Subscription businesses help brands with customer retention, increasing lifetime value, and higher engagement rates.
However, even a slight focus on the subscription business can derail this model and lead to decreasing revenue.
So what should you do when your Shopify store hits a plateau in subscription revenue?
Enterprise brands provide effective strategies, such as retention, upselling, and personalization.
In this blog, we explore what you can do for scaling subscription revenue for Shopify stores.
TL; DR
- The problem: If you’re experiencing flat growth despite new subscribers, high churn offsetting acquisition, or a low average order value, your subscription revenue has stalled.
- Common reasons: Over-relying on discounts attracts customers who use the discount opportunity but don’t come back for repeat purchases, poor onboarding and engagement leads to unsure customers, and lack of personalization making the experience just transactional.
- Subscription growth strategies: Tiered subscription models, combining loyalty perks with subscriptions, data-driven personalization, and upselling premium experiences.
- Implementation: Choosing a robust subscription app, enabling flexible billing, pause/skip options, and integrating loyalty and rewards perks to increase customer lifetime value.
- Scaling subscription revenue on Shopify requires implementation beyond discounts, creating tiered, and personalized experiences, and incorporating the right Shopify subscriptions apps.
Signs your subscription revenue has plateaued
Subscription models are based on long term approaches. And Shopify stores have to consistently build on their subscription models. However, many brands face subscription plateau, stagnant revenue, and no growth. Here are a few signs to look out for in your subscription business:
1. Flat growth despite new subscribers
Let’s say you’re adding 100 new subscribers every month. But your active subscribers number isn’t going up. It’s possible that you’re facing high churn, and hence, the active subscriber number isn’t moving up. This means you’re putting in equal or more effort into your subscription business to acquire customers, but there’s no real growth.
2. High churn offsetting acquisition
If your acquisition and churn rate both are high, your net subscriber rate will remain low. For instance, say you added 200 subscribers but lost 180. This 10% net growth will not be able to generate meaningful revenue for your business growth. Constantly rebuilding your subscriber base instead of growing it can have a negative impact on your business.
3. Low average order value
If the average order value (AOV) in your subscriptions remains low, it could indicate that customers aren’t finding value in it. For instance, if your competitor’s AOV is $50 while yours is $30, there’s a gap you should fill.
Common reasons subscription revenue doesn’t scale
While the reasons why your subscription revenue has stopped scaling could depend on your specific industry and products, there are some common reasons you should look out for. Here are some:
1. Lack of personalization
When customers join subscription programs, they expect exclusive experiences and treatment. And so, if you give all the subscribers the same offers and benefits, without offering a tiered experience, they might not feel fully satisfied.
If you do not utilize subscriber data to offer personalized experience, soon engagement levels will drop, and your customers will not see value in the subscription. Moreover, they might compare your subscription with other competitors that offer personalized experience.
2. Overreliance on discounts for acquisition
Acquisition costs much more than retention. Let’s take an example. You offer a 50% or 30% discount on the first subscription orders. For price-sensitive consumers who only buy at lower prices, this is a steal deal. They will definitely sign up and place an order. But it’s possible that they may unsubscribe immediately after the first order or may never buy anything in future.
This means, you paid to acquire customers but they didn’t stay, leading to a loss for you. Instead of discounts, if you create value via other benefits and perks, you’re more likely to attract genuine customers who will make multiple purchases from you over time.
3. Poor onboarding and engagement
The first impression is the last impression. If you treat subscription sign up as your end goal, you might lose customers soon after. Once a customer signs up to your subscription plan, it’s just the beginning. If you fail to engage them immediately, they may not understand the real value of the subscription.
For instance, if you don’t have a structured onboarding format, don’t tell them how to benefit from the subscription, they will not be able to meaningfully engage with your brand and see it only as a transactional experience.
Enterprise level strategies to increase subscription revenue
There are many strategies to increase subscription revenue, but all may not be beneficial for scaling subscription revenue for Shopify plus stores. Here are some effective strategies for enterprise Shopify plus stores:
1. Design tiered subscription models
Tiered subscription models—Silver, Gold, Platinum—can become growth engines for your Shopify business. Here’s what you should do:
- Instead of providing just one standard plan, create multiple plans so that it gives your customers an opportunity to grow
- The basic or silver plan could offer a discount and some new products every quarter
- The mid-tier or gold plan could include free shipping on all orders, free sample products with every delivery, and more new products
- The top-tier or platinum plan could offer early access to new collections, personalized curation, exclusive experiences, etc.
