How to retain customers during the [.blue]Great Unsubscribe[.blue]

May 13, 2022

min read

In 2020, Barclaycard dubbed Britain “a nation of super subscribers”, with two-thirds of UK homes signed up to some form of subscription service. Now, however, it seems many of us can’t keep up with our subscription products and services.

After hitting 7% in March this year, inflation is predicted to rise further still following a record increase in fuel prices and energy bills, hiked up by the conflict in Ukraine. This means that the cost of everything from transport to food is soaring – an estimated one in seven adults in the UK cannot afford to eat every day due to the financial squeeze. 

It's no surprise that families have been forced to make cuts where they can, which includes subscription spending. The height of the COVID-19 pandemic and subsequent lockdowns saw surges in subscriptions for platforms such as Netflix, Disney+ and Amazon Prime. However, research from Kantar has found that 1.51 million contracts for streaming services were cancelled in the first quarter of 2022. The 38% of consumers planning to cancel subscriptions stated that the primary reason was “wanting to save money”.

The ring of the doorbell signalling yet another delivery is proof enough that it wasn’t just streaming services that we were keen to put on a monthly tab. The pandemic also had us reaching for our wallets to get our hands on regular subscription boxes filled with products ranging from food, supplements and alcohol, to cosmetics, flowers and fashion.  

Although the purse strings of many UK households are tightening under the cost-of-living crisis, our love affair with subscriptions for physical products doesn’t seem like it will abate any time soon. In fact, physical product subscriptions still account for 45% of the collected global subscription economy and is predicted to be among the areas of the sector that grow the most in the next five years.  

Indeed, Royal Mail predicts the subscription box market for the UK alone will be worth £1.8 billion by 2025. This is a lucrative opportunity for many eCommerce businesses to cash in on but under a climate of increasing economic pressures and instability, how do subscription-based retailers continue to attract and – more importantly – retain their customers?

What is a subscription box?

Put simply, a subscription box contains a group of physical products that are delivered to customers on a regular, recurring basis. Subscription boxes are often curated, niche-orientated, and designed to offer additional value to the customer beyond the actual products they contain by creating an enjoyable unboxing experience. There are many different types of subscription boxes available but the most popular contain products like food and drink, cosmetics, pet supplies, books, and clothes.

Overcoming the churn challenge

If you own a subscription eCommerce business, then you already know why subscription boxes are so popular: they offer a convenient, personalised, and often lower-cost way for shoppers to buy what they want and need on a recurring schedule. This model turns one-time shoppers into repeat and – if done well – lifelong customers that ensure predictable monthly revenue, enabling your business to accurately forecast for future growth and scale.

Although the subscription box business model can be incredibly lucrative, it is associated with high churn – the rate at which you lose subscribers, which ultimately impacts your bottom line. “Churnover” can be high for your business if the market you are serving is oversaturated, or if your subscription box fails to be of the same high-quality, value-for-money product as those of competitors. An economic slump that forces subscribers to rethink their spending can also influence churnover. 

You can use the following formula to calculate your churn rate and see how you compare to the market average: 

Customers lost over the month / Number of customers at the start of the month x 100 

For example, if you had 500 customers at the start of the month and lost 25 throughout the duration of the month, your subscriber churn rate would be 5%. 

In the early stages of launching a subscription box, businesses typically prioritise acquisition in order to generate sales. However, once the ball is rolling, this is the time to switch tactics and focus on customer retention. Remember, acquiring a new customer costs five to 25 times more than retaining an existing one, so it makes the most commercial sense to invest in initiatives that keep subscribers engaged.

1. Deliver continued value

Many customers that invest in a subscription box want to be delighted and surprised each month, indulging in a gift-like experience every time they open a box. Book subscription boxes, for example, often deliver continued value for subscribers because the customer typically receives a new surprise book to read each month, which maintains the curiosity and excitement.

Even in the case of replenishment subscriptions for essential items like food and toiletries (which tend to have high customer retention rates), it’s important to keep subscribers excited with each box. This could be as simple as including a gift, small samples for new and upcoming products, or marketing inserts like tips and tricks guides to help customers get the most out of your products.

2. Personalise the experience

Consumers ultimately want products and services that are specifically tailored to them. Of the subscribers surveyed by McKinsey, 28% said that a personalised experience was the most important reason for continuing to subscribe. If you aren’t already incorporating personalisation into your subscription boxes, there’s no doubt you are at risk of losing subscribers to competitors that can make them feel like one-in-a-million.   

Personalisation doesn’t have to be complicated. Depending on the nature of your subscription box, you could start by offering your subscribers more choice of products. For example, the total replacement diet brand, Habitual, enables its customers to tailor their monthly subscription box according to the products and flavours they like. Habitual’s product range includes tasty soups, porridges, and shakes designed to support healthy weight loss. 

3. Offer multiple purchase options

Speaking of options, consider granting customers the ability to choose between subscriptions suited for different budgets. Customers are likely to choose a more affordable option than cancelling their subscription outright due to financial strain. Let’s say your current subscription box costs £40. You may wish to offer an alternative that costs half that and contains fewer items. 

Each box can include different products, but they should be of the same high-quality to avoid making your subscribers feel as though they are missing out with your regular subscription box. Then it’s a case of marketing your purchase options. Who knows? Subscribers that opt for a lower-cost box now may choose to invest in a premium option if their financial position improves in the future.

4. Reward customer loyalty

Customers work hard for the money that they pay into subscription boxes, so it’s reasonable that they want to receive maximum return on their investment. One way to strengthen the value of your subscription box is to offer rewards, which can go a long way to promoting brand loyalty, improving retention, and even driving new customers to your business. 

Rewards can come in the form of including a gift inside a customer’s subscription box if they leave a positive review online. Moreover, you could offer discounts to subscribers and those that they refer, which is a win-win for all. You could also provide subscribers the chance to earn free products when they have been subscribed to your business for a certain amount of time.

5. Maintain high standards

Competition within the subscription box market is fierce. Make no mistake that customers won’t be afraid to switch to a different subscription box service if you are failing to deliver on their demands and expectations. That’s why it’s crucial to maintain high standards across your business – from the products in your subscription box, to next-day delivery and customer service.

By outsourcing your subscription box fulfilment to Zendbox, you can ensure subscribers receive the right products at the right time every month. With a 99.999% order accuracy rate, Zendbox will collaborate with you to pick and pack your subscription boxes exactly as desired, presenting your products in a way that showcases your brand in the best light, before they are shipped on an ultra-fast courier service.

Adapt to subscribe 

Like many other industries, the COVID-19 pandemic was a game-changer for eCommerce subscriptions. As soon as consumers experienced the convenience, curation, and cost-savings of the best subscription boxes, many couldn’t go back. There is still plenty of scope for other businesses to step into the world of subscriptions, grow their customer base, and enhance their earning potential. 

However, the future of the subscription model remains uncertain in the face of a global economic recession, making it more important than ever for subscription-based retailers to adapt their offering in order to survive. Curating a subscription box with little thought to what subscribers want and expect will do little to promote repeat business. Retailers must be proactive and go that extra mile if they are to retain loyal, lifelong subscribers.

For more information on how Zendbox can help you deliver an exciting experience with every unboxing of your subscription products, get in touch today.

Micah George
Marketing Specialist at Zendbox

Micah assists in developing and implementing innovative marketing campaigns that promote the products and services at Zendbox. She also produces articles, eBooks and other useful resources to help online retailers optimise their eCommerce operations and grow their business.

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