Growing gains: How subscription brands can develop engaging customer acquisition strategies
This is the sixth in our 10-part Beyond the Product subscription series. In our next chapter, we sit down with Profitwell’s Patrick Cambell to discuss how the offboarding experience can be turned into a positive that drives repeat customers and even increases customer lifetime value.
There should be short-term and long-term plans for operating an ecommerce subscription brand—and one angle of marketing for short-term gain and long-term success is establishing a compelling customer acquisition strategy.
Customer acquisition varies from marketing due to the nature of the action a brand wants a customer to do: clicking on a link, becoming a subscriber. Marketing puts content in front of those people, but customer acquisition leverages specific techniques to get potential customers to participate in the brand’s offerings in some way.
It’s a challenging area of business operations to excel in, as it has become the secret sauce to profitable entrenchment in various fields, whether food-beverage or beauty or health-wellness or pet food and supplies. Customer acquisition is also a costly sector: In the last six years, the cost of acquiring new customers has increased 60%, according to data from Profitwell.
In this bookmark-worthy chapter, we discuss the various methods to address boosting your customer acquisition rate, and we included actionable insight from experts in subscriptions, such as Robbie Kellman Baxter, author of The Forever Transaction.
She first points out the rule of thumb that “the cost of acquisition should be one-third of lifetime customer value,” which stresses to brands the importance of avoiding the spray-and-pray approach and selecting the right strategy that works for the brand and their audience.
Below are some recommendations from Baxter and other subscription specialists, with advice on areas such as optimizing social media ads and taking advantage of referral programs.
Best Practice: Targeting social media content smartly
“Clicks are meaningless if the person clicking doesn’t decide to stay with the brand and subscribe,” says Baxter. She’s explaining how social media advertising should be approached with clear intentions instead of hoping for the most amount of traffic to come through this or that campaign.
As expensive as ads on Facebook, say, have become, there is still value in how these platforms can target specific demographics expertly, says Baxter. If promotional efforts live online, brands will benefit from prioritizing the measurement of their customer acquisition cost (CAC) over cost per click (CPC). Additionally, CAC should be measured in the context of customer lifetime value (LTV). A strong LTV:CAC ratio should be at least 3:1.
But as you can probably expect, organic reach is much preferable to paid reach, and if done right, a high customer acquisition rate can come from engaging and relevant posts. This strategy uses member data to better understand the kind of audience, however niche it may be, that loves to interact with the brand.
One standout example is Liquid Death, which offers a subscription business as well as standalone transactions for their still and sparkling mountain water. Their impressively large audience of 871,000 followers on Instagram and 229,000 followers on Facebook reveal this is a brand that understands their audience, who are young, edgy, and lean into the rock ‘n’ roll lifestyle.
Their posts may play with humor and pop culture phenoms, such as a recent post that wrote: “The only way to prove you're not a Tinder swindler is to wear LD merch in your profile pic.”
Liquid Death will also promote their committed fans who get tattoos of the brand’s skeleton ambassador on their neck, or even their face, further cementing in the audience’s mind that passion and loyalty is central to the Liquid Death ethos.
Hamid Saify, the brand’s VP of ecommerce, says in a recent Bold Commerce webinar how they branded a 2020 promotion with the kind of language that comes naturally to their voice. “A big driver of success for us during the pandemic was our Eff Corona special where we lowered our bulk pricing minimum to five cases, from 10, in order for customers to get the deal of $12.49 per case instead of $18 per case.”
The takeaway? Know your audience comprehensively in order to design and promote the right kinds of social media ads and posts in tune with their personality and behavior.
Best Practice: Influencers can make an impact, but they don’t have to be A-list
From content marketing to free trials, many strategies can create engaging entry points for potential customers to click on the right link to purchase products or join as a member. While those methods have been entrenched for years, what is increasingly popular with brands is influencer marketing, most notably on Instagram.
When asked about the rise of celebrities endorsing brands online and in mainstream ads, such as Snoop Dog promoting Skip the Dishes, Baxter notes that as well-known as a celeb can be, it’s not always the right route for subscription brands to take.
