Increasing Shopify Subscription Revenue While Reducing Churned Subscribers

Getting set up with a Shopify subscription app is the easy part. The hard part: Retaining those customers while you grow your e-commerce business.

To increase Shopify subscription revenue, you need two things:

  1. Steady growth for incoming subscriptions, and
  2. Reduced customer churn

If you can reduce churn (the rate at which a company loses its subscribers or customers due to cancellations and cart abandonment) and grow your Shopify subscription business, you’ll increase the average lifetime value of your customers—which leads to all sorts of great things like higher ROI for every marketing dollar, more brand loyalty, and more confidence in your future growth.

But being set up with a Shopify subscription app isn’t enough. How can you send targeted messages to customers who abandon carts? How can you make sure they don’t drop your service? What are the best ways to increase your brand loyalty? 

We’re going to answer all of those questions.

The Growth of E-commerce Subscriptions on Shopify

E-commerce subscription sales are nothing new, but over the last decade we’ve seen a mass shift around e-commerce and subscription-based products. 

Between the years of 2011 and 2016, McKinsey data shows the largest e-commerce subscription retailers grew about 100% per year, going from $57 million in sales in 2011 to $2.6 billion in 2016. This growth is even more prevalent within the Shopify subscription landscape: They’ve reported seeing a 4,461% increase in e-commerce subscription sales over the same period.

Subscription Apps on Shopify

Subscription apps that integrate with Shopify were the first ways e-commerce retailers could sell subscription products to online customers.

  • Recharge Payments started in 2013 as three people in an apartment developing under the name of Bootstrap Heroes. Today, they help over 10,000 Shopify businesses grow and thrive through e-commerce subscription sales. It’s free for businesses currently doing under $100,000 in transactions and essentially serves as an “out-of-the-box” solution for any Shopify store that wants to start selling e-commerce subscriptions.
  • Bold Subscriptions later came onto the Shopify app store as a subscription payment processing tool, and today it’s trusted by over 11,000 stores, including some of the biggest subscription retailers on Shopify Plus. Bold has two different pricing tiers and can be up and running on a Shopify store within 24 hours. 

Shopify has also grown as a platform for subscriptions. Shopify announced at Unite 2019 that it would implement a feature for enabling subscriptions at Shopify checkout (yet to be released, but on the horizon.) At Unite 2020, they shared this update:

“We're continuing to work on this in collaboration with select partners. We’re being exceptionally careful with any changes to checkout—including subscriptions—to ensure that conversion rates stay high for merchants. You can expect to see more improvements coming to checkout soon, including subscriptions and upsell functionality.”

This could displace the need for apps or complicated integrations for managing subscription billing and has the potential to make launching subscription offerings easier for businesses across the board.

This is great progress, but keep in mind: Shopify subscription apps won’t mean much unless you can grow your e-commerce subscriber base (and retain your current customers.)

Impact of E-commerce Subscriptions on Churn Reduction

We know why consumers like e-commerce subscriptions. With some products, it doesn’t make sense to place manual orders every month. They can set their own delivery frequencies and get products delivered to them consistently.

But what are the benefits of e-commerce subscriptions for a Shopify seller? Churn reduction and recurring revenue.

According to data from Recurly, the overall monthly e-commerce subscription churn rate is 5.6%, with a higher rate of 7% for direct-to-consumer businesses. 

Reducing churn helps you prevent lost subscription revenue. It also serves as an indicator of long-term success: If you can reduce churn, then every customer you acquire is more likely to sustain their lifetime value (LTV). And the longer you maintain customers, the lower your average cost of customer acquisition (CAC) will be. 

With reduced churn, every marketing dollar you spend will stretch that much further.

Ways to Increase E-commerce Subscription Revenue & Reduce Churn on Shopify

The goal is simple: Increasing revenue while reducing the likelihood that your subscription customers churn.

But how do you achieve this in practical terms? Implement personalized SMS campaigns. SMS messages have some of the highest open rates: Around 98% are opened and 90% will be read within just three minutes. 

How to use personalized SMS campaigns with Shopify subscription apps

Recover abandoned carts. 

LiveRecover integrates with Shopify apps like Carthook and Zipify to help you recover as many as 20% of subscribers’ abandoned carts through the use of targeted SMS that’s manned by real people (not automation.) Using the LiveRecover and CartHook integration, setting this up takes just four simple steps. You can also accomplish this with the LiveRecover and Zipify integration.

Share offers for subscription reactivations. 

If the subscriber says that price is an issue, consider incentivizing them to keep their subscription with a discount offer (say, 20% off) if they agree to extend their subscriptions by another quarter. With the ReCharge and LiveRecover integration, you can do this with ease.

Other options: Add on a free product, extend their free trial period, or upgrade them to the next tier at their current pricing plan. All of these, shared via SMS campaigns, can extend the lifetime value of the customer.

Other ways to use SMS campaigns to reduce churn of Shopify subscriptions

Have conversations with customers. 

Learn why they decided to cancel and get key insights into sources of churn (like pricing, frequency of shipping/delivery, product usage, and more.) You can then use this feedback to fine-tune your subscriptions on Shopify and to address common customer issues.

Create special offers or add-on items for long-term subscribers. 

Reward your loyal subscribers on Shopify. Statistics show that customers value loyalty-based rewards, with 75% of customers saying they’re more likely to make an additional purchase if there’s added incentive. With an SMS campaign that promotes perks for your most loyal subscription customers on Shopify, you can make them feel like a VIP (and increase their LTV.)

BeanBox is one e-commerce brand that’s used loyalty rewards to great effect. How? By incentivizing subscription customers with a 20% discount if they sign up for a subscription package that’s six months long (as opposed to monthly.) This offer could be shared with monthly subscribers over SMS to incentivize them to opt for the longer-term subscription.

Boost E-commerce Subscription Revenue on Shopify & Reduce Churn

You can reduce churn by following up with abandoned carts and reaching out to customers with human SMS campaigns that target their specific needs. If you can incentivize loyalty, offer discounts to decrease churn, and engage with your customers before they leave, you’ll have a much more robust LTV for every customer.

But campaigns like this don’t happen by accident. It’s up to you to integrate the capabilities with LiveRecover and keep your loyal subscribers around. Try LiveRecover to see for yourself just how effective text message marketing can be for your Shopify subscription service.

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