According to McKinsey, the subscription e-commerce market grew at a rate of 100% a year between 2013 to 2018, and now generates billions of dollars in annual sales.
Some e-commerce companies focus on customer acquisition at the expense of all else. By that I mean they’ll spend lavishly to get a customer enrolled in their program, but scrimp on the interactions that are needed to keep that customer satisfied with the service they are subscribing to. What we find most fascinating is that, when companies look closely at how often these customer interactions happen, they find that they are infrequent enough to warrant the higher cost of better delivery.
Offering poor service at these infrequent touchpoints with customers can be shortsighted for the following reasons:
First, certain markets have a limited number of potential customers. Churning through these valuable customers by hollow retention strategies is a bad use of financial resources if the marketing budget could be put to better use and spread out along the customer journey.
Second, customers who complain and are satisfied with the response have been shown to be 30% more loyal than a customer who hasn’t complained of an issue (See Chapter 1 of ‘Strategic Customer Service’ by John Goodman).
Third, positive word of mouth has been proven to be a very cost-effective form of marketing. And, conversely, negative word of mouth can make a potential customer more skeptical to subscribe to services.
According to McKinsey, customers of these services ‘expect great experiences, not great subscriptions.’ These customers can also be quick to cancel services if they don’t get good customer service when they need it.