+10.6%
CVR
+23.4%
ARPU
Reading time: 7 min
Increase e-commerce revenue by automating resupply with Subscribe & Save option
Key takeaway
Modern technology has conditioned customers to expect ease, speed, and convenience from their online shopping experience. The subscription replenishment model is perhaps the best way to fulfill this expectation. Not only does the subscription model grant your business reliable and predictable revenue streams, it also deburdens your customer’s from having to remember to order, decide how much to order, or expend the mental energy and time required to log online and shop. Instead, your customers can now have the entire resupply process automated for them via Subscribe & Save.
By reducing the cognitive burden of resupply via Subscribe & Save, you not only make your store a much more attractive option for shoppers (Thereby increasing CVR), but you also turn decision fatigue into an opportunity instead of a threat. Instead of customers deliberating or procrastinating over whether they should re-order, they’ll instead deliberate and procrastinate over whether they should pause or cancel their subscription – allowing you to monetize any consumer indecision. Finally, by having Subscribe & Save on your website (instead of a 3rd party seller), you grant yourself more flexibility and room for optimization. For example, you can now use financial modeling to decide on the optimal $ discount amount for your particular store.
Using Subscribe & Save to Improve Recurring Sales & Boost ARPU by 23.4% over a 6 month period
Of course, as with everything, there are downsides. Subscribe & Save will increase store churn due to customers who opt in for the discount only to leave once they’ve made their first order, but the overall CLTV and retention benefits far outweigh the cost of having your system gamed by a select few ‘savvy shoppers’.
Summary
Opportunity:
You can reduce friction by having an automated replenishment feature. From this, you can expect to achieve ARPU and retention uplifts.
Risks:
Some customers will game the system by opting into automated replenishment for the discount, only to immediately cancel. Not only will this give you a slightly higher churn rate, but it’ll also mean that you’ll get less full-priced sales.
Method:
Adding a Subscribe & Save automated delivery option to the shopping block, reinforcing it with a tooltip that explains the feature, and creating a control panel that allows users to manage their subscription with ease.
Result:
CVR increase for first payment + 10.6%. ARPU increase from first payment: 4.9%. Modeled ARPU increase over a 6 month period: 23.4% (Broken down into 5 reorder cycles for 1m month intervals, 3 reorder cycles for bi-monthly intervals, and 2 reorder cycles for quarterly intervals).
The сlient
NATPAT allows customers to access the healing and remedial powers of natural essential oils via specially engineered stickers.
SleepyPatch uses a specially formulated mix of essential oils to bring on sleep. Designed to help calm the nervous system, the mind, and stimulate an overall relaxed sensation, the patches are loved by parents across Australia, USA, UK, and New Zealand for their ability to provide a fun and drug-free sleep solution for kids.
Currently, they have different products:
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The SleepyPatch uses essential oils to help children relax at night
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The BuzzPatch uses essential oils to repel mosquitoes
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The ZenPatch uses essential oils to help regulate mood for kids
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The MagicPatch mechanically lifts skin around a bug bite, draining away insect saliva so that bug bites may heal more quickly
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The SunnyPatch: patches that tell you when to reapply sunscreen
Insights
Stores that sell low ticket consumer packaged goods should expect to see high repurchase rates. But for SleepyPatch this was far from the case. Only a very small percentage of their customers returned for repurchase, and the client needed a clear solution.
On inspection, we realized that there was an immediate opportunity – automated delivery. As things were, each time a customer needed more product they would need to make repeat visits to the sleepypatch online store and re-order manually. This is an inconvenient approach that introduces friction to the buying process and creates unnecessary barriers between the customers and long-term brand loyalty.
Not just because it’s a frustrating experience, but also because any competitor that could offer a more hassle-free approach to continuous deliveries could rightfully be seen as a better (easier) option.
After deciding that a subscription service was the growth opportunity we’d like to pursue, we needed to figure out what incentive would compliment it best. To do this, we utilized financial modeling to forecast which discount % would provide the best repurchase rates, repurchase revenue, and aggregated revenue for SleepyPatch – while still being a % large enough to attract and motivate customers. The number that we arrived at via analysis was 15%.
Hypothesis
From this came our hypothesis: If we added a subscription option to the shopping page, we could increase customer retention and customer lifetime value (And by extension APRU) by using automation to create a frictionless resupply process.
- By adding a subscription option to the page, highlighting the added 15% discount on subscription orders, and having the new subscription price appear when selected; we would make it easier for users to compare the regular price to the subscribe & save price, thereby highlighting the latter option as more cost and value effective. From this, customers would have a clear incentive to click the subscribe & save option.
- By adding a tooltip that fully explains how the subscription service can be easily altered, paused, or canceled, we would reverse the perceived risks of opting into the subscribe & save option by giving users a clear sense of control and agency over when and how the automated deliveries are scheduled.
- By adding a dropdown box that allows users to select the frequency and time-interval between automated deliveries, we would allow users to immediately choose a delivery frequency that best suits their needs. Additionally, by offering information that recommends the ideal repeat purchase interval according to family size and chosen pack-size, we would assist users in deciding what frequency will best meet their needs.
- By adding an account control panel and emphasizing the login button, we would give users an easy and intuitive way to modify, cancel, or pause their subscription.
Variation
Before launching the experiment we created two variant designs because we felt that UI/UX of the Subscribe & Save block would be a deciding factor in the success or failure of this project.
The two design variations we created were launched as prototypes for user testing so that we could validate the user experience before proceeding to a live test with our client’s ad budget.
The first UI design had the Subscribe & Save feature activated or deactivated by clicking a toggle tick box.
Slide-in Shopping Block – Variation #1
Shopping Block on the Page – Variation #1
The second UI Design had Subscribe & Save feature activated or deactivated by selecting one of two side-by-side buttons (labeled ‘One Time Payment’ & ‘Subscribe & Save’.)
Slide-in Shopping Block – Variation #2
Shopping Block on the Page – Variation #2
Results
Adding a subscription option seemed to significantly increase trust among new users. In fact, new users were the most likely group to opt into subscribe & save. This could be attributed to several reasons:
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First, the subscribe & save discount might motivate new users via decreased price perception.
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Second, the best point in time to secure a larger or longer commitment is usually during the initial sale, when a customer’s buying temperature is highest.
Slide-in Shopping Block
Shopping Block on the Page
Finally, it may simply be that offering a subscription option and pushing users towards larger packs and a longer commitment showcases confidence, which in turn makes users more likely to trust the product and sales process.
