Smartrr’s Molly Duffy On Building A Subscription Business Model

Is a subscription model right for every brand?

• It depends on what your product is because subscriptions are not for all kinds of products
• The key is the customer’s relationship with your brand and listening to what customers are saying. Are people asking for subscriptions?
• “I think that you have to make sure that it really makes sense with what you’re selling. So, if you have something that is replenishable, something that is part of someone’s routine, those are always things that work.”

Trends analysis for subscription-based models

• Cadence makes sense for subscriptions.  Dig into the frequency of your repeat buyers and find some patterns
• People want subscriptions to save time and money
• “If people are buying over the same cadence, can you find trends there that you could lean into with subscriptions to make that customer experience easier?

The magic discount number for subscriptions

• High discounts mean high churn. Brands need to be thoughtful about discounts on subscriptions vs. one-time purchases

• “I think 10% is typically a good area to be in. When we see it go a lot higher than that, people are just canceling and it doesn’t really work with actual intent of subscriptions.

How DTC brands can prevent churn

• Smartrr has a retention flow that helps brands understand why people are canceling so it’s critical to leverage data instead of assuming you know the usage
• Offer the right frequency with options for 30, 60 and 90 days, making sure customers get refills at the right times
• “It’s really important to maintain contact with your customers, whether you wanna use email, sms, whatever makes the most sense for your brand, really checking in with people, updating them on what’s going on.”

Taking advantage of predictable analytics in subscriptions

• The best possible data set you could have as a DTC brand is subscriptions because you have a very predictable future set of data critical for inventory planning
• Dig more into subscriber data and understand when people tilt from being a one-time purchaser to a subscriber and plan your marketing based on that

Make it easy to cancel subscriptions

• Having the option to pause, cancel or change frequency gives customers peace of mind and builds up the relationship with the brand
• “If you’re gonna trust a brand to charge your credit card multiple times a year, maybe indefinitely on a subscription, you wanna know that you have an exit and that you’re not gonna be stuck in a customer support loop.”

Combining quantitative with qualitative data for best insights

• It’s critical to look at the data and talk to people because you can get the “what” from data, but you get the “why” from your customers
• If your’re not getting any data from your retention flow, reach out to customers to understand what’s going on
• “I think just having all the context when you’re starting to dig into data and leveraging that is really important to keep in mind.”

The most exciting trend that will accelerate in 2023

• Brands are increasing the level of personalization from setting up referrals and rewards to making sure that customers are able to edit everything
• “Building on relationships with subscribers instead of just having a save and subscribe button. I’m really excited to see where brands will take that and the next level that they’ll build.”

Reducing churn with Cogsy + Smartrr

• Cogsy’s latest subscription feature focuses on keeping optimal inventory levels across multiple channels which can ensure subscriptions are replenished on time
• If you’re a subscription brand on Smartrr, Cogsy can help you increase your subscription retention and reduce the churn due to stockouts
•  Adii: “When I think about subscription, LTV and the retention of your most loyal customers, I wanna make sure that I am prioritizing those customers first and foremost before I take new customers into the door.”