As per a recent report from McKinsey, for the past five years, eCommerce subscriptions have grown at a rate over 100%. Just a decade ago, the growth rate was less than 1%! What changed? Though the concept of subscriptions or recurring orders has been around for awhile, the massive adoption of it happened recently. While there are several reasons for this accelerated growth of subscriptions business model, the importance that customers place on convenience (these days), and the stellar ‘subscription’ based experience that several top brands such as Netflix and Amazon (Prime) have given the world, have been key drivers.
But, a subscription-based business model has advantages not only for the shoppers but also for the merchants! In this chapter7 of the Shopify 101 series, we will walk you through how eCommerce subscriptions can be used smartly to your advantage, how to set up the business model in your Shopify store, and provide the list of top subscriptions/recurring order apps on Shopify, for you to choose from.
I. Why Subscriptions Is Becoming A Mainstream Business Model
Acquiring and retaining customers is becoming tougher every day, mainly due to two reasons.
1) More options for customers: Owing to the ease of store setup (as explained in the previous chapters), there are now a huge number of businesses – big and small – that have come up, often adopting an online or e-commerce model. While great for the economy, it also means that a typical shopper today has numerous quality options to choose from. To keep them engaged, stores are finding themselves in a position of constantly providing attractive deals and discounts, on top of their stellar products.
2) Increasing cost and stringency of social media campaigns: The costs of running regular or targeted ads on social media and search engines are going over the roof. Moreover, with tougher privacy and data protection laws emerging in Europe and China, and with the recent releases of iOS 14 and 15, that have impacted the effectiveness of Facebook Ads and email marketing, the $ value and returns from ad campaigns are diminishing.
To mitigate these headwinds, it is becoming important for businesses to adopt strong strategies to improve the retention rate and loyalty of customers they have already acquired. Here are a few statistics from HubSpot that prove the importance of retaining customers:
- 82% of companies agree that retention is cheaper than acquisition
- 65% of a company’s business comes from existing customers
- 43% of people spend more money on brands they’re loyal to
But other than these numbers, here are some other obvious benefits of retention:
- Predictability of revenue
- Better unit economics
- Effective demand forecasting
This is where setting up recurring orders or subscriptions in your Shopify store comes in, as one of the most promising strategies for shopper retention.
II. What Is Shopify Recurring Payments?
Shopify recurring payments is another term used to describe the eCommerce subscription model, wherein a customer can make pre-scheduled purchases based on their needs, in a repeating frequency. In the subscription model, consumers set up automated debits from their preferred payment methods, which ensures a steady flow of revenue to the merchant, with each recurring delivery.
Some commonly seen types of subscriptions on Shopify include:
- Replenishment subscription: This is typically referred to as the ‘subscribe and save’ model, something that Amazon is popular for. The model taps into the psychology of consistent and recurring needs, as well as the want for a good and ‘special’ discount
- Convertible subscription: This type of subscription model attracts the customer by making an introductory offer. It also allows customers to ‘try before they buy,’ so that they feel they’re getting more than what they are paying for. OTT platforms such as Netflix make use of such subscription models.
- Build-a-box subscription: If your store offers multiple products that can combine to fulfill a broader and recurring need of customers, build-a-box is the way to go. This type of subscription model allows customers to curate products and create their own custom box. You’ll typically see this model used by health, wellness and food brands! This article on box subscriptions gives a great outline of this much popular revenue model.
- Curated boxes subscription: This is a subset of build-a-box subscription, where the products that make the box are curated based on specific preferences, or needs of the consumer. The ‘monsoon skincare kit’ or Stitch Fix, which sends a periodic selection of clothes and accessories to its subscribers, based on their specific preferences and tastes, are successful examples of this model.
- Monthly clubs or boxes: Another type of curation subscription service – ‘monthly clubs’, offer the experience of discovering something new every month from the brand. For example, John’s Crazy Socks has a ‘Sock of the Month’ club, where all members receive a fresh pair of socks every 30 days.
