Appstle | Appstle's Subscription Products: Boosting Customer Retention in a Recession

Appstle’s Subscription Products: Boosting Customer Retention in a Recession

Appstle | Appstle's Subscription Products: Boosting Customer Retention in a Recession

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With the potential economic downturn,  many companies across industries and geos are looking for new ways to retain their customers. They are exploring the benefits of subscriptions, recurring orders/recurring payments, memberships, and loyalty programs, to increase customers’ lifetime value and avoid customer churn. Two popular ways are to offer subscriptions or memberships in your store, whichever is a good fit for your store, customers, and product categories. They are both extremely effective in customer retention.

The benefits of these business models are that they provide a consistent and predictable stream of revenue (in other words, recurring revenue) for merchants of all sizes, as long as your store’s products meet customers’ needs well and your membership perks are relevant to the target customer segments. Various industries have adopted it and have seen unprecedented growth, like the automotive subscription services market,which registered a 71.38% CAGR from 2018 to 2022.

In this article, let’s separately look at how each of these models will help retain your customers during a recession

I. Subscriptions

Appstle | Appstle's Subscription Products: Boosting Customer Retention in a Recession

Subscriptions are nothing but recurring, automated orders. Traditionally, products are normally purchased in a single transaction, as a one-off. There are certain things, however, that can be sold regularly, and marketed with a ‘subscribe and save’ option. These are often goods that individuals need regularly. Keurig coffee cups and children’s diapers are great examples of products that are consumed regularly. When a consumer purchases a product as a subscription, the product is automatically delivered to the customer at predetermined intervals. Many companies have been successfully able to retain customers with a subscription to their Shopify store.

Subscriptions are not just about recurring revenue, but also about customer retention

In a recession or economic downturn, it is important to retain your loyal and returning customers which can be possible through loyalty programs in subscription plans., In a recession or economic downturn, it is important to retain your loyal and returning customers which can be possible through subscription plans, which are a subset of loyalty programs. Subscriptions are an excellent way to gain continued loyalty to your store, because, from a shopper’s point of view, they offer the convenience of paying for something they need, are familiar with, and love having without any interruptions in the delivery cycle. They can even help businesses gain profit during a recession.

Subscribe and save helps clients with restricted budgets and reduced disposable incomes

Subscriptions provide retailers with recurring income and an overall lower cost of customer acquisition (CAC). As a result, many shops pass on some of these cost advantages to their consumers by attaching discounts to their subscriptions or recurring order offerings.

This gives an affordable way for customers to purchase products that they regularly want without having to pay the full retail price. Moreover, the more the customer is engaged with your company and its products, the more likely their customer loyalty is to your company because of the familiarity and trust they develop with your store’s ability to consistently deliver, and the knowledge that they are getting a good deal due to the discounted rate. This can be seen in Appstle’s loyalty program, which also improves CLTV.

Appstle | Appstle's Subscription Products: Boosting Customer Retention in a Recession

Recurring orders let customers avoid repeating the product buying process, and focus their time on what matters the most

Recession impacts people in multiple ways, as seen during the peak of COVID, which according to the World Bank, plunged the global economy into the worst recession since World War II. Whatever the impact, a common thing most people want is to focus their time on doing what matters the most and help with wading the downturn, and profit during an economic downturn is an afterthought. This could be taking up an extra shift to help pay the bills or strategizing how to build their newly started entrepreneurial venture, or thinking about a career pivot from an industry hit severely by the downturn. Given that, the convenience of receiving at your doorstep the products you regularly need at a discounted rate without having to spend valuable time repeat-shopping seems like a no-brainer.

What kinds of subscribers are there?

There are two types of subscribers: transactional and retained. Transactional subscribers are those that subscribe for a certain amount of time, like a weekly, monthly, or yearly subscription, but then cancel their subscription before the next billing cycle. Retained subscribers are those that keep their subscriptions active for multiple orders or billing cycles. These are who we call ‘loyal subscribers’. Businesses aim to retain subscribers so they can keep receiving recurring payments for their products and achieve customer retention.

AppstleSMSubscriptions&Loyalty is a loyalty program through subscriptions, that provides key features such as special discount tiers and shipping options, additional new product trials, and gifting for ‘loyal subscribers’.

How to get started with an automatic subscription

The key to successfully retaining subscribers is to make sure that you have your ‘automatic subscriptions’ set up in a way that will keep the customer coming back for more. Below are a few key points that will help with retaining your subscribers, during a recession.

