How to win in today’s competitive subscription economy

By Chris Purcell, Product Strategy Manager, Optimizely

With the promise of ending lockdown restrictions on the horizon, there’s finally a light at the end of the tunnel. However, so much has changed over the past year and will continue to do so, affecting how we live, work and behave. This is also true for businesses and retailers, as the way they operate and sell will shift to meet new consumer demands that didn’t exist before the events of the last 12 months.

A boom in subscription-based retail
The move to subscription-based models is a key example of how consumer buying behaviour has changed, and over the past year subscription-based retail has seen a vast amount of growth.

While household names in the beauty and fresh food industries have dominated the market for a long time, the pandemic has seen other major retailers shift to a subscription model, including wine and confectionary companies.

The ‘products in a box’ approach is a natural and alternative way for non-essential brands to reach and stay engaged with consumers while their physical stores stay shut. However, the essential brands are moving into this space too. Throughout the last year, consumers who are unwilling or unable to visit supermarkets or other essential retail stores have rapidly turned to subscription-based retail for items including pet food, toilet roll and other groceries.

Even though physical retailers are now starting to reopen in the UK, subscription services allow consumers to enjoy a convenient experience without the need to leave home. For retailers that have suffered from the loss of in-store footfall, launching a subscription service can serve as a great way to recover lost revenue.

But while there are many advantages retailers can harness through adopting subscription-based models, it’s a competitive and crowded market, so it’s crucial that retailers focus on making themselves stand out in the crowd.

Enter experimentation
If retailers are to successfully compete with the larger, well established players in subscription-based retail and attract new customers, then experimentation is key. Retailers will never know what their customers respond to favourably unless they try experimenting with their offering — meaning adopting an experimental culture should be a core principle of every retail strategy.

Launching a new subscription-based service shouldn’t be seen as a tick-box exercise — retailers must instead carry out ongoing testing to understand what areas of the customer journey are working well, and what needs to be improved.

Once retailers have this level of insight, then experimentation can be carried out across different areas throughout the buying journey that may need improvement — whether it’s adjusting the pricing, offering different products as part of the subscription service or making iterations to the checkout and basket page. With subscriptions, experimentation can also be carried out on the frequency and length of communications and the look and feel of each message.

Making it personal
Making communications personal has long been part of retailers’ marketing strategies, but when it comes to getting a subscription box through the door, there’s an even bigger opportunity to apply personalisation. Through the use of digital experience platforms, retailers are able to take a more data-driven approach to personalisation which increases the efficiency of experimentation strategies.

Data analytics can provide retailers with the actionable insights they need to understand what is happening in each step of the customer journey and how they can make it more personalised in order to drive an increase in subscription sales and in turn, achieve better business outcomes.

While combining experimentation and personalisation can, through behaviour-based decision making, give retailers the insights they need to understand what works for specific groups or individuals — customers need to have a say in how much personalised content they wish to receive. This is where experimentation can hugely benefit.

Optimising the online customer journey is key to personalisation. Experimenting with the messaging, content, product offerings and pricing, as well as the overall customer experience for each audience enables retailers to gather more data-driven insights for better decision making and in turn, achieve a better long-term impact. But this should be a continuous exercise ­— personalisation is a journey that must evolve and be able to rapidly adapt to changing consumer behaviours.

If a retailer is not continuously experimenting and optimising, then they are at risk of falling behind the larger, more experienced retailers who are currently winning the subscription retail game.

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