Most DTC brands approach subscriptions wrong
Done right they're key to tackling rising acquisition costs
Hi there,
Subscription models are on the rise.
I never expected to have a subscription for dog food, meal shakes, even cleaning products… and the list goes on.
But as subscription models become the norm, it’s even more important that DTC brands are getting the basics right.
A solid subscription programme can help us battle rising acquisition costs with a higher Lifetime Value (LTV), as the LTV of a subscriber is 2.7x higher than a non-subscriber.
Not sure where to start? Here are three steps to making subscriptions work for you.
Step 1 - Building foundational relationships with customers
Some customers will be ready to subscribe, but others prefer to try out your product first. Make sure to give them both options.
You can experiment by running an A/B test offering subscription-only vs. one-off purchases. It could be that your conversion rate goes up with providing both options, but in terms of LTV, it isn’t worth it. However, in general, for higher-order value and/or less common subscription products, having the option can give them the comfort of choice.
The key here is ensuring that customers get to see the value of your product with the first purchase.
Step 2 - Building your subscriber base
Next, you’ll need to figure out when is the right time for customers to reorder or subscribe, based on data on purchase frequency.
You can do this using a predictive tool like Relo to ensure you’re targeting the right customers at the right time. Relo analyses all customer orders to give the best possible predictions, and integrates with Klaviyo so brands can push the data into their existing SMS/email flows.
It’s important to be specific here - remember, people use your products in different ways, and will use different products at different frequencies.
You also have to make sure the subscription offer is worthwhile. What’s in it for them?
This is, of course, convenience, but also better price. Think about additional benefits, like free gifts or priority access to sales to enhance the VIP experience.
Step 3 - Put your customer in control
This is absolutely key to reducing churn.
There’s nothing worse than when you’re trying to pause, update or even cancel your subscription to something and the brand just makes it impossible. For example, if it can’t be done online and only by phone. Although this might feel like a great way to keep customers on board, in reality, it just alienates them from returning and kills brand loyalty.
A good example of where I felt in control is Allplants, a vegan freezer meal subscription, which makes it super easy for me to adjust and feel in control, so I’ve stayed with them for nearly 2 years:
I receive an email AND a SMS heads up that my order is getting ready to ship
I can directly adjust the timing, pause the subscription or update it via the website
Basically, don’t try and force your customers to stay, Reduce as much friction as possible.
Recommendation
In every edition of Growth Waves, I also share a related book, individual or newsletter to check out related to the week’s topic.
If you’re starting from absolute scratch here, take a look at my DTC Subscriptions Set-Up Checklist - an actionable list of everything you need to figure out before you set up your subscription programme.
Some of the points might feel obvious, but I often see brands with blind spots on key areas, so following a structured list can really help you make sure you’ve got the basics sorted.
Download a high res PDF below.
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The rise in subscriptions means we have to get our basics down, but also get more innovative in how we bring customers onboard, time the upsell and put them in control of their subscription.
This doesn’t require a fancy website or portal, but simple communication to remove friction from the process.
And the payoff is well worth it - high LTV to balance out the CAC, and loyal customers who see your product as a long-term investment.
Good luck,
Daphne.