The global e-commerce subscription economy is booming. According to the Central Statistics Office, 42% of internet users in Ireland had at least one online subscription for media content in 20241, highlighting the growing adoption of subscription services in the Irish market. This trend presents a valuable opportunity for businesses to leverage subscription marketing strategies and tap into the recurring revenue potential of the subscription economy.
This article will delve into the concept of subscription marketing, exploring its various types, benefits, and challenges. It also covers ten proven tactics to boost sales and enhance customer retention in the subscription landscape.
What is subscription marketing?
Subscription marketing is a strategy designed to help businesses acquire new customers and retain existing customers in the long-term. The most common way is via a subscription business model, which involves customers paying a recurring fee to access a product or service.
How a subscription model works
A subscription model operates on the principle of recurring payments. Customers sign up to be charged regularly, typically monthly or annually, in exchange for ongoing access to a product or service. This provides businesses with a predictable revenue stream and allows customers to enjoy continuous benefits without the need for repeated purchases.
The flexibility of subscription models is a key advantage. Customers can often choose the frequency of their subscriptions, whether it's weekly, monthly, or quarterly, depending on their needs and preferences. They can also typically upgrade, downgrade, or cancel their subscriptions at any time, providing them with control and convenience.
This model fosters long-term customer relationships, as businesses strive to provide ongoing value and satisfaction to retain their subscribers. It also allows businesses to gather valuable data on customer preferences and behaviours, enabling them to tailor their offerings and improve their services over time.
Types of subscription marketing
Chances are, you have several active subscriptions yourself. There are the obvious ones, of course, (hello Netflix), but lockdown encouraged people to explore niche services, too.
Broadly speaking, within e-commerce, there are three types of subscription business models:
Replenishment subscriptions
This is when a customer pays for a replacement of an essential item on a regular basis. The driver for this is usually convenience – the customer doesn’t have to remember to buy necessities like milk, dog food or deodorant; they’ll be delivered straight to their doorstep.
In Ireland, several companies have successfully implemented replenishment subscription models. For example, the online grocery retailer Tesco Ireland offers a subscription service for regular delivery of essential household items2, while the pet supplies company Petstop.ie provides a similar service for pet food and supplies3.
Curation subscriptions
A key example is subscription boxes, which have grown in popularity in recent years. A business will choose several products they think the customer will like based on their previous buying history and send them out in a box each month. Customers enjoy the “surprise” element, whilst the personalisation aspect fosters strong engagement with the brand. One such example is the beauty brand Glossybox, which ships cosmetics samples to customers all over the world with DHL Express.
Access subscriptions
With this, customers pay for exclusive access to member-only perks such as discounts or early access to sales. The driver for customers to sign up is the exclusivity element, whilst brands can leverage the model to make customers feel valued, which in turn increases their loyalty.
An example of an Irish company utilising access subscriptions is the online fashion retailer ASOS, which offers its Premier Delivery service for a fixed annual fee4. This service provides subscribers with unlimited next-day delivery and exclusive discounts, creating a sense of exclusivity and encouraging customer loyalty.
Benefits of subscription marketing to your business
The subscription model is rapidly gaining popularity. From 2023 to 2024, the global subscription e-commerce market experienced a remarkable 64.15% year-over-year growth5. This surge in adoption highlights the increasing appeal of subscription services for both businesses and consumers.
Time for your business to join in? These are the main benefits which might just tempt you to commit:
Steady revenue
For e-commerce businesses, forecasting sales can be unpredictable. But with subscribers, you’ll have a more accurate idea of how much money will be coming into your business each month, which will help you make better financial decisions.
Cost effective
Acquiring new customers is expensive. In fact, it’s five times cheaper to retain an existing customer than acquire a new one6. With a subscription service, you can foster long-term, loyal customers – providing you give them a great service, of course (more on that, later).
Improved demand forecasting
When you know how many subscribers you have, you can better plan your inventory needs. This will reduce excess inventory, which will save your business storage costs.
Less losses to competitors
E-commerce is highly competitive; your rivals are always just a couple of clicks away for customers. Yet, subscribers to your business will be less tempted to stray to other brands if they’re already signed up to your service.
The subscription market is experiencing explosive growth globally. It is projected to reach a staggering US$2227.63 billion by 2028, expanding at a compound annual growth rate of 61.1%7. This indicates a strong and growing consumer appetite for subscription services across various industries.
In Ireland, this trend is reflected in the increasing adoption of subscription models by businesses and the rising number of consumers opting for subscription-based services. By offering compelling subscription options, businesses can cultivate a loyal customer base, reduce customer churn, and gain a competitive advantage in the Irish market.
