#184: How to Wow Customers with Subscription eCommerce
Unlock the path to higher profits and customer retention in this episode of the Ecommerce Coffee Break Podcast. Join Dileepan Siva, founder and CEO of upscribe.io, as we discuss the art of delivering an impactful customer experience that drives business success.
On the Show Today You’ll Learn:
- The biggest challenges of implementing a subscription into your business
- What is churn rate, and why is it important for the evaluation of your business
- What strategies to use to motivate customers to sign up for subscriptions
- Subscription model or membership on loyalty and rewards model
- The right time to offer a subscription
Links & Resources
Shopify App Store: https://apps.shopify.com/upscribe-subscriptions
About Our Podcast Guest: Dileepan Siva
Dileepan Siva is the Founder and CEO of Upscribe enabling subscription eCommerce for fast-growing brands. Prior to Upscribe, he built growth teams for three B2B eCommerce startups all of which have been acquired and also led retail partnerships for Twitter Commerce as well as social commerce for eBay. Before entering the technology sector, Dileepan spent several years advising Fortune 500 CPG companies including PepsiCo, Unilever and others on emerging market retail strategy.
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Claus Lauter: Hello and welcome to another episode of the E-Commerce Coffee Break podcast. Today we want to talk about retention. We want to talk about how to bring back customers to buy more from you, customer lifetime, obviously a very important factor, specifically with rising at costs. Therefore you wanna bring back as many.
Customers that you already had. So with me on the show as a guest, I have Dileepan Siva. He's the founder and CEO of upscribe.io, and they're enabling subscription services for merchants. Prior to subscribe, he built growth teams for three B2B eCommerce, all of which have been acquired, and also led retail partnerships for Twitter commerce as well as a social commerce for eBay.
Before entering the technology sector, he spent several years advertising Fortune 500 CPD companies, including PepsiCo, Unilever, and other emerging market retail companies out there. He also received an M B A from Harvard Business School and a BA from University of California at Berkeley. So he has a vast background when it comes to technology and e-commerce.
And I wanna to the show. Hi, Dileepan, and how are you today?
Dileepan Siva: Doing well, Claus, thanks for, having me here.
Claus Lauter: You're welcome. Let's talk about subscription-based businesses. , obviously that's a huge topic right now. What got you into e-commerce? To start with, just give me an overview. How did you get started in this whole at landscape of business?
Dileepan Siva: I was working with Unilever, a very big global multinational. That's some amazing work around the world. And, was in the early days of them and other c p G companies like Pepsi, thinking about, oh wow, online is growing. This is now, just to be clear, 10, 15 years ago. So online is growing.
How do we think about e-commerce? And as they were entering that, , I was like, wow, there's so much happening here. And the tools to, , power online commerce, were just starting. So this is before even we had Shopify. And so I was starting to see all of this happen. But because I had come from the C P G, the consumer package goods world with Unilever, many people buy these products on a recurring basis because you want to have soap, not once, but every month, for example.
Or you want to have coffee. With that background, when I think about e-commerce, I already thought about a consumable. Good. You would buy more than once.
Claus Lauter: Yeah, obviously it has a lot to do and I think you said that you buy it more than once, so it's a lot of, being, , convenience in involved in there.
You don't need to think about it comes delivered all the time. I think that's where most of the impact is on subscription-based businesses. Now you mentioned with Shopify things have become easier , subscription as said is on the rise. , it's a big part of every marketing strategy of merchants.
Tell me a little bit about where are the biggest challenges of implementing a subscription into your
Dileepan Siva: business? The biggest challenge for individuals is understanding which products to enable. For subscription. It's not as easy as saying these ones sell the most, and you should enable it, although many merchants do that.
When we work with merchants, we. do an analysis to understand which products should you enable to subscription and test and iterate from there to then understand how best to grow. Cause you could turn on subscription for every product and then result in a lot of churn, those products are not the most likely to increase your lifetime value or ltv.
Claus Lauter: mentioned churn. Not everyone Notice this term. What does churn mean and what kind of impact does it have on your business? Yeah,
Dileepan Siva: so churn is an important concept, , in addition to lifetime value, which is what is the value of a customer over the course of how long they're buying your product or products.
is if they do subscribe and then they choose to cancel. . You've now had a churn in your business, right? So that's how we think about those two Metrics are really important. Lifetime value, L T V. And what is the churn rate for a business when we think about recurring revenue and subscriptions?
Claus Lauter: So how do you get these two things together in a possible way into your business , on how to make that work?