  • Understand how your target customers are hit by the recession: The downturn is hitting many people in different ways, and it can be difficult to find just one way to still stay relevant and valuable to all people. Hence, focus on your core target customers. Some of the best ways you can help your customer are by providing them with an automatic subscription service with a discount and/or payment options tagged to it. This will allow them to purchase products at a discounted price while still being able to afford the scheduled payments. This is a great way for your customers to get the things they need without having to worry about paying too much upfront and for you to receive recurring revenue with subscription for your Shopify store or any other app you use.
  • Personalize promotions: This can be done through email marketing, in-app messages, or even through a chat-bot. All of these methods work because they use the customer’s specific data and provide them with a customized promotion based on their needs. To start personalizing promotions for your company, you will need to first know where your customers are coming from, and what type of content they enjoy reading from you. Once you have this information, you can use it to create personalized campaigns for your customers.

Pricing and payment options: If you want to retain clients with a subscription for your Shopify store, it is important to choose the right subscription pricing strategy for your business and customers. The most common pricing strategy is to let customers choose how much they pay upfront. This can be pay-as-you-go, paying just for the order being delivered, or upfront or pre-payments done for several upcoming recurring orders at a time for a much heavier discount. Typically, the longer term they pay, the higher the discount they get. Appstle Subscriptions&Loyalty provides all these pricing functionalities

II. Memberships

Appstle | Appstle's Subscription Products: Boosting Customer Retention in a Recession

While subscriptions and memberships are both models that help with customer retention and customer lifetime value, they are significantly different. Memberships, in the simplest terms, mean belonging to or being a part of something.

Memberships may take several forms, such as an exclusive membership that serves as a key to utilizing a certain product or service (for example, a golf club or a gym membership). Memberships might also be the cost of receiving unique benefits while purchasing a product, such as fast, free shipping. Amazon Prime is a very relevant and known example of membership where customers pay a special price just to have the benefit of free and fast shipping of products that are available for both Prime member and non-member customers. The goal is to get recurring payments and client retention which is effective with membership strategies.

Memberships offer a way to keep customers loyal in the face of a recession

Memberships are a great way to get customers to continue spending money with you, even when they have lesser disposable income.

Some of the strategic benefits that e-commerce businesses can get from membership models are:

  • Repeat visits and psychological push to shop from a single retailer to maximize membership cost

These can be achieved by strong memberships and loyalty models or programs that provide benefits that encourage repeat spending. A great example of this is (once again!) Amazon Prime Membership! Amazon Prime offers free full-year shipping for $139 a month (US pricing). Since there is no limit to the number of orders for which the free shipping will apply, the yearly blanket cost creates a psychological push amongst customers to meet their product requirements from Amazon as much as possible, to maximize their family’s ROI of the Amazon Prime cost.

  • Friends and family referrals by loyal customers are sometimes achieved with a slight nudge or incentive

Most customers love to share their favorite brands and stores with like-minded people. They bond that way! Uber Eats is one company that does the referral program well, with their Uber Eats Uber Pass Memberships. Having Uber Pass provides free food delivery from restaurants listed on the app. Apart from that, referring others to take up the Uber Pass provides valuable cash credits to the referrer that can be used when ordering food via the app. This causes a vicious cycle that helps with app usage and customer spending on it.

  • Exclusivity or first looks that create a sense of urgency.

Depending on the brand and product category, exclusivity and getting the first shot at buying new SKUs often play a key role in retaining members and increasing their spending at your store.

Appstle | Appstle's Subscription Products: Boosting Customer Retention in a Recession

With an economic downturn or recession, where money can be tight, this has to be slightly modified and tactically crafted. For example, exclusive and first looks to members can be for special discounts or order benefits. There are a few brands, especially in the clothing industry, that have already started running VIP special member prices for a limited time!

Appstle Memberships&Loyalty is the only membership app on Shopify that provides not just the complete range of perks that a store can offer its members (e.g., discounted pricing, shipping benefits, exclusivity/first looks, member-only stores, etc.), but also the loyalty functionalities that come with memberships, to innovatively reward the long-term members to tactically increase wallet share with amazing membership & loyalty pricing.

How does a membership work?

A membership is a contractual agreement where the member pays an upfront fee and gets access to a range of benefits. That is why brands typically give a terms and conditions (T&C) agreement after membership signups.