Increased customer satisfaction
Personalisation is a huge influence on consumers’ buying decisions – in fact, 80% are more likely to purchase when businesses provide a personalised experience8. With a curated subscription service – like a monthly box – you can send your customers a carefully-selected bundle of products based on their specific likes and dislikes.
Upselling and cross-selling opportunities
Subscription models provide an excellent platform for upselling and cross-selling opportunities. Once you have established trust with your subscribers through a personalised and valuable service, they’ll be more receptive to additional offerings or upgrades – which could mean more sales for your business.
Challenges of subscription marketing
While subscription marketing offers numerous benefits, it's essential to be aware of the challenges that come with this model.
Churn rate
One study of B2C subscription companies over a 19-month period found the churn rate – how many customers cancelled their subscriptions – was, on average, 8.11%9. Many customers cancel their subscriptions after the initial excitement and sign-up freebies dry up. That’s why it’s important for businesses to have a long-term strategy in place for their subscription models if they are to increase their customer lifetime values.
Budget-conscious consumers
With global inflation and the cost-of-living crisis upon us, it’s no surprise that “reducing overall expenses” was the leading reason consumers cited for cancelling retail subscriptions in a recent survey10. If your business falls into the “luxury” rather than “essentials” category, you will need to put extra effort into creating a valuable offering.
10 strategies for effective subscription marketing
It’s one thing getting a subscriber on board for a trial period, but how can you retain them in the long term?
Offer enticing discounts
Your customers will be looking for great value – they need to feel they’re getting a significant deal on your products by subscribing, otherwise they’ll look elsewhere.
Give perks
Beyond price reductions, there are plenty of other benefits you can offer to keep subscribers signed up. Examples include member-only wholesale pricing, priority service, and a special discount code on their birthday. Get creative to make the experience extra special. Look at what your competitors are offering, too.
Make it easy to join
Signing up to a subscription with your business should be a quick and seamless process for new users. If they are an existing customer of yours, let them use the details they have already registered with your business (shipping address, card details etc.) to create a subscriber account.
Consider a freemium subscription model
Freemium pricing is an acquisition tool whereby you give new customers limited access to selected subscription features, for free, in the hope they will eventually sign up for the paid-for model. If you are unsure whether it is right for your business, you could trial it for a short period of time to see if the number of conversions it prompts makes it a worthwhile investment.
In Ireland, several online businesses have successfully implemented freemium models. For example, the online classifieds website DoneDeal offers free basic listings for users, with the option to upgrade to premium listings for enhanced visibility and features. This allows users to experience the platform's value before committing to a paid subscription.
Use a tiered subscription model
A one-size-fits-all price is not the best approach for subscription models. Your customers are all different, so you should offer a range of subscription pricing tiers which they can choose from depending on their individual needs. Remember, choice equals sales!
This approach is commonly used by telecommunications and media companies in Ireland. For example, Sky Ireland offers various television packages with different channel options and price points, catering to diverse customer preferences and budgets. Similarly, Virgin Media and Eir provide tiered broadband and mobile plans, allowing customers to choose the option that best suits their needs and usage patterns.
Have a transparent cancellation policy
Many consumers are deterred by subscription packages by the worry of being locked into a long-term contract. So, the more flexibility you can offer in your cancellation policy, the better. If you allow subscribers to cancel immediately at any point (and with no fee), you’ll be on to a winner.
A clear and transparent cancellation policy should also outline the process for returns and refunds. For example, if a customer cancels their subscription after receiving a shipment, the policy should clearly state whether they can return the products and receive a refund. Here’s a small business return policy example you can use to create your return policy.
Adapt and tweak
Over time, you can use your customer data to improve your subscription service. Things to look out for include at what point in the subscription cycle most cancellations are happening. What is occurring at this point and how can you address it? Remember to invite customer feedback, too.
Use an automatic billing system
Choose a payment provider that offers a no-fuss recurring billing system so that you can process payments from your subscribers with ease. Keep the billing process simple for your customers, too.
For example, Stripe provides a comprehensive subscription and billing management platform that automates recurring payments, handles failed payments, and provides detailed reporting. Other popular options include Sage and Square, which offer invoicing and payment processing features that can be integrated with subscription models.
Offer free shipping
In a global survey of consumers’ most desired subscription features, “free shipping” came out on top11. If you can afford to offer this, then do so – and be sure to shout about it on the subscription sign-up page.
Choose a reliable logistics carrier
Once you’ve curated the perfect subscription model, bursting with personalisation and perks, it’s time to think about delivery. And for that, there’s no better logistics partner than DHL Express.
With DHL Express, you can offer your customers fast, reliable shipping, with full tracking and shipment status notifications. So, you can be sure they receive their subscriptions on time, every time.
Open a DHL Express business account today.
