Vol. 127 - NO. 39

Blog Startup CPG

SINCE 2019

10 Things You Should Know
Before Launching a CPG Subscription

Matthew Holman runs growth at QPilot.cloud, a subscription software company that focuses on great delivery outcomes. He loves creating educational content and consults on branding, marketing, shipping, and subscriptions. QPilot is a proud Startup CPG Sponsor.

If you haven’t launched it already, then you’re certainly thinking about subscriptions. From a business perspective, it makes a lot of sense: acquisition costs can be offset by repeat purchases. Profitability is higher.

From a brand perspective, it makes even more sense. Customers love your products. You should make your products easy to get on repeat, whenever customers need or want them.
But crafting an incredible subscription offering is difficult and there are many things to consider before launching. Here are the top ten things you should consider when launching in order to best position your brand to deliver a superior customer experience while unlocking a new revenue channel:

1. Value is king

People need a reason. Sometimes that reason is they use it regularly enough to warrant a subscription. But many people need more than that. A subscription should be special, and here are some ways to do that, courtesy of Lorenzo Carreri:

  • Discounts (classic, solid place to start)
  • Free shipping (another classic)
  • Freebies or samples (especially those that aren’t available anywhere else)
  • Loyalty points (2x or 3x that given on normal products)
  • Tips on usage (ex: typical consumer uses this 3x/week, which lasts 6 weeks)
  • Stress the benefits of regular usage

Or with membership perks:

  • Free consultation (works great for CBD, dietary, supplement, or cosmetic companies)
  • VIP customer support (skip the line sort of thing)
  • Members-only products (great option to test new products)
  • Content from top experts (could be webinar, AMA, Q&A, FB Live, etc.)
  • Other digital content (trainings, or fun stuff)
  • Community access

A great place to begin understanding what your customers value is looking deeper into your category. What else are they buying? Can you include some of that with a subscription purchase?

2. Which Products to Choose

Consider this: do you want every product available on subscription?

What products are the most popular? What products are being bought the most on repeat already? Those products should be the highlight and focus for your subscription offering.

Bundles are a great option for subscriptions. Products that get used together can be sold together. Single-use products make great gifts and add-ons as well.

Think about how to best leverage your product inventory to give the most value!

3. Plan Inventory

If there’s one rule you should never break in subscriptions, it would be to never run out of product for your repeat customers. Especially if you sell out to new ones.

Think about it: how much are you paying to acquire new customers? How much have you already invested in returning ones? Make sure that you’re reserving inventory for subscription orders so that you never run out.

If you do (we all know that supply chain issues can be a headache), try and be accommodating. Offer other products. Offer additional discounts. Give a gift. Small costs to keep profitable customers far outweighs the costs of acquiring new ones.

4. How Will You Manage Subscription Orders?

As much as we’d like to think customers will order the same thing on the same schedule until the end of time, things do actually change occasionally.

Most subscription software requires you, as the merchant, to go into the software and make changes or cancellations. Most software won’t track inventory either, so you’ll need to plan for upcoming orders.

When evaluating software (#9) ask about how easy it is to make changes and manage things from your end.

But the key to true scale in subscriptions is making it easy for customers to manage everything themselves. This starts with a customer portal where they can access orders, make changes, and even add to their orders. This should be a prime consideration for software (#9).

If you want to see what an amazing customer subscription portal looks like, check out what QPilot makes possible: The Best Customer Portal.

5. What Frequencies Should You Offer?

The most common frequency is still once-a-month, but you should understand how consumers actually consume your product. How often do they really need it? You can start with common frequencies (one every week, one every two weeks, or one every month, etc.) but you should base these on your understanding of actual consumption.

As part of your research into Churn (#10), include consumption questions. Having too much of a product is a common reason for cancelling.

Use the question, “Not sure how often to get your subscription?” As a content opportunity. Include a simple chart with recommendations. For health-related products, you can even make this outcome based (ie “For a healthier gut, take 2 pills every day. That’s one bottle every two weeks!”)

6. Shipping

Similar to the one-time orders, you should find package size and weights that can scale. Find box sizes that work with commonly-ordered quantities so you can anticipate shipping costs.

If you’re planning on upselling one-time purchases or using occasional gifts for loyal customers, you’ll want boxes that can accommodate those additions. This way you can add those things without worrying about increasing shipping costs.

If possible, build shipping costs into the subscription itself. Free shipping is a great motivator (and upsell opportunity for the actual subscription), and it will be simpler on your operations.

For non-perishable items, using the lowest-cost shipping option is a must. For perishable items, however, make sure you are sending notifications about orders processing and shipping so there aren’t any surprises. Covering the cost of shipping is harder on faster services, so be sure you’re charging the right amount at checkout.

It should be noted that subscription software does not take shipping into account. There are limitations on what your customer can change for shipping addresses, and the software will not recalculate shipping charges over time. You’re stuck with what you charge at checkout.
The only exception is the Autoship Cloud plugin powered by QPilot! Customers can change shipping methods, addresses, and shipping recalculates every time the order changes.

7. Notifications + Communications

There are two schools of thought around communications: those that like to send as few as possible (and hope you won’t cancel), and those that see any communication as an opportunity.

An opportunity to build trust. To engage. To build rapport and create engagement. When customers pause or cancel, ask them why. When you send a notification about an order set to process, offer an upsell.

Don’t let an opportunity pass by to engage with your subscribers.

8. Reporting (Data is your friend)

Data points to start tracking:

  • Conversion rates (how many customers buy one-time versus repeat)
  • Products bought the most on subscription
  • Average Order Value (AOV) per subscriber
  • Churn rates (see #10 below)
  • Count of active, paused, and cancelled subscriptions
  • Average length of time per active subscription
  • Lifetime Value (LTV) per subscriber

Understanding what products drive the most subscriptions (see #2) gives insight into what you should be promoting on site and in other channels. Conversion rates show you how successful you are initially, while churn gives insight into when you lose subscribers. The length of time lets you know when to start targeting subscribers before they churn.

9. Software, Software, Software

The software you can use is dependent on your website platform. The bulk of this list is designed to give you points to consider when evaluating subscription software.

Few will solve all of your problems, but some will handle the ones that are most important to your business. Keep those in mind when reviewing these:

Shopify apps: ReCharge, Appstle, Bold, Skio, and Smartrr

WooCommerce plugins: Autoship Cloud

10. Churn

Churn is a lot more than just making butter. Subscriptions are dependent on keeping customers ordering over time. Churn is when they cancel. There are a lot of tactics for keeping customers longer (see #1 above on adding value to start), but there is something you should do from the beginning:

Find out why. Surveys and customer interviews are a simple and straightforward place to start. But the information is invaluable.

Understand why customers cancel, and then address it.

Wrapping Up

Subscriptions can be an incredibly valuable part of your business. While it is fun to imagine what it could be, and to plan accordingly, the trick is finding the right place to begin. Focus on the right product(s), the right offer, and the right way to continue engaging with your customers.

If you want to learn more about how QPilot powers incredible subscription experiences, visit our websites https://autoship.cloud and https://qpilot.cloud. I’m always available on StartupCPG’s Slack channel to chat about marketing, ecommerce, and subscriptions. I’d love to learn what you’re building.

Want to see Autoship in action? Meet with me and my team on a demo today.

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