Diving into data: Learning more about your customers can strengthen subscription brands
This is the eighth in our 10-part Beyond the Product subscription series. In our next chapter, we’ll discuss the enormous value of subscription referrals and how to scale your subscription program through the power of word of mouth.
You have your subscription business set up, and members are joining at an impressive clip. But now you’ve reached a crucial decision: How can I leverage all that data subscribers are sharing, either through the onboarding process or within the site or via surveys and emails?
Mining customer data is vital for any business, but for subscription brands that live and breathe ecommerce, it should be a front-burner responsibility everyone on the team takes seriously. After all, as author Geoffrey Moore once said, “Without big data analytics, companies are blind and deaf, wandering out onto the web like deer on a freeway.”
With recommendations shared by Jason Barbour, CEO of subscription-enabled Metabolic Meals, we’ve compiled an insightful list of best practices brands can bring to their subscription business to harness customer data and help them make more strategic decisions going forward.
Going beyond the basics of member data
Any online brand recognizes the importance of understanding key metrics such as AOV (average order value), LTV (Customer Lifetime Value), and CAC (Customer Acquisition Cost). They know a valuable equation factors into the success of their business: profitable brands sport a higher LTV than CAC, which is the LTV to CAC ratio. Experts recommend a 3:1 LTV to CAC ratio.
Subscription brands add more layers to data than the obvious algorithms. One of the key benefits of a subscriber compared to a one-time customer is how brands can learn more about their behaviour and preferences, establishing firmer relationships with subscribers as more data is fed into the right channels.
That lengthy relationship can yield new insights into customer habits, such as engagement with products, delivery time preferences, pricing, and payment options. But remember how finding that data doesn’t mean the brand’s work is done. Collecting data is one thing; analyzing that information, and immediately acting on that knowledge is different. Successful subscription brands should take action while data is relevant.
Best practices: The power of personalization
When we asked Barbour of Metabolic Meals, a meal delivery service based in St. Louis and operating across the US, on a key strategy for subscription brands to leverage member data, he immediately replied with, “Personalization. You have to pay close attention to what customers order.”
Metabolic Meals offers 30 new items every week, and they pay close attention to what customers favor and lean towards. They’ll analyze nutritional data of a customer’s orders to better glean if, say, they are more calorie conscious or prefer a low-carb diet. Then they can better tailor the subscription experience to those buyer personas.
"A critical strategy for a successful subscription is to identify the key target market and what makes the service relevant for those people,” says Rachel Saul, Co-CEO of Ordergroove, during a webinar in 2021. “Data informs decisions. When creating, analyzing, redrafting your program, have as much data as you can.”
As McKinsey data notes, to continue subscribing, consumers expect personalized subscriptions to become more tailored over time: 28% of subscription consumers said that a personalized experience was the most important reason for continuing to subscribe.
Look at several key examples of personalized service. For Amazon Prime members, they are well aware of the recommendation engine—when a customer searches for a particular item, this enables Amazon to better predict what else that customer might be interested in. It’s reported that its personalized recommendation system is thought to account for 35% of the company’s annual sales.
Birchbox, a subscription service in the beauty and skincare space, takes data from subscriber profiles to customize which samples to feature in each subscriber’s box. For example, a curly-haired subscriber wouldn’t get sample products designed for straight hair.
Giving customers choice is also part of a savvy subscription strategy. For example, workout gear subscription box FabFitFun allows members to have the company curate their boxes based on a mix of behaviors, patterns, and other data points—but it also gives members the option to actively choose what goes into each box.
Best practices: Surveys and email outreach can retain subscribers
When Metabolic Meals looked at their internal ordering data, combined with surveys sent to subscribers, they discovered how one of their menu items was being passed over consistently. “We thought we made a great egg white frittata paired with chia pudding, and we wanted to get the fat down by just using egg whites, but we couldn’t get it to sell,” says Barbour.
By combining deep research into customer data with external data point such as surveys, Metabolic Meals could get a more holistic 360-degree view of subscriber preferences. Unlocking more granular insights could help stave off churn, too, and keep loyal subscribers satisfied with their product variety.
“We regularly talk to members over email and through our Facebook Group,” adds Barbour. “What really amazes our customers is how we give that personal touch.”
He says one area of data they often analyze closely is order frequency. “If we notice the orders are going down for a customer, and it doesn’t have to do with our supply chain or anything else we can see, we’ll email that customer to find out what we can do to deliver a better experience. That information can be so important for customer retention.”
Surveys also allow subscription brands to view customer preferences that might not be part of the regular behaviour when they interact with the business. Surveys also bring more flexibility to what kind of data can be accumulated, ranging from questions on delivery times to reactions of new items to how they’d like to receive future communications.
Best practices: Don’t neglect customer service
Customer data might not always be culled through outreach; instead, it may come to the subscription brand through channels such as customer service calls and emails.
“Customer service is an in-house priority for us,” says Barbour, “and we staff that desk with people who have a background in nutritional health, so we can be informed of the kind of issues customers may bring to us.”
The key takeaway: Fill your customer service positions with people experienced in your industry so your customers can feel comfortable with knowledgeable staff.
Barbour says they take each piece of customer feedback to the appropriate department through “tickets” created by CSM platform Zendesk. “That way, we have a technical solution to help us track each customer call which helps us improve the service we offer to our subscribers.”
As more subscription brands seek to retain customers and generate more revenue per subscriber, they should identify gaps in their data collection and analysis processes, while also taking action with that information to build a more personalized experience. This is more critical now than ever.
Stay tuned for chapter nine, where we meet up with Christ George, Co-Founder of the Subscription Trade Association to discuss best-of-market referral strategies for growing your brand and fostering long-term customer relationships.