Dileepan Siva: We focus a lot on churn, , because we are an enabling tool for subscriptions, we focus a lot on very simple things. Like if a customer or subscriber is skipping a product, is skipping their shipment, saying, okay, I don't need it this month.
What can we learn from there? Is the frequency too much? Is there another reason they don't like the product? So we're using surveys and very soon data science and AI to understand what's happening with that customer so we can prevent that churn. If we can prevent the churn, the money that the merchants spent to acquire that customer won't go wasted.
Claus Lauter: Is that AI might help there, data helps there. What kind of KPIs are you looking into to run churn as one, but are there other KPIs that you're looking at when you set up your subscription business? Those
Dileepan Siva: are the main ones, Klaus. It's primarily the lifetime value as well as churn. would say as the main two pieces, and no surprise, what do those relate to?
They relate to making more money and then saving more money. ? Which are probably the two most important things in any business. We can complicate it with all different kinds of KPIs and metrics, but it comes down to those two things, right? Money in, money out. we want to be very clear that if you're spending money to acquire a customer, That you have a very low churn rate and most companies will have a churn rate, say between say 10, 20, 30%, which is quite high.
We want to get that number into the single digits if possible. .
Claus Lauter: When it comes to motivate someone to sign up for a subscription, what kind of strategies do you have to,, to motivate them?
Dileepan Siva: The simplest one is to offer a discount, , Whether you're buying and subscribing on Amazon or using our solution and you're buying directly from a brand, like a coffee brand you might love, or a tea brand, you might love, , the easiest one , is hey, you'll save 20% on a recurring basis by subscribing.
That's the basic thing. But what we're really excited about is where is this gonna go in the future? And this is where the loyalty and the membership really come in. So what do I mean by that? It's not just offering a discount on each order, but do you get other exclusive, perks or benefits by subscribing?
That's where the industry is going now. Many of the fastest growing brands that we focus on are moving from subscription to more of a membership on loyalty and rewards model.
Claus Lauter: Okay. Now that's very interesting that you mentioned that. It goes one step ahead and involves a lot of different areas that were in the past, , as looked at separate, but at the end of the day, it's one customer.
So you wanna, bring all of this together. , Now you mentioned coffee, tea. Are there any specific industries or verticals where subscription works very well? Yeah.
Dileepan Siva: I would say that , the most obvious ones is food and beverage, right? Health and wellness is a huge vertical, so this is like supplements, vitamins, smoothie, powders, whatever that might be.
People don't think about this, but it's really important. Vertical beauty cosmetics. , a lot of people subscribe to specific beauty and cosmetic brands. , and then home goods would probably be the category number four, which is paper towels, , all of those pieces. But I would say the top three are really helping wellness, food and beverage and, beauty cosmetics that drive the industry.
Claus Lauter: Okay. So if you have , a business that's somewhere in that range, then it might be interesting. Now, when it comes to the usability ux, putting it into your store, are there any kind of best practices on when to show or when to offer a subscription?
Dileepan Siva: Yeah, in terms of, acquiring a subscriber, what we've found is, , many about the fastest growing brands that we work with, they actually have specific marketing campaigns focused on the most loyal.
Potential customer who can become a subscriber. And so what they're doing is, yes, you can have it on your P D P or product detail page. More important is to have maybe even a full landing page driven by an affiliate partner or an ambassador that lays out why you should subscribe, not even offering the one time option so that we find to be very effective again.
Brands need to figure out which product or products really work well. That way we find brands that are very low skew count or product count do really well with a singular landing page focused on subscription
Claus Lauter: so do you think it would make sense to then not only to have your usual product detail page, but on top of that, create a separate lending page only for a campaign to increase your subscription numbers?
Is that right?
Dileepan Siva: That's right. That's what we see the best in class brands do because what they're focusing on then is, Who are , my most loyal customers? You probably know the classic metric of, 80 20, where 20% of your customers are driving 80 with some revenue. How are you best serving that 20%?
It's not that you don't serve the 80% with the main page and the product listing page and the product detail page, but can you serve this loyal customer with a specific offering?
Claus Lauter: Yeah, you're talking my language. Loyal listeners of the show will know that I'm a big fan of the 80 20 rule, And then that's absolutely right there.
Now, when it comes to the communication with your subscriber, I think , that's a very important factor to keep them, , at bay , and having them coming back. Are there any strategies like email marketing, s m s, marketing or whatsoever, , you are using to just keep them informed and remind them that they're a subscriber?
Dileepan Siva: We actually launched late last year, a really amazing product called Reorder. So our main product is enabling subscriptions. How do you buy on a recurring basis? There are some customers that 20% that wanna subscribe. They know they want this product, they want it on a recurring basis.
