How subscriptions drive LTV (and are an essential growth strategy)

There are a handful of strategies your Shopify brand can employ to bring customers back to your store—but one rises to the top. Subscriptions. That's because subscriptions drive LTV.

Customer loyalty is a long game. Get your strategy dialed in ASAP and reap the rewards of repeat customers. 

You've probably poured resources into customer acquisition (and I bet you already know a measly 15% of customers tend to return to your store, ouch). I also bet you brought in a record number of new customers over the holidays. Maybe you're selling a seasonal product and need to get creative about cash flow. Now I'm not typically a betting woman—but I bet "personalize our marketing" appears on at least 1 list of goals for 2022.

Subscriptions are the most strategic way to maximize the lifetime value of the customers you already have—with data you already collected. 

Saddle up. We're taking a deep dive into the revenue-rocketing, AOV-boosting, supply chain-defying world of Shopify subscriptions. We'll cover:

CartHook Post Purchase Offer

Why repeat customers are essential to ecommerce brands

If your business needed to increase revenue—fast, how would you do it? I'd suggest focusing on your existing customers. 

Focus your marketing efforts on your greatest potential (existing customers)

Repeat customers spend 300% more and are easier to sell to. They already know your brand, so you can skip the chit chat.

When marketing to a prospective customer, you have a 13% chance of getting them to checkout. When marketing to a repeat customer? That number climbs closer to 70%.

Focus your marketing dollars on your highest potential ROI

It costs more to acquire a new customer than retain an existing one. Investment in customer service and loyalty programs keep customers happy, and increase their lifetime value. 

One sign of a healthy business? A low churn rate. 

Strategies to help drive repeat customers? An airtight post-purchase email flow is essential—as is excellent customer service. Be sure to collect (and implement) customer feedback, and engage with your audience. I also love a loyalty program (that's actually designed for loyal customers). Brand ambassadors can also help virality and build community.

Repeat customers drive recurring revenue

What's the benefit of predictable MRR? Knowing your financial baseline will let your brand make better projections, and offset financial risks. Also, knowing your customer's order weeks ahead of shipping deadlines helps to get ahead of that pesky supply chain. Predicting demand is going to lift a giant weight off your operations team's shoulder. 

Savvy brands find a way to turn a 1-time purchase into a recurring one. (Even NPR has a subscription coffee club that supports their radio show.)

Repeat customers increase your Customer Lifetime Value (LTV)

At CartHook, we spend a lot of time focused on AOV—but LTV is an equally crucial metric to watch. Where AOV looks at individual orders, LTV measures for your customer's repeat orders and signifies the overall health of your brand. 

Want to keep churn down, MRR high, and marketing dollars focused? Offer subscriptions.

"We are seeing extraordinary growth in subscription eCommerce, with more and more merchants taking advantage of subscriptions to lock in predictable revenue and grow customer loyalty." —Carmen Spitz, Product Lead for Subscriptions, Shopify

How subscriptions drive LTV for most ecommerce verticals 

Subscriptions are a slam dunk, no-brainer for brands in the consumable, health, and beauty spaces.

1. Dollar Shave Club: This brand helped to build the subscription mold. Note the way it's positioned: Always a "club" never a "subscription." A quiz gives customers the impression of personalization.

Dollar Shave Club

2. Bev: Positioned as,"Not your momma's wine club," Bev's subscription program boasts serious perks (20% off and free shipping), plus sneak peeks for members.

Bev Wine Club

3. FabFitFun: This brand sends subscribers 6-8 lifestyle items each season, worth up to $300 in value—though membership only costs about $50/box. FabFitFun manages to remove "sticker shock" prices from individual products, and lowers the barrier to access luxury lifestyle items. 

Fab Fit Fun Box

Other vertices might need to flex more creativity to hit the home run. (Hey, if NPR can do it . . .) 

3 creative subscription strategies:

1. Offer a subscription as a post-purchase cross-sell. Did ya get that? 

Here's an example: Say your company sells hot water kettles. Using CartHook and your preferred subscription app, you could offer a coffee subscription as a post-purchase upsell. Come for the kettle, stay for the membership. 

Or, flip it the other way. If your customer buys a butcher box subscription, offer them a one-time upsell of barbecue sauce! 

Shopify's unified checkout makes it simple to offer subscriptions and post-purchase upsells. Any subscription app (shoutout to our favorites, Recharge and Awtomatic) that's native to Shopify's checkout will allow you to offer subscriptions as post-purchase upsells. It's as easy as toggling the option on!

