to find an underserved market just waiting for you.