- Access subscription service: Under this type of subscription service, a customer takes a membership of the store, to gain access to all or a few exclusive products and services offered by the brand. Items in this case are usually offered at a hefty discount, making the membership worth it. A good example is Amazon Prime, which offers fast and free shipping only to its members.
Now, if you have set up a store on Shopify, setting up Shopify recurring payments is easy. There are some top apps on Shopify that enable you to set up different types of subscriptions in your store, depending on what you sell.
III. 4 Best Shopify Subscription Apps
While every app listed below will help you set up a subscription model on your Shopify store, we encourage you to read through the reviews before installing one.
01. Appstle Subscriptions
One of the most comprehensive subscription solutions for Shopify stores, Appstle enables you to offer products and services to customers on a recurring basis, using different types of subscription models (as stated above).
Their features include subscription build-a-box, subscription upsell, one-time product inclusions, multiple and tiered customer discounts, inventory forecasting, custom shipping, and more. It also comes with additional features such as mixed cart checkout and product swapping, to enable easy shopping for your customers. Moreover, Appstle provides 24x7x365 product support, which has been coveted by merchants.
02. Subscriptions by ReCharge
Another app that comes with good subscription features, ReCharge lets you create personalized models for customers. The app comes with a number of integrations that help you share customer data across multiple Shopify apps for marketing.
It also comes with a feature that lets customers skip/ swap choices in their subscriptions, letting you evaluate product efficiency as well.
03. Bold subscriptions
Another app to set up Shopify recurring payments is Bold Subscriptions. Irrespective of which subscription model(s) you choose, the app lets you create them all, with an easy-to-use dashboard.
Its features also include custom cancellation flows and automating dunning management, to help you understand your customers and their changing needs of subscriptions, in a better manner.
04. Subscription & Recurring Order by SpurIT UAB
SputIT is another subscription app that lets you set up Shopify recurring payments with ease. It comes with features such as auto-charging subscriptions that are fully integrated with the checkout and compliant with taxes.
The good thing about Subscription & Recurring Order is that it offers flexible subscription rules, that can be applied to a collection of products, or to the whole store, for a defined period of time, with a single click.
IV. How To Set Up Shopify Subscriptions
Appstle Subscriptions is a leading Shopify app that enables you to create, offer, and conveniently manage subscriptions or recurring orders, through your Shopify Store. It’s well integrated with PageFly and can be used by all PageFly customers smoothly, without any interruptions.
Once the Appstle Subscriptions app is installed in your store, the process to set up and configure the subscription options is just a few steps away! But before we go into discussing these steps in detail, you will need to make sure the following are checked and applicable:
- The products (for which you wish to offer subscriptions), are in an ACTIVE state from Shopify backend
- One of the following payment gateways is enabled – Shopify Payments or Paypal Express or Authorize.net or Shop Pay. Currently, these are the major payment gateways that Shopify supports, for subscriptions. If you are currently on a different payment gateway, and just want to test out subscriptions, you can enable the test mode for Shopify Payments.
Now, let us go into the detailed steps for subscription creation and management.
1. Setting up your first subscription plan:
- In your Shopify merchant dashboard, click on the option for Subscription Plans
- Click on Create Subscription Plan
- Name the subscription plan (we recommend giving it a functional name, for business ease) and Select the products that you want, to be a part of the subscription plan:
- Click on Save to save the subscription plan
- To go deeper into creating a subscription plan, please refer to this article
2. Configuring the widget:
To have the widget appear on your product pages, all you need to do is to configure the widget from your Shopify theme settings.
- In your Shopify Admin dashboard, go to Online Store
- In the Themes section, click on the Customize button
- Under the Theme Settings > App Embeds > enable the Appstle Subscription button
You’re all set! The widget will appear on your product’s page!
3. Customizing the widget:
Appstle allows its merchants to have complete control on how the widget looks. To customize your widget, visit the Appstle dashboard.
