The subscription box market is booming, but creating loyalty in a world where customers’ options are practically endless isn’t easy.
A vegan beauty and self-care box, focused on showcasing other brand’s products to help customers discover exciting new vegan brands, was losing 80% of their subscribers within the first 3 months, and didn’t know why.
181st Street was commissioned to create a subscription box retention strategy, and tasked with increasing their 6+ month retention by 20%.
We increased it by 92%.
These outstanding results were thanks to the 181st Street team’s academic expertise in audience targeting and customer behaviour, exceptional digital marketing skills and ability to create breathtaking experiential branding moments that drive engagement and loyalty.
Here’s how we did it…
The Background
As a small team passionate about finding the best vegan self care, beauty and wellness products for their monthly boxes, our clients were on a mission to smash stereotypes and take the vegan lifestyle mainstream.
The monthly subscription box model presented an exciting opportunity for them.
From a behavioural perspective the convenience appeals to customers. Challenger brands see inclusion in subscription boxes as a valuable route to their target audience, and financially, the recurring revenue is an attractive prospect in a market where demand is high.
In 2021, 81% of households were signed up to at least one subscription box.
While meal kits and food boxes dominate the market with a 31% share, there is still plenty of room for personal care, beauty and even pet-themed subscription boxes, which are all growing in popularity.
But our client was facing a retention problem, with 80% of customers cancelling their subscription within the first 3 months.
This isn’t uncommon. Industry statistics show that 70% of subscribers typically cancel in the first 6 months.
However, data shows that if you can retain them beyond 6 months, they are likely to stay subscribed for 12 months.
Our client didn’t have a great handle on their data, wasn’t collecting customer feedback to identify why people were cancelling, and their low retention rate was making it hard to predict cash flow, build new brand relationships and plan for growth.
As a small team, their efforts were focused on product sourcing, fulfilment (which they were still doing at their kitchen table) and social media to acquire new customers.
Without a clear subscription box retention strategy, they were stuck in user churn and unable to grow.
They didn’t have the expertise in-house, or the time, to understand how to optimise for better retention.
That’s where we stepped in.
Under The Skin Of The Problem…
The vegan values and desire to make the lifestyle more mainstream was the driving force behind our client’s business.
They’d falsely assumed this would be the driving force for their subscribers too.
On social media, their values-driven content was driving good engagement – because who doesn’t love fluffy animal pictures? But without any data collection, our client couldn’t tell us who was subscribing, why they were buying or why they were cancelling.
we started with our signature audience-first approach.
We created a detailed demographic and psychographic profile of the target customer most likely to buy a subscription and stay subscribed.
Widening this out beyond “beauty lover with vegan values” helped our client understand more about their customers’ reasons for purchasing, which helped inform their choice of products to include in the box.
At first they were understandably hesitant to focus less on the vegan lifestyle.
However, it was clear that by putting such a heavy brand emphasis on this, they were only attracting people who were already vegan, and therefore not achieving their goal of making the lifestyle more accessible and mainstream.
When we showed them the science behind the attitude/behaviour gap, and how a heavy focus on ethical and sustainable values can actually stop customers buying (even if they love what you stand for), they were comfortable making the changes necessary to build the brand their customers wanted to buy from.
Previously, the client’s messaging had focused heavily on the products and brands featured in the monthly boxes. As they were selling a combination of different products from different brands every month, they had struggled to create an identity for their own brand, beyond their vegan values. They suspected that people were cancelling to buy direct from brands they had discovered in the box.
Building a brand identity
We knew we needed to create a standout brand experience that complimented the showcase brands but was strong enough to garner customer loyalty.
Our branding team took the client through a full reposition.
That meant a new tone of voice, new content pillars for social media, a new and consistent photographic style to bring their brand to life with every product post, and a new focus on the benefits of subscribing (to the customer not the animals!)
Research suggested that curated subscription boxes maintain a higher retention rate across the market, regardless of category.
