3 Use Cases of How Data + AI Help Marketers Rock Subscription Ecommerce
Subscription e-commerce can have its cake and eat it too. Companies benefit from a direct-to-consumer acquisition framework and a recurring revenue stream. Consumers enjoy a personalized experience. Everyone wins. You know this segment has promise since the industry is witness to an eye-popping billion dollar acquisition.
Effective marketing technology is absolutely crucial to the success of the subscription e-commerce model. Marketing technology needs to aim at the biggest challenge that these companies face on a recurring basis: acquiring subscribers, keeping them engaged through the subscription cycle so they can lower the rate of “churn,” or membership cancellations.
No wonder AI-based marketing has proven to be a subscription ecommerce friend. If a company relies on marketing that accurately predicts what a customer will like, and engages with the customer in a real-time manner to cater to that discovery, then the probability of cancellation diminishes considerably.
As a marketer, you can actually understand your subscribers and articulate what they want better that they ever could. How? By going Predictive.
It this article, we’ll explore 3 Use Cases of how Visitor Journey Analytics and Predictive Notifications tackle common challenges subscription ecommerce companies face: acquiring subscribers, keeping them engaged, and preventing cancellation.
Acquiring Subscribers. Use Case 1 — Barre3
Barre3 created a healthy lifestyle hub — apart from having studios in 30 of the United States, Canada and Philippines, they offer workout accessories, apparel and online courses. The last comes in the form of a monthly / yearly subscription.
By subscribing, members have access to exclusive workouts, nutritional guidance and expert support. Barre3 also has separate domains for its blog and online store.
What if?
Let’s explore an idea of how Barre3 could acquire new subscribers. Their bounce rate is relatively low at 27%, and an average visit lasts nearly 2 minutes, with 3–4 pages per visit on average. However, their subdomain — blog.barre3.com — is responsible for 14% of all visitors, which is remarkable, considering that store.barre3.com, for example, is responsible for 8%. Since the total visits to the website are about 335,000 per month, we’re dealing with nearly 47,000 blog readers who could become subscribers, if only given proper guidance through the funnel.
So! We are looking to create a campaign that will leverage the power of existing blog content and prevent Barre3 from any wasted ad spend — according to public data, we see that the majority of Barre3’s display advertising efforts are aiming at the “Subscription” and “Store” pages.
Let’s create a campaign that will encourage visitors to become subscribers and prevent losing money on advertising. Here’s what we do:
- Link domains. First, let’s identify the shared visitors of our two domains, barre3.com and blog.barre3.com. Using a platform like Intempt, we specify a tracker for 2 domains to understand visitor behavior across domains and leverage the data in the future campaign. Now, we store every interaction by a visitor on both websites to understand their behavior.
- Identify a drop off point. We’ve assumed that visitors leave the blog after viewing 3 pages. To back our hypothesis with data, we create slice two narrowly defined segments out of the funnel and compare how many visitors have fallen into each segment. We create a Segment 1 for visitors who browse 3 blog pages (behavioral property Count Of) and a Segment 2 for visitors who browse 4 blog pages (behavioral property Count Of). Here’s what it could look like:
Based on the gap we noticed between the two segments, we know a visitor is likely to leave, so we prevent the drop off with a targeted notification.
- Segment our visitors. We specify a target group by blending past behavior (fact) and future behavior (predicted). For this segment, we are focusing on first-time or returning visitors who haven’t subscribed (behavioral property Has Not Done), browsed 3 or more pages of the blog (behavioral property Count Of) and are predicted to drop-off without subscribing (predictive property Will Not Do.)
- Time to campaign! For this campaign, when 3 blog pages are reviewed, we know the possibility of a drop-off is high based on the average number of pages per visit. It’s a good time to send a notification inviting the visitor to check out barre3 subscription. Final look:
Why this notification at this time?
- The visitor has engaged with at least 3 blog posts;
- The visitor is new to the subscription model;
- The visitor is predicted to drop off without becoming a subscriber.
In this scenario, we’ve leveraged a visitor’s intent of becoming a healthier version of themselves and used that intent to convert them into a subscriber.
Keeping subscribers engaged. Use Case 2 — Dollar Shave Club
Dollar Shave Club (DSC) solely use the subscription business box business model.
They don’t provide the option of one-time purchases, though you are able to cancel your subscription at any time. This model, an amazing viral introductory video and affordable prices allowed the company to not only grow quickly, but to also get noticed and acquired by Unilever for $1 billion.
Once you become a member, the website recognizes you with every visit and greets you with a personalized “Nice to see you” page that offers new blades and a referral program to earn an extra $5.
What If?
Dollar Shave Club is doing well with acquiring new members — the introductory video alone got them 12,000 subscribers in the first 48 hours of being live, and their monthly audience reaches 3.3 million people, who on average, spend 2.5 minutes per session. As with many subscription companies, the question of retaining customers and keeping them engaged with the brand remains an open switch.
