Subscription models are widely preferred by consumers owing to its regularity and simplicity. For store owners, it improves the scope of their business model, with the assuring prospect of recurring income. Subscription models are everywhere with diverse products and services, ranging from books to SaaS, being offered to paying customers. It might be an appealing prospect to start a subscription business on your WooCommerce store. However, you might face several practical hassles when you actually try this out. In this article, we will look into some strategies that will help you overcome the challenges of a subscription model. When using WooCommerce Subscriptions plugin, you should be able to maximize your customer satisfaction and profitability by following these tips. Before starting, you can familiarize yourself with the WooCommerce subscription model here.
Advantages of the subscription model
Before getting into the details of enhancing your subscription business, let us take a quick look at the obvious advantages.
Recurring revenue gives you more stability
When you start with an online store, one of the toughest aspects that you have to deal with is the uncertainty. Not knowing the next source of income can become a worry that borders anxiety. The prospect of recurring revenue from a subscription business can surely find you a respite. Several payment gateways offer automated recurring payments, which ensures prompt payment from your customers. When you have a steady income, you can focus better on growing your business and the brand more effectively. More importantly, you can be really creative with what you offer and build a solid customer base. Find tips to improve customer retention here.
Customer retention becomes easier
In the subscription business model, your customers are getting into a contract with your business for a relatively longer period of time. This would give you better scope to know them better. That means, you can design products or product bundles that would be more appreciated by your consumer base. In fact, this would help you create a virtuous cycle of customer satisfaction and business growth. In fact, as a result of this business model, you will be able to invest more time and resources in improving customer experience. Read our article to find out more tips on improving customer experience on your WooCommerce store.
Better marketing strategies
Knowing your customers better means you can devise marketing strategies in a more targeted fashion. With the subscription business model, you will have better access to user behaviors and specific interests. Accordingly, you can align your marketing strategies and find better returns on investment. Up selling and cross selling become easier, as you have better insights on your customers’ shopping patterns. Similarly, you can display testimonials of some of your loyal customers to gain more attention. If you are looking to improve your marketing efforts, here is an article that features a few WooCommerce marketing tools.
How to start with WooCommerce Subscriptions?
One of the best options out there to get your subscriptions model up and running is to use WooCommerce Subscriptions. It helps you offer subscriptions on your store, and manage them efficiently with the help of recurring payments. You can create suscriptions out of any product type – physical, downloadable or virtual. If you are not familiar with different WooCommerce product types, take a look at our article.
It offers multiple billing schedules, which you can set up based on your convenience. Also, you will get the option to provide automatic payment options from several payment providers that offer this feature. And manual payment option is available for any payment provider that you choose. There is also an option that allows automatic re-billing of failed transactions, which makes it convenient for both customers and store owners. With the subscription plugin, you can offer your customers a lot of freedom to manage their subscriptions. They can upgrade or downgrade a plan from their account page, without any involvement of the store owner.
Sometimes, automatic subscription renewals can cause confusion when there is no clear recollection of the renewal dates. The plugin handles this problem well with automated renewal notifications to customers and store owners. It also has a decent set of reporting features that helps you stay on top of your subscription business model. The single site subscription of this plugin is $199. The 5-site subscription is $249, and the 25-site subscription is $399.
Starting a subscription plan with the Subscriptions plugin
It is pretty simple to get started with this plugin. Once you have WooCommerce installed on your site, you can purchase the Subscriptions plugin from the WooCommerce marketplace. Install and activate the plugin just like you would do with any other WordPress plugin.
Now, you can create a new product. If you don’t know how to create a product in WooCommerce, this article will help. In the product type drop-down, you will find more two additional options – single and variable subscriptions. You can choose one of these options for your subscription product. If you wish to offer multiple subscription packages, which customers can choose, variable subscriptions is the way to go. If you have only one subscription plan, single subscription will do.
For a variable subscription, you can create attributes and use them to create different variations. The process is similar to the process of creating a variable product in WooCommerce. However, you can set up a sign up fee along with the recurring subscription charges here. You can also set up an appropriate payment option for the subscription product, and then publish it. Your customers will be able to purchase subscriptions from the front-end of your site.