Toggle on CartHook subscription

2. Build a box. Turn a transaction into a longstanding relationship! Awtomatic's build-a-box feature personalizes a shopper's experience (and gives your customer the opportunity to try more of your products). Plus, subscribers can tweak their boxes between subscription deliveries—such a great way to drive brand engagement! 

Awtomatic subscription box

3. Subscribe and save. Skincare brand, Disco, bundles best sellers and complementary products into kits. My favorite part? Buying a bundle—with a subscription—saves 20%! That's a huge incentive to drive repeat business. 

One idea to level up Disco's subscription kits? Use CartHook's sophisticated funnel logic to offer a complimentary upsell. If a customer's cart doesn't include their best-selling eye stick, display it as a one-click post-purchase upsell (at a slight discount). 

Shop Disco kit

With CartHook, merchants can display up to two post-purchase offers. Using the example above, if a customer accepts the initial eye stick upsell, you could offer a toiletry bag as a second offer! 

"CartHook has increased our AOV by 24%. Every Shopify store should be using CartHook to increase AOV and LTV. Setting up a funnel takes five minutes and has easily been the most impactful change we've made to our Shopify store to drive revenue." — Benjamin Smith, Disco

How saavy Shopify brands offer a subscription as an added post-purchase upsell

Post-purchase offers are upsells or downsells that are presented directly after checkout, before your customer sees the Thank You page. Customers can accept or decline the upsell with 1 click. 

The post-purchase offer timing is essential to its success! There's no risk of cart abandonment (since your customer already completed the checkout), and the user experience is frictionless! There's no need to re-enter shipping or billing info.

Bonus? The offer is presented at a powerful moment: your customer trusted your brand enough to buy something and are excited about their purchase. Why not give them more (based on what they just purchased)?!

Most brands that implement CartHook Post Purchase Offers see a 10% increase in total revenue. When a post purchase subscription is offered? Revenue and LTV soar!

The Fit Father Project and Fit Mother Project use CartHook to deliver customized post-purchase upsells for a variety of funnels. 

"We recently kicked off our New Year's health & fitness sale where we are offering a $1 trial to our core Fit Father & Fit Mother health & weight loss programs to encourage as many new members as possible to join us," explains Dr. Anthony Balduzzi, founder of the Fit Father Project. "After our new customers purchase the $1 trial, we use CartHook Post Purchase Offers to give people the option to pre-pay in full for their trial and receive a free supplement for doing so. This exact upsell funnel has a 24.48% conversion rate, which has been a great boost to our business this new year!

For subscriptions, they pair CartHook with Recharge to offer subscription upsells to increase their Monthly Recurring Revenue (MRR). "Overall, Carhook has become a very valuable tool for running our Shopify-based ecommerce business."  

Rise New York's post-purchase subscription success

Just a month into using CartHook for post-purchase offers, Luca Washenko, co-founder of Rise New York, which sells flavored caffeine diffusers, says they're already seeing a 10-15% bump in revenue and a 10-15% increase in their AOV. And a lot of that has to do with offering subscriptions in the post-purchase space.

"Our product is a product that lends itself to subscriptions," he explains. "It's consumable, it lasts about a week, and it's very low price point."

They initially started with CartHook because their product lent itself to a low AOV. Because of the rising costs of Facebook advertising, combined with the iOS 14 update, Rise needed to find a way to maximize the value of every single customer who made a purchase. "That's why we brought in the post-purchase upsells," he says.

Luca says that when they discovered CartHook had a subscription feature, they decided to try something new: investing in the LTV of a customer, even if it meant decreasing the initial AOV.

"Say someone buys $30, $40, or $50 from you up front, but they never purchase again," he says. "That's much worse than if we're going to give them a 20% discount or free shipping to subscribe. Then we're retaining that customer for the next 3-6 months."

Plus, he says, their product lends itself to word of mouth. "During those 3-6 months, they're also telling their friends because our product is naturally viral, naturally sharable."

Once they saw their post-purchase offers were working, the Rise team added more. Now they're running about 15 post-purchase funnels with everything from cross-sells to subscriptions. They've seen success with offering the same quantity of the initial purchase in the same flavor. So a purchase of a three-pack of the flagship Pink Lemonade product would be followed by a discounted or subscription offer of the same flavor.

Use CartHook to offer post-purchase subscriptions in your Shopify store

Ready to reduce churn and build repeat customers (that love your brand)! Start your free 14-day trial of CartHook, and watch the video below to see how easy it is to add post-purchase upsells to your Shopify store.

For a step-by-step on how to add subscriptions as post-purchase offers, learn more in our Help Center.

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