Membership programs are usually in place for a fixed period, such as 12 months, with automatic renewal options, and reminders to the customers before the renewal and have different pricing strategies than subscription plans. Even with a fixed period, they can increase profits and even improve growth during an economic downturn.

With a diminishing disposable income, individuals will prioritize what they absolutely need

In an environment where the economy is in a downturn, consumers are more selective about what they purchase. They will prioritize what they absolutely need and try to avoid spending on things that are not necessary. This may be a great opportunity for companies to offer clever benefits that can prolong member loyalty during a downturn and have recurring Shopify payments with client retention.

By offering clever rewards, you can prolong member loyalty to ensure a low CAC and maintain profit margins

The most apparent reason consumers prefer memberships is the exclusive perks and discounts they provide.

Some of the benefits you may offer include:

– Exclusive access to new products or services before they are released to the public

– Exclusive discounts on products or services

– Early access to sale items

– Access to VIP events

– Complimentary shipping on all orders over $X

What are the pricing and payment options?

The most common pricing strategies for memberships are:

  • Pay per use (pay as you go)
  • Flat rate (a set price for a fixed amount of time)
  • Tiered (a set price with different levels of member perks)
  • Free trial/free version with premium features

Know the pulse of your members through smart cancellation management

The goal of a membership model is to create a community for your members and keep them engaged. The best way to do this is by giving them the right experience, and that’s what smart cancellation management does.

Companies can proactively manage the cancellation process with their members by providing them with clear notice and following up with them on any outstanding issues. This helps companies to avoid losing their membership base due to attrition or because of less than expected customer service.

Three cancellation options available for merchants are:

1. Make immediate cancellation simple: Your members/shoppers may quickly cancel their membership on their end, through the member portal, without any re-routing. While this feature is the most convenient for your members, it does not give much chance for you to communicate with them at this important point to prevent cancellation or get feedback.

2. Provide instructions for cancellation: You, as the merchant, may manage the cancellation process and communicate the instructions (through text or HTML) with your members who want to cancel their memberships. Cancellation instructions might include anything, even requesting that they contact you. You may then take advantage of the chance to learn about their reasons for canceling and determine whether to give them a discount, a customized package, or anything else you consider fit to avoid their cancellation. While this option provides you with the greatest member involvement, it is a very long procedure that may annoy some customers. As a result, we urge that you use this with caution.

3. Create a member retention flow: This is the process we recommend the most since it allows members to easily communicate their cancellation reasons with you. According to research and our own experience with our merchants, this strategy, which works as an ‘exit interview,’ often provides useful information about the wants and thinking of your members. It serves as a free diagnostic, giving you the chance to make any necessary changes to address the reasons for the cancellation. You can also use it to come up with better strategies to retain customers with Subscriptions or Memberships to your Shopify store or any other that you use.

Appstle | Appstle's Subscription Products: Boosting Customer Retention in a Recession
Appstle | Appstle's Subscription Products: Boosting Customer Retention in a Recession

The Smartest Way To Grow Your Company’s Profit and Value

When you start your e-commerce store, it can be very difficult to get customers. You have to find new ways to attract them and make sure to retain customers with Subscriptions or Memberships for your Shopify store and other methods you use.

In today’s digital economy, the key to success is the speed for recurring Shopify payments for client retention. The more quickly you can grow your business and pivot along the way, as often as you need to, the more likely you’ll be able to stay ahead of the competition.

At Appstle, we employ new technology to construct distinctive, personalized, and affordable apps for e-commerce stores. We prioritize customer loyalty and wallet share. Our two primary offerings are Appstle Subscriptions&Loyalty and Appstle Memberships&Loyalty.

Appstle Subscription Versus Membership Video

We know that all companies are different. That’s why our team of experts will work with you to customize a solution that will take your business to the next level. Contact us today to learn more about our apps and how they can help your business gain growth during recession, retain your customers, and ensure recurring revenue with a subscriptions or membership model.

About the author

Appstle | Appstle's Subscription Products: Boosting Customer Retention in a Recession

Sarah Pruzansky

Sarah Pruzansky is a content marketer for Appstle, and specializes in social media, blog content, influencer marketing, and email campaigns. Whether she's writing for Appstle, engaging on social media, or networking, Sarah always finds a way to keep up with the latest internet trends. In her free time, Sarah enjoys yoga, running, and reading. Stay tuned for more content from Sarah!

If you are looking to understand more about Appstle Inc’s products and solutions, you can get in touch with us. Our 24x7x365 available experts will be happy to assist you further.

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