How to improve your subscription business model?
As you have seen above, it is pretty straightforward to set up a subscription model with the help of WooCommerce subscriptions plugin. Now, let us look at some of the strategies you can try out to improve this further.
Understand your target audience and customer acquisition channels
Knowing your target audience is an important aspect in the subscription model too. Everything from pricing plans to subscription packages needs to be based on the tastes of the audience you are targeting. You will find a few insights here on identifying the target audience for your online store. Once you have a clear view on your target audience, you can even design your site’s user interface around it. This would help to make it more inviting for your target audience to engage and trust your site.
Trying out different channels to acquire customers is another useful strategy you can try. Just like multi-channel retail, your subscribers should be able to sign up from the channels they prefer. This can be through your website, one of the social media channels or when they complete the purchase of certain products that are linked to a subscription. After a careful analysis of the business model, you can probably pick a few channels that you are going to focus consistently. In addition, you need to ensure that the customers find it simple to sign up through any of these channels. A consistent user experience across all acquisition channels would ensure better brand perception as well.
Try different pricing strategies
How you price your subscription plans makes a big difference in the growth rate of your subscription business. It has impact in acquiring new customers as well as retaining your existing ones. You might have to create layers of pricing based on different customer bases that you are targeting. Just a single pricing plan wouldn’t suffice when you are targeting different demographics and psychographics. Having a tailor made plan for each of the target groups would bring in more returns. For example, a particular target audience might prefer a monthly renewal option, while another prefers annual. This can be quite apparent when you do an analysis of your customers’ spending patterns. So, if you are targeting two different groups with such a diverse spending pattern, it might be wise to offer both annual and monthly options.
If you have other products too on your store, you can also try offering subscription plans at discounted rates based on purchase patterns. Your most loyal customers or the ones with the highest lifetime value can be rewarded with a reduced price, if feasible. Similarly, waving off sign up fees in special cases too can be a good strategy when you start out. If you are not sure of an ideal pricing pattern, you can always experiment with several before zeroing in on a few ideal ones.
Develop better customer relationships
Managing customer relationships is of utmost importance in a subscription model. You need to consistently offer a great service to your existing customers for a subscription business to flourish. That is because a considerable share of your revenue will be coming from existing customers. Also, it is important to get renewals, add-on purchases, upgrades, etc. from your existing subscribers. Without a careful focus on building great customer relationships, you cannot sustain a subscription business. Make sure to build a support team that your customers can bank on.
Choose good payment and shipping options
The payment service provider that you choose is an important factor for subscriptions. One of the main concerns here is whether you are offering choices that your customers prefer. Here is an article that will help you choose the right payment method. Basically, you need to make sure your are giving the payment options preferred by your target audiences.
Similarly, the fulfillment options need to be well thought of too. You need to optimize the delivery options according to the convenience of your customers. For example, some products need to be replenished on a monthly basis for some while some may prefer it weekly. Finding the right way to do this through customer feedback would give you an advantage in satisfying your customers.
Choosing the right shipping carrier too makes a difference to your subscription model. Make sure you are choosing a reliable partner for your shipping needs. You might find quite a few shipping plugins here and here.
Measure with the correct parameters
You need to make good use of analytics tools to make full use of subscription business model. Parameters like annual recurring revenue, retention rate, growth rate, etc. are especially important in a subscription model. These will give you a generalized idea on where the gaps are and where you are managing well.
Also, you might need to focus more specifically on individual customers to understand the user perspective. Customer acquisition cost and lifetime value too are important parameters in this regard. It will give you a better vision on specific strategies you can try out. You can read more on eCommerce specific analytics tips here.
Subscriptions are a great way to increase revenue from your online store. The fact that it provides a cushion of recurring income from your store is appealing. This would mean you can use your revenue more comfortably in building the business . Moreover, the subscription business model offers better scope to understand your customers. This enables you to create more customer friendly products and product bundles. WooCommerce Subscriptions plugin is one of the best available options you can try to offer subscriptions on your store. With a careful focus on your target audience and by maintaining good customer relationships, you can easily create a great subscription model. Please leave a comment, if you wish to share your success story with the WooCommerce Subscriptions plugin.