With this in mind, we supported the client to take a more curated approach to each box, so that every month had a theme, and positioned this as a monthly ‘edit’ to align with the luxury fashion magazines and Instagram culture their target audience were highly engaged with.
From there, we walked through every step of the customer journey from first look, to initial purchase, to receiving the box through the post.
maximising retention
We optimised product sales pages to manage expectations and reflect the brand experience.
We introduced a new automated welcome email sequence to introduce the brand, set expectations, build excitement and create a sense of belonging as soon as the subscriber signed up (92% open rate on first delivery).
This was enhanced by an ‘anticipation sequence’ in the days running up to the first or next box arrival.
We designed this multi-day anticipation sequence to be changed for each box and lightly personalised based on the customer’s subscription length.
It included product sneak peeks, personal insights from the team as to why they had selected the products, self care tips and fun and engaging content to bring the vegan values to life post-purchase, creating a ‘feel good’ factor, all designed to build anticipation and ensure that the customer opened their box as soon as it arrived.
Behaviourally, the dopamine hit of happy hormones we get from shopping comes when we add to cart, not when we checkout. As we pay we actually experience flares in our insular cortex – the area of the brain that handles emotional processing and pain perception.
Researchers have found that pre-payment models, where you pay first and experience the benefits later, help to numb this pain, which is good news for subscription services.
To ensure we were maximising positive experiences throughout the customer experience, we timed the anticipation sequence to begin on the day the customer was billed each month, to keep them focused on the benefits of their subscription and excited for the products to come.
Creating A Beautiful Unboxing Experience
Our packaging designers worked with the client to improve the unboxing experience, making it feel more luxury and high end, in line with audience expectations and the self care focus. This included a redesign of the packaging materials, box design and inserts, and consultation on how to pack the boxes to maximise the unboxing experience.
By encouraging customers to share photos and videos of them opening their latest box on social media (and incentivising this with a monthly giveaway) we were able to create a body of user generated content to enhance the client’s social media channels, humanise the anticipation sequence with a sense of community, and leverage social proof.
Making It Easier To Leave…
74% of UK adults wish companies made it easier for them to self-manage their subscriptions.
The Subscription Economy Benchmark Report analysed 90 million subscriptions and found that companies that allow customers to make more changes to subscriptions, grow faster.
While it sounds counterintuitive, one of the keys to increasing subscription box retention is to actually make it easier to cancel.
Our client was handling cancellations manually, asking people to email them to cancel. We worked with them to embed subscription management technology that allowed customers to cancel with one-click, and gave them the option to pause their subscription for up to 3 months.
We then highlighted this in the pre-sale FAQs, on the product pages, and promoted the pause option as a benefit for people going on holiday or wanting to take a break to use the products they already had.
…But Giving Them A Reason To Stay
Research for Barclays Payments showed that some of the most popular reasons for subscribing to monthly boxes across categories included: highly tailored products (52%), good value (54%), and access to exclusive content (57%).
We highlighted the value of the boxes by adding an RRP to the product listing that reflected the total value of all the products included, and ensured that this was mentioned every time the client talked about the upcoming monthly edit.
With a tighter focus on who the target customer is and what they want from their subscription, the client was able to highlight how each edit is tailored to their lifestyle and how the products are chosen and curated for them.
We then worked with the client to explore their brand partnerships and create a strategy for sourcing new products pre-launch – giving the brands a guaranteed distribution channel and social buzz, and giving subscribers access to exclusive products before the mainstream market.
The Results
Thanks to our deep market research, science-backed customer and behavioural insights, and granular approach to optimising the customer journey, we were able to bring our client’s brand in-line with the audience most receptive to their product.
From there, we designed an experience that kept them engaged, built brand loyalty, and created a sense of community built around the brand values.
As a result, we increased 6+ month subscription retention by 92% in just 12 months.
If you would like to see similar results, book a free consultation call.