“The real question to answer is does that influencer have status within that category, with the target audience, and are they also credible to that audience,” she says.
She would question the approach of a meal-kit company, for example, that hires an influencer popular with teens if the end buyer is a mom with young kids at home, or an adult couple. “That doesn’t make sense to me because the parents of those kids are really making the meals at dinnertime. They’re the ones who will be heading to the website to join as members,” she notes.
Look at subscription service Birchbox, a beauty products subscription brand. They hired Instagramer Emily Schuman who primarily discusses jewellery and make-up, and she posted images of Birchbox’s bundled products, attracting a total of 18,000 “likes” for the images.
A combination of influence within the category and name recognition can be a winning combo, though. At Liquid Death, they brought in rapper Wiz Khalifa and pranker extraordinaire Steve-O to promote the water, and the alignment makes sense: Steve-O plays in the field of risqué decisions, much like Liquid Death doesn’t pull any punches with the bold moves they make, even in their web copy: A page on their site is called “Sell Your Soul,” which leads visitors to its Country Club landing page, a VIP membership option that also caveats cheekily at the bottom: “I agree to receive important info and offers from Liquid Death since they will own my soul for eternity.”
Would this messaging work at Peloton or Goop? Of course not, which is why fine-tuning the marketing campaigns for your specific audience, with an influencer or not, is all the more integral to sustaining a successful subscription brand.
Best Practice: Consider the value of referrals, merch and event sponsorship
Subscription brands should harness the ambassadorship coursing through their current membership list, especially if their most loyal fans are already trumpeting the benefits of the brand’s products on social media. Baxter says referral programs can help with customer acquisition strategies, due to how “friends and family have more credibility than a brand talking about itself.”
A HubSpot Research study found that 81% of consumers trust the advice of family and friends over businesses. Also, Profitwell reports that three-quarters of consumers identify word-of-mouth as a key influencer in their purchasing decision.
Knowing this, subscription brands can implement referral programs centering on refer-a-friend deals, where both the subscriber offering the referral and the new member receive a discount or reward of some kind. It’s a win-win situation, especially for the brand who can watch their passionate subscribers spread integral word-of-mouth goodwill.
What has consistently worked for Liquid Death is thinking beyond the checkout box by launching an apparel line. “To build a deeper connection with our fans, in 2019 we decided we were going to give away a free shirt to each subscriber,” says Saify in the webinar, “and we thought they would churn out once they got a free shirt, but they actually remained loyal subscribers, and that drove a lot of growth for us.”
They entice new and current subscribers by announcing eight new launches, or “drops”, monthly, offering a range of products from shirts to goggles to $6,000 Liquid Death vending machines.
Sometimes, brands want boots on the ground, so to speak, when they opt for a more face-to-face customer acquisition strategy, especially as more conferences and trade shows return to venues across the world. With the right CAC, event sponsorship could be a route for brands to interact with potential customers and learn directly about their ideal member and approach to messaging by, say, giving away product samples at a conference, or speaking at the sponsored event.
“Having employees on the floor can be a great way to better recognize the engagement level people have with your brand, and you can get the vibe right away in that kind of environment,” Baxter says.
Once you entice a new visitor to your site, onboarding them efficiently is the next step. Customizing that experience to each customer can generate more conversions, and this means making the customer feel like their specific needs are being taken into consideration.
A Bold Commerce customer, Kong Box, excels in this area by creating a personalized experience right out of the gate by not just asking for your dog's name and breed; they actually dive right into the personal challenges your dog might be facing.
Customer acquisition success won’t happen in a finger snap. But the more a subscription brand can inspire referrals, generate buzz through the right kind of influencer, and open new product lines that act as marketing tools, they will gradually begin to see an impressive return on their investment.
Stay tuned for chapter seven with Patrick Campbell, CEO of Profitwell, where we’ll discuss offboarding strategies that can drive future growth and deepen customer relationships.