Using Subscription Commerce to Retain High-Value Customers

According to the Internet Advertising Bureau, global companies will spend $69 billion on online marketing this year. That number will reach $100 billion by 2014. These billions of dollars are spent for one goal: to acquire new customers. From paid search, display and video to email, social marketing and website optimization, online marketing has become a key business driver for almost every industry worldwide.

Retailers, in particular, spend billions on customer acquisition but then spend very little time or money on the next step: getting customers to stick around. Most retailers have become extremely adept at getting their messages and promotions in front of prospects. But even when they succeed in acquiring a new customer, that person usually only makes up to two purchases per year. That equates to billions of dollars spent for very little long-term value.

What if there was a way to turn newly acquired customers into loyal brand enthusiasts who return to make up to six purchases a year? Wouldn’t most retailers want to deploy such a tactic?

Well, there's a method that works to “lock in” high-value customers: subscription commerce. Retailers ranging from Amazon to Sally Beauty Supply are already deploying subscription commerce programs to improve customer retention, boost repeat purchases and deliver a superior customer experience. The trend is even growing to encompass retailers like high-end tea supplier Teavana and office supplies upstart ReStockIt.com.

Here's an example of how subscription commerce works: A consumer arrives on your site either through direct navigation, organic search or a paid ad. The person makes a purchase of diapers, baby formula and a new stroller. This is when a subscription commerce platform kicks in. The site automatically offers the customer the chance to sign up for a subscription for repeat purchases, in this case diapers and baby formula.