The 3 Biggest Challenges Subscription eCommerce Businesses Are Facing Today | BlueSnap

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The 3 Biggest Challenges Subscription eCommerce Businesses Are Facing Today

Written by: Aravind Ekanath

From apparel to palliative care, every industry is either exploring or thinking about subscription eCommerce. With TBRC forecasting subscription eCommerce will reach $904.28 billion by 2026, chances are, you already know it is a sound business model. It offers predictable revenue and helps you cultivate relationships with your most loyal customers. But without a strategy to keep your subscription business fresh and react to the market, this approach can soon lead to diminishing returns. Here are 3 challenges to watch out for and strategies to tackle them.

1. Subscription Fatigue

According to Simon-Kucher’s Global Streaming Study, subscription fatigue is growing. Over a third (35%) of the 12,000 surveyed say they are likely to unsubscribe from a service in the next 12 months to increase savings and have fewer subscriptions to manage.

With multiple competitors vying for consumers’ dwindling discretionary wallet, businesses that don’t deliver bespoke experiences are likely to be forgotten.

Which is why, businesses today must provide differentiated, memorable, enticing customer experiences by offering customers:

  • Flexibility: Make it easy for subscribers to add/remove products or even upgrade/downgrade their plans at any point in the billing cycle. Keep in mind that bills need to be prorated accordingly to avoid sticker shocks.
  • Churn Alternatives: Not all churned customers are unhappy. For some, today might just not be the best time for a subscription with your company. It could be something temporary like a vacation, or more significant like layoffs. Enabling pause, snooze and skip options as alternatives to cancellations go a long way in maintaining relationships even with fatigued customers.
  • Personalized Experiences: Invest in a better user experience by making every on-platform touchpoint personal. This means offering multilingual, multi-currency and multi-payment method support. Subscription management platforms like Chargebee can act as growth enablers for ready-to-scale businesses in this regard. When paired with BlueSnap’s Payment Orchestration Platform, businesses can accept 100+ currencies and 100+ payment methods across 200 geographies, and support local card acquiring in 47 countries.

2. Involuntary Churn

Some churn hurts more than others, primarily because it is easier to avoid. A Forrester study suggests, about 20% to 40% of your net churn rate is passive. These could be soft payment declines due to insufficient funds, expired cards and limit expiries, or hard payment declines, such as stolen or lost cards, invalid card data, etc.

Automated solutions offer smart dunning capabilities that customize payment retry frequency based on past transaction data patterns to achieve higher revenue recovery. For example, collagen brand and Chargebee client Vital Proteins took churn data seriously, and in turn, grew save rates by 2X while beating a tepid pandemic market.

3. Lack of Experimentation

While there’s no magic pill, having the right subscription management partner is often a fundamental requisite to deal with this evolutionary problem. In general, these tools can help – run A/B tests on subscription plan pricing, make your product roadmap fluid by supporting SKU addition and plan changes on your platform so you can offer wider range of products and flexibility to your subscribers. But, more importantly, provide clear analytics around subscription/retention metrics, ICP and growth.

If subscriptions are your breadwinners, choosing a partner over spending budget and bandwidth on building unscalable technology can help you generate better ROI .

Time Your Investments Right

To find success in a crowded market, forward-looking subscription eCommerce businesses that invest in the right tech, at the right time can not only overcome the challenges they face today but also build long-term leverage over competitors and incumbents.

Optimizing for better customer experiences, retention strategy, and a sustainable subscription process now will set you up for incremental success when the markets open up tomorrow.

Get a bird’s-eye-view of the efficiency of every new plan, feature launch, pricing experiment, and sweep customers off their feet with an eCommerce subscription management platform like Chargebee.

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Aravind Ekanath is a Content Marketer with Chargebee. He writes about retention, talks about existentialism, and doesn’t shut up about motorcycles.

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