Offering exclusive perks in each tier encourages subscribers to progress to higher tiers. Moreover, it also allows customers to downgrade if they want to. This way, subscribers are more likely to stay and not cancel.
Example:
2. Bundling subscription with loyalty perks
Another effective strategy for scaling subscription revenue for Shopify stores is combining subscriptions with loyalty perks. This strategy offers more benefits to subscribers, enhancing the value perception of subscriptions. Here’s what you can do:
- Multiply subscription benefits by adding loyalty perks
- Offer double loyalty points on all subscription orders
- Make it difficult for customers to let go loyalty points, VIP status, other privileges and cancel subscription plans
3. Using data-driven personalization
Personalization takes subscription experience a notch higher. When subscribers feel exclusive as well as understood by brands, they feel more satisfied. Here’s how to create a data-driven personalized subscription experience:
- Gather data on subscriber behavior patterns to understand them better
- Track which products subscribers engage with, purchase frequencies, survey responses, and understand individual preferences
- Offer different and exclusive perks to each tier of subscribers
- Based on data insights, create relevant recommendations and offers
4. Upselling premium experiences
Another subscription growth strategy is upselling premium experiences. When physical products are complemented with experiential elements, it increases engagement and enhances experience. Here’s how to upsell experiences in subscriptions:
- Create experiences of various types, such as virtual workshops, exclusive offline events, subscriber online communities, activities related to social causes, pop-up events, etc.
- Ensure whatever you upsell adds value to subscribers
- Create emotional experiences via upselling
- For example, if you offer a coffee subscription, upsell a coffee education series or a tasting workshop
How to apply these strategies for scaling subscription revenue for Shopify
To ensure you meet your revenue targets from subscriptions, you have to implement strategies in the right manner. Here’s how to do it:
1. Enable upgrades and add-ons
One of the first factors to think about is a subscription app. To be able to incorporate various features, you will need an efficient app that provides the technical infrastructure to execute strategies, such as Appstle Subscriptions.
- Design a tiered subscription model so that subscribers have the opportunity to upgrade to higher plans
- Configure the subscription app to enable subscribers to pause and swap deliveries, add or remove products, make quantity adjustments, etc.
- Set up automation for various features, such as notifications, billing, churn management, etc.
- Automate data collection and analysis for gathering customer insights
- Incorporate gamification and personalization marketing strategies
2. Personalization
Personalization can help with scaling subscription revenue for Shopify brands. There are many ways to personalize subscriptions. Here are some:
- Offer flexible billing options. For instance, monthly, quarterly, annual, so subscribers can enjoy the flexibility of choosing an option most suitable to their needs and financial situations
- Allow subscribers to skip and pause deliveries, and add or remove products based on their needs. This can help them personalize their subscriptions based on their preference
- Segment customers and offer personalized perks based on their interests and liking
- Create a tiered structure to allow subscribers to upgrade or downgrade tiers based on their needs
3. Integrate loyalty and rewards to increase customer lifetime value
Increasing CLTV can increase your Shopify subscription profitability. And one strategy to increase CLTV is to integrate loyalty and rewards perks into your subscription model. Subscribers who earn more points, enjoy exclusive experiences, and VIP status are more likely to keep their subscriptions. This increases CLTV. Let’s see how to do that:
- Use an efficient Shopify loyalty app that integrates with your subscription app. This way subscribers can earn more points on their recurring purchases
- Create exclusive reward points that can be earned and redeemed only by subscribers
- This strategy creates multiple touch points, for example, during monthly deliveries, when they redeem reward points, when they receive updates for new points, when they access their perks, etc.
Wrapping up
Scaling subscription revenue on Shopify involves various factors. From acquiring new customers to retaining existing subscribers to integrating personalization and more. You have to create an ecosystem to ensure your subscriptions keep generating revenue.
To integrate effective features, you require a Shopify subscription app, such as Appstle Subscriptions.
Appstle Subscriptions offers a set of comprehensive features as well as the ability to integrate other third-party apps to create a robust infrastructure that can help increase revenue for your brand.
Install Appstle Subscriptions App in your Shopify store today!
