Earlier this week we attended Internet Retailing’s SubscriptionX conference to hear from established and emerging brands in the sector.

The subscription sector is in high demand, with 81% of the UK owning a subscription. Digital content leads the sector at 40%, but physical products such as pet food, alcohol and beauty (which currently sit at 6% of the market) are growing. According to Emily Bullman, Consumer VC Investor at JamJar, who spoke at the event, the demand for this emerging sector is coming from, “products that are used every day such as pet food & deodorant and subscriptions that offer consumers an emotional connection where they feel some level of exclusivity from being associated.”

With this increasing demand in mind, here are our three key takeaways from the event that emerging subscription brands should consider:

1. Your subscribers are your biggest champions

Opening up the conference, Wild co-founder, Charlie Bowes-Lyon, said that the biggest thing the brand has benefitted from is its 1,000+ wide online community, using Typeform to gather instant data from its most engaged customers across CRM and socials. “We have customers that are obsessed with the brand. There’s a feeling of loyalty, of being part of the brand. All the products we’ve launched in the past year have been chosen by our customers.”

Bowes-Lyon admitted that there’s always going to be some existing customer bias that you have to take into account. But customers who subscribe, “tend to follow the brand more closely and get involved with our products,” meaning that Wild can gather thousands of engaged responders to inform business decisions.

A later panel moderated by Internet Retailing underlined the need to capture customer data and monetise loyalty and membership. It’s not only about launching new products but understanding how your products satisfy a consumer need. Subscription brands must provide value to their customers if they want them to continue wanting their product to land on their doorstep.

This approach pays off as Wild shared, “when you compare subscription customers to non-subscribers, the lifetime value is 50% higher in under a year. In two, three, four years, it really starts to grow.”

2. You should place just as much importance on retention as acquisition

Wild’s Bowes-Lyon talked about how Wild acquires subscribers using a range of tactics that include lowering prices and offering rewards & freebies. He acknowledged that, “there’s always going to be a group of people that will ‘game’ your subscription. You have to analyse that and adjust your offer.” However, he believes that subscription offerings must be flexible. Brands should aim for their customers to have a good experience and, if they do, there’s nothing to say they won’t move into a subscription later.

When speaking to Chargebee’s Guy Marion later in the day, Marcus Cohen, Head of Commercial at Butternut Box noted how the brand has, “transitioned from growth at all costs to being a sustainably growing business.” For Cohen, he believes that a, “solid retention curve is the only way you can be a sustainable business.”

Understanding retention, why customers are pausing and why they are cancelling is key. Once you’ve gained long-term customers that value your products, Cohen believes a combination of personalisation and a demonstration of your expertise is what puts D2C subscriptions ahead. One of the biggest customer successes that Butternut Box has seen comes from a surprise and delight campaign which sees the brand send a bouquet of flowers to customers when their dog passes away.  According to Cohen, “it’s a moment of real connection that resonates with the customer the most. People constantly come back and say the brand has gone above and beyond.”

3. Partnerships can fulfil different requirements

Finally, a panel combining speakers from Mindful Chef, Craft Gin Club and Peloton discussed the merits of partnerships for subscription businesses. Each speaker noted that they had different types of partnerships to fulfil different needs.

Mindful Chef’s CMO, Vineeta Anuj, explained that when the brand launched, it didn’t have budgets for above-the-line media so it began looking into three types of partnerships. The first is brand awareness which brings in about 5-7% if Mindful Chef’s customer mix, with Vitality currently making the most impact for the brand. Next, the brand looks for retention partners that can provide added value products. Anuj conducted tests to see if surprise & delight gifts were going to waste and to analyse the impact of a premium vs average gift on retention. She found that they improved both retention and overall customer spend. Finally, Mindful Chef turns to menu collaborations to keep excitement and variety alive in its offering. These partners are a great driver for increased customer spend, retention and bringing customers back. In fact, Mindful Chef wins back 20% of lapsed customers when it has recipe partners.

Craft Gin Club also turns to partnerships to fulfil a variety of needs, though it takes a different approach, as Tom Hurst, Head of Acquisition explained, “historically we were reliant on paid social but off the back of the pandemic, it became a rocky road to manage base size. Partnerships allow us to tap into other closed groups at a lower risk.” The three types of partner Craft Gin Club looks for are:

  • Commercial: The vast majority of subscribers are to the brand’s Gin of the Month box which comes with products that complement the gins. Partners allow the brand to add surprise and delight gifts into the box
  • Acquisition: partnerships with brands such as Mindful Chef or Gousto provide Craft Gin Club with the opportunity to tap into their audiences to run offers and acquire new customers
  • Card link offers: similarly, partnerships with the likes of AMEX and Santander broaden the brand’s reach into new audiences

When looking to build your own mix of partners, the panellists agreed that it’s important to be clear on the role that partnerships play. Peloton’s ex- Business Development Director, Richard Sale, admitted that they, “first thought that direct media is targeting a direct audience, so we looked at targeting different sets of customers with partnership. However, we found that this often didn’t work. Instead, partnerships became more about targeting the same customers but in a different way.”

Challenging assumptions was a point echoed by Hurst who explained that they had initially thought that their offering would fit an audience of 30+ women. However, they undertook a lot of work to profile their customer base from DM and door drop campaigns to understand behaviours and buying habits. They instead found that they had a much older audience. The brand is now running successful partnership activity with the likes of the RHS and the Caravan Club.

Anuj agreed with this approach, saying, “you should keep your gut feel, but back it up with data and science and get better metrics in place to understand success.”

 “Dream Big”

Timo Boldt, Founder of Gousto shared his inspirational journey and summed up the challenges the subscription sector faces when he said, “scaling a subscription business is ridiculously hard… Gousto has been a twelve-year overnight success.” However, across the board you could see the passion and excitement every speaker had for their brand and, with customer demand on the rise, we’re certain that the subscription sector is one to watch for accelerated growth over the next year!

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