Agility is Key to a Customer-Centric Approach for DTC Subscription
“The customer is always right.” That iconic phrase was first uttered in the early 1900’s and can be attributed to any number of successful retailers, from Marshall Field to Harry Gordon Selfridge. Back then, it signified a paradigm shift in the industry: rather than condescend to customers, department store staff worked harder to delight them. Not surprisingly, happy customers turned into repeat customers. Today, the customer may not literally always be right, but brands have more tools than ever to create amazing experiences that meet an ever-expanding variety of unique customer needs.
In the DTC ecommerce space, customers are often divided into one of two categories: a one-time buyer or a recurring subscriber. But what if neither of those binaries yields the happiest customers? Most brands think they are hitting all of the notes that lead to great experiences: convenience, value, and personalization are just a few. But all too often these efforts are only scratching the surface of what’s possible. For example, allowing subscribers to occasionally pause or skip a shipment is good for the brand, because it guarantees revenue while offering a modicum of choice. But it doesn’t take into account the possibility that a customer’s household budget might fluctuate. For example, a customer might want a more bespoke delivery schedule, say every eight weeks instead of every month. Limited flexibility can ultimately lead to churn.
Although it requires more risk and investment, I believe the secret to cultivating a true, long-lasting member community is staying attuned to consumer needs through research and data, and taking a nimble approach to every aspect of the customer journey.
Research the Pain Points—and Adjust Customer Experience Accordingly
The data tells us that consumers are flocking to subscriptions, with the average person having two to three subscriptions. If that number increases, brands need to provide a more creative array of flexible membership options and thoughtful touches to stand out. Because if the Covid-19 pandemic has taught us anything, it’s that routines, budgets, and customer needs are not static.
Ollie, the online dog food company founded in 2015, is in the convenience category: their product needs to be frequently replenished. A subscription offering was a no-brainer for the company when it launched. At first, Ollie’s flexible shipping plan allowed customers to choose delivery from weekly to monthly. But in 2019, after listening to their customers, they went even further, now stretching shipments to once every eight weeks for customers that prefer to buy in bulk. While it might seem like more of a risk to offer so many shipping options, Ollie reported higher value carts as a result of the expanded delivery options.
The pet food industry is experiencing explosive growth, accounting for 10% of ecommerce sales or $10 billion in 2020, with growth projected to hit $15.5 billion by 2025. This kind of flexibility will become increasingly necessary as more and more brands compete for consumer dollars.
Another category that is primed for subscriptions but requires a customer-centric approach is children’s clothing. Because kids are always growing, there is a built-in need to replenish their wardrobes. To develop an offering that would meet this need in a unique way, Rockets of Awesome conducted three types of research activities with moms—asking them to keep a diary, conducting in-home interviews, and a co-creation exercise.
The results led them to fine-tune their subscription box offering with thoughtful touches, like allowing shoppers to swap out items before the box ships. There is also a sustainability component to their service: with their Rockets Reverse offering, subscribers are invited to return up to 12 pieces of clothing per month from any brand, for recycling. It’s an acknowledgement of a common pain point any caregiver has had to face when swapping out children’s apparel for a bigger size.
Step Outside the Subscription Box
When Hims launched in 2015, it was focused on creating self-care products for male conditions that were often stigmatized (like hair loss) or required a trip to the doctor (like erectile dysfunction). With the Hims network of virtual physicians, customers were able to avoid awkward conversations with their doctors and long lines at the pharmacy. In 2018, the company launched a second brand—Hers—and began to focus on the unmet needs of women too, from birth control to hair loss. Subscriptions and the company’s ability to provide personalized product recommendations has led to explosive growth. In fact, 90% of the company’s customers have set up a recurring subscription.
Although their subscription business allows them to have reliable, recurring revenue, it also has given them the resources to survey their customers and stay attuned to trends and pain points. For example, during the early days of the Covid-19 pandemic, when it became difficult for people to visit the doctor, Hims & Hers added a telehealth option so members could meet with primary care physicians. And in April 2020 they began offering mental health services, beginning with group therapy and adding other services such as psychiatric consultation and prescriptions. Today, with the Delta variant continuing to interrupt daily life, the company is now offering at-home Covid tests as well.
While the core business remains strong, Him & Hers has stepped out of the subscription comfort zone. They are strengthening their relationship with their customers by providing a range of targeted and timely services, products and avenues of engagement. And it’s working: this past January, Hims & Hers went public in a $1.6B SPAC deal.
Taking Subscription Experiences Further
In a merchant-centric approach, brands are focused on the pricing, shipping and product offering formula that will ensure the least amount of volatility for their businesses. But I believe that in the future, the most successful DTC brands will more nimbly adjust their product offerings based on research and insights, as well as push further into personalization.
In other words the future is in the hands of the consumer now more than ever. The brands that invest in the technology, research, and data to cater to consumer needs will come to the same conclusions as those retailers did at the turn of the 20th century—happy customers turn into repeat customers.
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