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4 Good Reasons To Offer Discounts To Your Subscribers

By May 11, 2020 No Comments

Most ecommerce merchants know the value of offering discounts on their products and services – customers love a good sale!

And, research shows that when people receive a saving, they become happier and more relaxed.  Happy and relaxed is exactly how you want your customers to feel when they’re making the decision to purchase from you.

The same is true of your subscribers.

Why offering discounts to your subscribers works

The subscription model owes its success to the optimal balance of value it provides to both your business and the customer.

For customers, the value lies in the convenience of receiving products at a set price they can budget for – their purchase arrives like magic to their door before, or as they need it and they know exactly how much it is going to cost each week, month, or year.

For businesses, the value of a subscription model is the ability to predict revenue through recurring sales. And according to John Warrillow, creator of The Value Builder System, recurring revenue made through a subscription model, makes a business up to eight times more valuable than a business without subscribers. 

Which means, you can afford to offer discounts within your subscription model.

Now let’s look more closely at the benefits of discounting your products for subscribers…

More revenue & increased customer value

A subscription model in your business ‘locks’ a customer in over a longer period, which extends their value to your business, by increasing the revenue you receive from them. This in turn  reduces your costs, because the initial cost of acquiring the customer decreases with each subscription payment (known as customer acquisition cost – CAC).  This is what gives you the room to offer a discount to subscribers.

Gain Repeat Customers 

The discount offered to subscribers helps you turn a one-time customer into a repeat customer.   And according to research from Colloquy, a loyalty marketing firm, 55% of people subscribe to loyalty programs to get discounts on purchases. 

So as long as your product continues to meet your customer’s needs and you maintain customer service standards, there is no need for your subscriber to question their subscription fee each month.

A predictable supply of your product at a set price

If you sell a product that people rely on every day (pet food, coffee, wine, supplements, beauty products etc), a subscription offers a convenient supply of your product, so your subscribers never runs out.  This works very well for Kee Subscriptions customer Lucky Pet.  But it also offers them predictability in terms of price – they don’t have to wait for sales to stock up on what they need.  Instead they are always receiving their purchase at a discounted rate as they need it.

What’s in it for you?

You get the benefit of a Sale, without the heavy discounting that often comes with it.  Promotions tend to mean higher discounts to attract attention and new buyers.  The discount you offer subscribers can be lower than your sale discounts – as long as the subscriber feels rewarded for loyalty.

And the discount can come in forms other than discounted pricing – free shipping for example (shipping costs tend to decrease when you are shipping more product, on a more regular schedule).

Help Customers Choose Your Products Over Competitors

We know that discounts motivate buyers to try out new products and subscribe to offers on an on-going basis. And they can also help new customers choose your products over your competitors, giving you the opportunity to wow them with your products and customer service and retain their business over the longer period – so they never go looking for an alternative supplier.

Making discounts work for your subscription business

To enjoy the benefits of offering discounts to your subscribers, its important that you calculate the best discount to still make a profit.  This starts with knowing your numbers – your current profit margin, mark-up and break-even point.  You should also do your research and consider what your competitors are offering and review all options for rewarding your customers – for example discounts on expiring stock and free shipping.

To learn more about turning your one-time customers into repeat customers read our Guide To Subscription Model Types.

Katie

Author Katie

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