- Open Customizations > Widget Settings
- In the Widget Labels section, you can modify the text or the labels inside the widget (e.g. instead of ‘One Time Purchase’, you can use ‘One-off purchase’)
- Use the Widget Appearance section, to modify the feel and look of the widget, to best suit your store’s theme, style, and products
- If you are aware of the CSS for styling, you can also define your own customized CSS by going to Customizations > Custom CSS
V. Shopify Recurring Payment Best Practices
Setting up the subscription model or recurring payments in your Shopify store, is just the first step in boosting customer loyalty, retention, and wallet share. To be able to achieve these objectives end to end, you need to carefully build and nurture long-term relationships with your customers.
Below, we have highlighted some of the tried and tested methods, to build lasting customer relationships:
1. Streamline the billing process
First things first! The idea of implementing subscriptions is to make it ‘simpler’ for your customers to buy from you. One of the first things we recommend you do, to ensure this simplicity and convenience, is to completely streamline your billing process, irrespective of the type of subscription model you are using.
While streamlining the billing process is at its basic, setting up recurring and automated payments before deliveries, it also includes making it easy for customers to update their order delivery dates, modify/pause/cancel the subscription, update payment methods, etc.
2. Communicate proactively with customers
Even when a customer has subscribed to products in your store for regular deliveries, proactively communicate and engage with them, throughout their journey with your store. This begins right from the moment when they decide to subscribe to your products.
Start with thanking them for subscribing, later moving on to keeping them up to date with their recurring orders, such as informing them about upcoming delivery dates, payment processing of their credit or debit cards, etc.
Pro tip 1: Request feedback from customers, during ongoing subscriptions, to improve your customers’ experience, and predict when a customer is at the risk of churning.
Pro tip 2: Don’t forget to thank your customer every time you deliver a product as a part of a subscriptions order. Reinforce the value behind their purchase, to continually enjoy their loyalty!
3. Determine your own goals early on
Before you launch a subscription-based model on your store, make sure you know your ‘why’. Knowing what goals you want to achieve (e.g. revenue increase, profit maximization, market expansion) is important, and can be the key driving factor of several strategic and tactical decisions such as the subscription model you choose (regular versus box) and the discounts and payment terms you offer.
Choose a subscription app that will let you track the performance of your new model closely, and provide you insights on how you can make it better.
4. Offer flexibility on subscriptions
As a merchant trying to achieve strong retention, your goal is to get as many recurring orders or subscriptions as possible. However, consumer demands change with time. Shoppers may find a subscription useful today, but may want to alter or cancel it tomorrow. Either way, offering some degree of flexibility to them, will go a long way.
For example, offer within the customer portal, functionalities to enable your shoppers to change their delivery dates (upto a certain point), or swap a product or product variant with ease. You can always define the rules within which such flexibilities can occur. For example, if your store sells keurig coffee cups subscriptions, allowing your customers to change the flavor every now and then, will let them try new flavors, without disrupting the existing subscription order.
Pro tip: Always have clear policies documented and shared with your customers, so that they know what commitment they’re getting into.
5. Don’t overwhelm customers with choices
There are a number of subscription models that you can set up to receive Shopify recurring payments. While it’s great to experiment, it is also important to not overwhelm your store visitors with too many choices.
At any given time, do not have more than two types of subscription models available on your store. Focus on growing the model, understanding how consumers interact with it, and get feedback before you implement another model, or make changes.
This will help you keep your efforts streamlined as well!
Overall, the subscriptions or recurring revenue business model is a great way for you to establish your brand and products in the lives of customers, in a long-lasting way. If done right, it can bring down sales frictions to ‘0’ and increase conversion to ‘100%’.
Both Shopify and PageFly are very ‘subscriptions model’ friendly, and offer a great list of apps and partnerships, respectively, to kick off subscriptions or recurring orders in your store. So, what’s the wait? Test out the model today!