What to consider when launching subscription boxes

Whistl recently conducted a survey focused on Subscription Services, in a bid to establish the key points online retailers should consider when launching subscription boxes.

Of the 1000 people surveyed this research found that 86% of purchases were made by customers who were self-gifting, and the top three categories for people to purchase items from were; Food, Beauty and Male Grooming. Self-gifting is a trend where consumers purchase gifts for themselves in a bid to receive exactly what they want. Self-gifting is an important consumer trend for companies to consider in the lead up to Christmas.

For those purchasing subscription boxes as a gift the popular items to were; Food products, Beauty, and Arts & Crafts.

The research also shows that there are several different influences that affect the decision to purchase a subscription box. As well as self-gifting, other factors include an opportunity to try something new, received an offer or a discount, received it as a gift, and there is flexibility to pause or cancel at any point.

When it comes to churn and the rate of customers who stop subscribing the research shows that 44% of customers choose not to continue their subscriptions. Customer churn occurs when a consumer ends their subscription, and therefore companies need to be aware of why their customer are leaving in a bid to calculate any potential stunts in growth.  The highest churn rates appear in the categories; Food, Beauty, and Books & Magazine. The most significant reasons that subscribers appear to discontinue their online subscriptions are; one off trial ended, received an offer or a discount at initial sign up, received a gift from someone, opportunity to try something new, or bought it as a gift for someone.

Those who continue with subscription boxes tend to do so because they always have it/ don’t run out; it is personal, and they can pick what they want; and the flexibility to pause/cancel at any time. 57% of users have only ever subscribed to one category and 33% are currently subscribed to only one. 43%, in the past or currently, subscribe to more than one category and 23% are subscribed to more than one currently. Those subscribed to more than one category are more likely to be: Male; younger; with children under 18; and living in London.

When it comes to promoting online subscription services the most effective ways are through social media, a recommendation from a friend or family member, and by being searched online.

Social media is the most effective way to promote subscription services to women, whereas the research suggests men are more likely to be responsive to web adverts.

Different categories require different advertising platforms to entice subscription service buyers. For those interested in food subscriptions, recommendations from friends, TV adverts and leaflets through the post work best. Drinks subscriptions favour emails, online searches, and leaflets through the post. Social media, recommendations and online searches work best for Beauty boxes, and male grooming can be advertised most successfully on Website and TV adverts, and social media.

61% of subscribers have not been offered an extended discount period yet 23% accepted and extended their subscription at a discounted rate.  13% declined to continue without the extension.  Of the 23% who extended a subscription with a discount the most popular categories were Food and Beauty.

When managing and paying for subscription services two-thirds of subscribers pay by a recurring card payment or debit card, with only 33% paying a one-off payment. 77% of subscribers manage their subscriptions via the company’s website. Those companies that offer an app to manage subscriptions have the lowest churn rate of customers, with 77% currently signed up. 

When it comes to choosing to cancel subscription services the top five reasons include; too expensive, disappointed with what was received, bored with the product, discount period ran out and no longer needed the products.

The demographic that are the largest group of non-users of subscription boxes are male, older and less affluent, living in Northern Ireland. 

Female non-users are generally more aware of subscription brands than men with graze; Hello Fresh; and Abel & Cole the best known. For men Dollar Shave Club and Harry’s lead the awareness popularity table however, over a third unaware of any brand. Non-users would be more open to considering taking out a subscription service if it was: Cheaper than the alternatives; free/ discounted trial period/ Finding a product that I need; better range of products; as a gift for someone else.

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