DTC Strategy Subscriptions

In this installment of The Stable and Recharge’s Enterprise Subscription Growth series, we’re discussing subscription models and trends for 2022.

And just like that, we’re right on the doorstep of 2022. With the calendar set to turn, how should brands be preparing and planning for the new year to hit? What subscriptions trends will continue? What verticals will continue to show growth? How will consumer buying habits continue to change after almost two years of the global pandemic?

We don’t have a crystal ball, but we can share our thoughts on the patterns and growth we’ve seen over the last several months.

Verticals To Watch In 2022

When we look back at the most popular subscription verticals to date, the clear industry leader is Food and Beverage. The category has the highest AOV of any vertical and it continues to experience tremendous growth. Consumers have flocked to Food and Bev subscriptions as they recognized the convenience of having the pantry staples they love having delivered easily on a recurring basis. Or entire meal kits delivered freeing up time spent planning dinner or making a trip to the grocery store to get ingredients.

We’ve seen more and more traditional brick-and-mortar Food and Beverage CPG brands pivot to offering eCommerce subscriptions and giving their customers flexibility over their orders and delivery schedule.

Health and Wellness is another vertical that will be popular in January as consumers look to hit personal New Year’s resolution goals. The category as a whole is on the rise, with 30.5% growth in the space from 2019 to 2020, as well as a 20% growth in AOV. What’s more, brands that offered a one-time purchase option to their subscriptions increased their AOV by over 71% in this space. As the pandemic changed everything at the start of the new decade, our physical and mental health has become more of a focus for consumers. Smart brands have recognized this desire and focused on providing products and services that benefit the mind and body.

Crossrope, for example, offers a unique and versatile full-body jump rope workout you can do in under 30 minutes. The brand combined their jump rope workout with their Crossrope app which offers access to fun and effective workouts right from your phone. What’s more, they added a subscription element by offering customers the ability to upgrade to Crossrope Premium membership for a full library of workouts, challenges, and features.

Which brings us to the fastest growing subscription revenue model: Access memberships.

Trending Subscription Models

Quick recap on the three types of subscription model:

First up, there’s replenishment subscriptions, which is the classic subscribe and save model, resupplying you with products that you use on a consistent basis. Coffee beans, deodorant, protein powder, pet food, your favorite beverage—if it’s consumable and convenient to be reordered you’re looking at a successful replenishment subscription product.

Next is the most popular type: curation subscriptions. This particular type has merchants curate a box of one or more products, which are packaged together and shipped at a regular cadence. These goods can be anything from a collection of delicious snacks, new beauty products or an assortment of wilderness survival gear. The key to curation is the surprise and delight factor with merchants providing consumers with new products or member favorites.

Lastly, let’s look at the fastest growing subscription type (and one that you’re likely using) access subscriptions. Also known as membership subscriptions, this model is incredibly popular for providing the subscriber with access to gated content, limited time or exclusive products, and more. Netflix, Spotify, the Adobe Creative suite all use the access subscription model.

Access memberships also offer tremendous potential to build a brand community (which you can read up more on in the first blog in this series). Brand communities are increasingly more valuable as a way to spread awareness about your business and products at a time when Apple’s iOS 15 update has made it more challenging for merchants to advertise.

Access memberships are also incredibly valuable because they can truly fit and benefit any brand regardless of their vertical. They’re easy to implement, flexible, and provide benefits right off the bat to consumers. Because of the popularity of digital memberships, we’re all familiar with the type, so there’s no learning curve for consumers to recognize the benefit of exclusive access to gated products, services or content.

Looking to implement an access subscription for your business? It could be as simple as gating one of your most popular products and offering it (as well as other benefits like free shipping, or access to other limited-time products) behind a membership subscription.

Tactics To Grow Subscriptions In 2022

Now, we see the trends and we have an understanding of the subscription market heading into 2022. So, how can we apply these observations to strategic initiatives that will help your subscription revenue model grow in the new year?

Strategies For Subscription Growth (Acquisition)

With rising customer acquisition costs over the past year and heading into the new one, one of the most crucial elements of your subscription strategy is how to drive new subscribers. If you are an enterprise level merchant with an already large subscriber base, you should create look-alike audiences from your existing customers that can be leveraged in your strategy to acquire new prospective subscribers. It may be enticing to run simple campaigns such as a one-off promotion on subscriptions, but this tactic can bring in large groups of new subscribers that are less qualified and more likely to churn.

In order to identify your highest quality leads, you’ll want to segment special groups in your current base to get regular feedback, which will often drive insights around product issues, potential new products, and subscription program issues.

Your Subscription Pricing Model (Conversion)

Always try to price your subscription offering based on value. Many merchants opt into competitor-based pricing or cost-plus pricing, however, these strategies can go against the grain of what your customers are actually willing to pay. With consumer expectations of shopping experiences greatly shifting due to the COVID-19 pandemic, it’s important for brands to listen to their customers and meet them where their current needs are. By leveraging a value-based subscription pricing model, you are leveraging your consumer data and taking a hard look at the features of your offering in order to provide a subscription price that customers will want to pay, thus increasing conversions.

Optimize Your Subscription Customer Portal (Retention)

Heading into the new year is the perfect opportunity to optimize your customer portal for retention. Especially knowing that Access Membership subscription models are gaining traction, it’s important to create strong incentives for customers to stay subscribed. This takes shape in not only your offering benefits, but also your customer portal digital experience. Leverage the Shopify partner ecosystem for apps to integrate with Recharge that can encourage users to increase order value or incentivize them to stay subscribed.

Closing Thoughts

As you prepare for 2022, whether you’re launching a new subscription program, or optimizing your current offering, there are a lot of strategic considerations. The Stable and Recharge are here to help your business succeed. Be sure to check out the other articles in this series for more information.

Want to talk to us about your subscription revenue model? Reach out to us here.