How Subscription Services Can Convert Customers to Long-Term Members During Challenging Times

Subscription box services are a booming e-commerce market yet, despite their popularity, these companies commonly face high churn rates and struggle to retain customers over time. As many consumers may think to cancel their apparel subscription boxes during the coronavirus pandemic, experts believe this could be an opportunity to convert customers to long-term subscribers.

A new study by customer retention platform Brightback shows that 96% of subscription companies believe that customers cancel their services for reasons that can be managed or fixed. With McKinsey estimating the subscription service market value at $15 billion, that leaves a lot of money on the table.

Guy Marion, CEO of Brightback, recommends that subscription box companies first focus on promoting their value-added experience: tailored recommendations, combined with the surprise factor. Consumers who are overwhelmed with the sheer volume of options online, now unable to make selections in-store, may be tempted by a subscription service.

“Subscription companies have been building customer data platforms that allow them to tailor their approaches to you with shoe selections that you’d never find if you’re clicking around different sites,” said Marion. “And it’s exciting to get a box delivery service that will surprise you every couple of months.”

By emphasizing the expertise of curation and the added entertainment of each box opening, brands can encourage consumers to either sign up or remain on the service plan during the coronavirus era. For apparel-specific boxes, targeting the new need of customers is also a way to stay relevant.

“The strength of the relationship between our stylists and customers has become abundantly clear,” said a spokesperson for Trunk Club, Nordstrom’s subscription service. “Some of our customers are using this time to clean out their closet and are working with their stylist over video chat to help, while others are asking their stylist for loungewear and athleisure to feel comfortable while they work from home.”

Sample offering from Nordstrom Trunk Club subscription service
Nordstrom’s Trunk Club sends personalized boxes, prepared by their in-house stylists, to customers every 1, 2 or 3 months.
CREDIT: Trunk Club

If that doesn’t work, however, Marion still believes there is a way to reduce the number of customers moving towards cancellation: allowing them to pause or suspend their current plan. By getting ahead of the consumer, businesses take an immediate hit to revenue, but with the goal of preserving a broader base of paying customers when business does resume in the coming months.

If initiating a subscriber-wide freeze is not a feasible financial option, companies can target specific at-risk customers. Brightback’s study found that the most popular measures to retain customers at the point of cancellation were discounts, personalized offers and cross-selling promotions.

The report recommended that companies offer a clear route to cancellation online, with built-in flows to accommodate retention tactics. Customers who try to process a cancellation are therefore prompted to give their reason and then presented with suitable responses: discounts if the cost is too high or a waived styling fee if the choices haven’t been quite right.

Marion also suggests that services be open about the impact of the coronavirus on their business and use honesty to mitigate potential cancellations, that may be due to anxiety over interacting with deliverymen or concerns about expenditure.

“Put in place a specific call: is this due to coronavirus, because we’re all in this together,” said Marion. “Getting very specific at that moment, particularly for the box companies where churn tends to be very material and 5-10% of customers per month, is an opportunity to engage and surprise people.”

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