Some customers are in the camp of, Hey, I wanna try this out and I'll reorder this product, but I'm not ready yet to get locked into a subscription. So we have a product where it looks back at the order history for an individual customer and says, okay, if they bought twice, and let's say for example there's a 45 day gap between two purchases, we can then send them an email, sometimes s m s, but more likely email saying, Hey, Klaus, would you like to reorder this product?
And then in the email it'll say, Have a reorder button. If you click the reorder button, it'll prepopulate a cart and make it very easy to check out. If you're not ready, you can click snooze and it will then automatically remind you in a week or two. So what does this do for those customers? And by the way, many of the time, like I'm actually one of these customers, I prefer to be nudged gently than locked into a subscription.
Claus Lauter: Yeah, that's a very smart move. I like that. I'm with Zoom. I would rather reorder than sign up for a subscription, but it might be something that is a, like a soft step into a subscription. So I think that's a very, , interesting strategy that you have there. Now when it comes , to implementation, a subscription program, not only from a technical side, but also from the, , administrative side of a business.
What kind of homework does a, merchant need to do before they can really get started
Dileepan Siva: There isn't much homework beyond, , because we do a lot of, when we onboard a merchant of that data analysis to understand exactly what to do. best practice would be to actually say, Hey, I think we've done some of our own analysis.
We think we should enable these three products with this level of discount. But what we can do is actually take and do the analysis ourselves, and this is where I think we differentiate, is we actually look at past order and sales data to then set up the program versus just saying, Let's just enable every product on subscription.
you could do that, but it's not really leveraging data. And I don't believe that many merchants are using data in the right way. We're in a world right now where we have so many tools, but the tools are not what I would call smart. Does that make sense? Meaning they're not leveraging data to do something.
It's more like, here's a dashboard, here's a tool, and we are saying, we're gonna do that for you. Yeah, I think
Claus Lauter: that's very critical for a lot of merchants. , as I said, oftentimes they just get another dashboard out of the 20 they already have, and then they're on their own to figure it out.
Now, when it comes to. Customers using that? Who's your perfect customer?
Dileepan Siva: Yeah, our perfect customer is brands who are in health and wellness, food and beverage, beauty, cosmetics. They're fast growing. Most of our brands are growing, at least 10% month over month, if not even more than that. They have a smaller skew count, so it's generally not the brands that have.
50, a hundred more and more products. They're hyper focused on these brands and they do a lot of selling through direct to consumer as well as wholesale or retail.
Claus Lauter: Okay. I know that you have a Shopify app. , are there also other APIs or solutions that other merchants can use it as well?
Dileepan Siva: So we are right now focused on Shopify.
We plan to expand beyond Shopify down the road. We're looking at big commerce. , there is an opportunity that we're exploring also in the wholesale market. So if you think about right now, the most of our conversation has been around direct to consumer. years ago or even five years ago, many merchants were direct to consumer only.
I don't know any brands right now who are launching, who are not doing retail and trick to consumer at the same time. And so you think about what's important, how do we enable this journey? The wholesale reorder subscriptions don't exist right now. It's almost like what D two C looked like 10 years ago.
And so we're focused on doing both things for merchants, because merchants now. Are doing D to C and they're doing retail. It's very rare to find a merchant just doing D to C now, which is like more so the case 10 years ago.
Claus Lauter: No, makes perfect sense. where can people find
Dileepan Siva: out more about you? ,
check out our website, subscribe.io. , they can email us there. We have a form that can sign up and learn more about our platform and where we're going. And just to be very clear, when they reach out to us, we would be more than happy to do the data analysis gratis. We can have a conversation.
We really wanna adopt our approach about educating the industry here on the importance of recurring revenue, whether that be through subscriptions or reorder. So happy to just talk about what we know and how we think about the space and how we can be helpful, whether it be around. And, a singular landing page or other tick, , tips and tricks that we know that we can share.
Claus Lauter: I'm sure a lot of listeners will take you up on that. , before we come to the end, obviously the most important question is what's the pricing? , what's the structure
Dileepan Siva: of your fees? we operate on a percent per transaction. So every recurring transaction that we enable for the merchant, we take a cut off that revenue.
Claus Lauter: Okay. That's very, very straightforward. Cool. Yeah. Thanks so much for giving us an overview of subscription on how to increase the lifetime customer value in your business. I think it's a, , must have for every merchant out there and I would strongly recommend that they would reach out to you and then at least give an overview of a data analyzers of if their business is really suitable for that.
Dileepan Siva: Thanks so much. Thank you, Klaus.
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