The New World of Customer Retention

Consumers today enjoy an unprecedented level of control over the subscription experience. Successful subscription retailers are focusing on surprising and delighting customers. They are always looking to provide as much value as possible.


But we need only look back, say, 10 years to appreciate just how much things have changed.


In those days, direct-to-consumer companies took an approach to keeping subscribers that boiled down to “retention by any means necessary.” Customer relationships were preserved not by offering a great eCommerce customer experience, but by making it almost impossible for customers to terminate the relationship.


The Old Ways Just Won’t Cut It


Until about a decade ago, most subscription businesses had entire arsenals of strategies cleverly designed to prevent customers from canceling. For instance, some companies would go into hiding after a customer became a subscriber. They wouldn’t send customers any sort of notifications alerting them that a shipment was on the way. Products would just show up, regardless of whether they were wanted.


Others would force customers to make a phone call to request cancellation — and they wouldn’t make it easy. Companies would bury a support number on some obscure page of their website, if they included one at all. That meant you’d have to call an operator or peruse online forums to see how others were able to connect. If you did get a number and made time to call during the company’s limited business hours, a support rep would read you a lengthy script to make you feel guilty about canceling.


Businesses would rake in profits thanks to rules designed to take advantage of customers — things like inflated shipping and handling fees, late fees, obscure and complex return policies, and negative option shipments. Decades ago, some would even sue customers for not complying with a contractual obligation to buy a product during every sales cycle. Customers would have to decline by sending in a mailer. Postal and operational delays lead to extra shipments and extra profits.


Plenty of companies deployed a combination of all of these tactics and more. For them, retention was all about sneakily adding sales, increasing profits through fees (especially late fees), and stretching customer relationships through whatever method worked best.


The Customers Are Back in Charge


Needless to say, things are different now. These types of policies and tactics are rarely tolerated by modern consumers, who will quickly take their business elsewhere if they feel they’re being treated unfairly or deceived. But first, they’ll let the whole world know how they feel about you via review sites and social media.


In 2019, the companies that are best at retaining customers take a new approach. It starts with attitude. The most successful subscription retailers truly want to provide customers with a great experience, and it shows. They seek to understand what their customers value, and they strive to ensure a long-term relationship that actually lasts beyond the lifetime of the subscription.


The top direct-to-consumer companies are constantly examining their retention strategies and looking for ways to improve. If you want to become one of them, you can get there with a strategy that incorporates the approaches below:


1. Deliver an Experience


Fast, reliable delivery is a basic requirement in today’s customer-centric DTC space. While Amazon has redefined efficient delivery, great DTC companies know they can do more than get a package to customers’ doors on time. They make sure their deliveries look and feel good when subscribers open them, and they align their shipping cadence with real customer needs. They’ll often throw extra surprises into each package, such as a personalized note or free products, building anticipation for the next box.


2. Connect Emotionally


Younger customers tend to make purchase decisions based on their values, and companies that make good products and do good deeds get their business. Some subscription businesses inspire their customers with great storytelling or stimulate the senses with sample flavors, aromas, and textures that get them interested in other products. Others, especially those that target Millennials, understand the importance of demonstrating that they have a passion and purpose beyond profits, and they do so through philanthropy, sustainability initiatives, and more.


3. Communicate Constantly


Subscription retailers always make sure their customers know exactly what’s going on with their shipments. They send emails and texts to communicate order confirmations and shipment status, and they are upfront and transparent if issues arise. They’re usually mobile-focused, and they give consumers complete control over the subscription cycle via their preferred devices. If a customer does want to talk to a company representative, these companies make their phone numbers easy to find, and they have human support staff standing by to offer help.


4. Harness Technology


Top DTC companies like Amazon, Dollar Shave Club, and Birchbox collect data to inform almost every decision they make. They invest in and develop tools that allow them to use data to create very precise customer segments, and they’re able to analyze segment behavior down to the smallest details. Their ever-expanding knowledge and deep customer insights are then used to create experiences that make people want to stay, even in a world where 40 percent of subscription service customers cancel their memberships.


The best DTC companies typically blend all of these approaches into their holistic retention strategy. Depending on your customers, some tactics might make more sense than others. Regardless of which ones you ultimately choose to implement, focusing your strategy on truly satisfying your customers will lead you to success.