Based on public data, email campaigns are well used by DSC — in fact, email marketing is responsible for 18% of total traffic. Based on how members engage (and don’t engage) with a nurturing email strategy, a DSC marketer could earmark a member as qualified for a marketing campaign. Furthermore, they would anticipate the key event that triggers the message. Here are some ideas on how DSC could give their email marketing a boost in engagement and turn it into revenue:
- Collect and store data. First, let’s store every interaction by a member to understand their behavior. Imagine that we’ve collected data from the hypothetical email campaign dedicated to introducing new shaving products. To tie it into the visitor journey, we’re tracking a special link embedded into the email. So we know what action brought a member back in a marketer quantified way, and we’ll help a member reach that goal.
- Create visitor segments. We create a segment that contains members who have clicked an email link containing a new product (behavioral property Has Done), clicked away from the new product page (behavioral property Has Done), have not visited new product page yet (behavioral property Has Not Done), and are predicted to not add a product to the cart (predictive property Will Not Do Add To Cart).
- Set up a notification campaign to suppress the discovered dropoff. Using Intempt Campaign Editor, we create our future campaign in 5 steps by specifying a targeted segment, campaign goal, preferable channels of communication, notification message, and delivery preferences. Here’s what creating our future notification looks like:
Now, we target currently active members from our target segment with notifications at key drop off points. In this example, a member may not engage with a new product right away. The key difference now is that we know what brought a member back. Once they meet a trigger event (for a campaign), the notification goes out. Here’s what it looks like:
Why this notification at this time?
The visitors’ past browsing and purchasing behavior as well as their current context is indicative of what will happen:
- The member has engaged with a link sent through email which indicates member’s interests;
- The member is not aware of the new product;
- The member has disengaged with the initial offer;
- The platform predicted that the visitor is not going to add an item to the cart (Will Not Do Add to Cart predictive property) unless we trigger their attention, so the “Bundle purchase” notification appears to encourage the member to proceed with a purchase at a later time.
Once the member engages with a link, we take them where we promised — it encourages the member to add a new item to their monthly box.
Voila!
Preventing Cancellation. Use Case 3 — Surfair
Surf Air is a California-based airline that offers unlimited, “all-you-can-fly” service for a fixed monthly fee. Once you signup and pay a monthly fee, you are exposed to a streamlined booking engine and convenient private terminals to travel quickly, simply and comfortably. This year, the company has extended its reach to Europe for its 4,000 active members.
What if?
While Surfair is growing their customer base at a decent clip (2,000 in September 2015 compared to 3,000 in June 2016 and now ), preventing members from cancellation remains a key strategy. 72% of subscription eCommerce customers don’t renew within 6 months of their initial transaction. To minimize the chance of cancellation among active members, I would create a marketing campaign that sheds more light on the benefits of sticking with a brand. Here’s how to get there:
- Keep collecting the data. Exploring subscriber behavior through data may tell us that they were inclined to cancel their memberships. The data and facts deepen the subscriber profile.
- Create a segment. We segment our subscribers as narrowly as possible based on their activity over one or more web sessions. If a member booked at least 1 flight before (behavioral property Has Done), hasn’t been to the website since the time of previous purchase (behavioral property Has Not Done), have read the cancellation policy (behavioral property Has Done), and is predicted to cancel the subscription (predictive property Will Do), they fall into our segment. We’re dealing with a subscriber who has been passive towards the brand and is inclined to unsubscribe, which shapes our future campaign.
- Move on to notifications. We set “Reads cancellation policies” as a trigger event for our personalized notification. If a visitor falls into a segment described earlier, they are qualified to see a notification introducing the benefits of the membership they have experienced so far. For example, a link in the notification can take a member to a new page where they can see how many free hours and how much money they have saved using Surfair, compared to the most popular flights in the same directions at that time. Here’s what a notification could look like:
Why this notification at this time?
- The member has booked at least 1 flight with Surfair, so we have data for a comparison;
- The member has been passive towards Surfair since the time of their last flight;
- The member has checked out the cancellation policy letting us know they’re not far from leaving.
By leading a member to a potential comparison page, we reinforce the value of Surfair membership and lower the risk of cancellation.
Final Thoughts
Running a subscription ecommerce business is both rewarding and challenging. If you think acquiring customers may not be as challenging as in other business models, I’m here to tell you that keeping them engaged and renewing keeps us marketers awake at night. With the right technology platform in place, retaining subscribers becomes less stressful. Intempt is a platform designed to help every company be smarter with their subscribers. We are constantly investing in delivering AI that transforms the customer experience.
* Barre3, Dollar Shave Club, and Surfair website data was acquired from Alexa.com
