The subscription box industry has been flourishing, and it's likely that this trend will continue. But, what’s really in store for subscription boxes as the year progresses?

The Facts About Subscription Box Services

Subscription businesses have grown by about 100% every year. Sales in 2016 were $2.6 billion, which was a huge increase from $57 million in 2011.

In February 2018, there were about 7,000 subscription box companies globally, with about 70% of these in the United States alone.

The Global Research and Advisory Company - Gartner, found that by 2023, 75% of all companies that sell directly to consumers will offer some type of subscription-based service.

Entertainment is one of the most dominant aspects of subscription services, with streaming subscriptions at an all-time high, with 55% of homes in the U.S. spending $2.1 billion a month on streaming services.

American businesses with decent loyalty marketing programs grow revenues 2.5 times faster than others in their industry. They produce 100-400% higher returns to shareholders.

Customer retention is a strategy to keep your customers loyal to your brand so they continue spending their cash with you over their lifetime. Offering a decent loyalty program is an approach to enhance customer loyalty.

Globally, 96% of consumers say customer service is a significant factor in their selection of loyalty to a brand. Poor customer service and customer experience is something that must end in a company.

The Origin Of Subscription Box Services And Subscription Box Trends

The subscription box industry started to attract publicity in 2010 with companies such as Birchbox, Ipsy, and Dollar Shave Club leading the pack. Those who wanted a slice of the subscription box pie joined afterward from 2011.

Here are the trends:

1. Quality Will Prevail Over Quantity

Data demonstrates that sometimes when it comes to subscription box services, less is better often.

This could turn some people off if subscription boxes are filled with too many items. The choice can confuse them, and then, instead of choosing what they want, they'll just feel like getting rid of the entire subscription package.

While subscription boxes for indecisive people can be fine, too many items can have a negative impact. This is where it falls into personalization.

Subscription firms, such as Dollar Shave Club, have got quality over quantity right. At good prices, they have a limited number of high-quality choices, so the customer can customize according to their preferences easily.

2. Personal Recommendations and Reviews are Must-Haves

McKinsey found that word-of-mouth recommendations and great online reviews encourage new customers to sign up for subscription services. This is particularly the case for the form of subscription box services for curation and access. Be sure to have a presence on social media so that after posting a review, consumers can tag your brand.

Reviews also assist with customer satisfaction and brand loyalty, in addition to attracting new customers. For instance, HelloFresh invites subscribers to rate their star meals and leave feedback as well. For product creation as well as delivering customized meals, this form of input is invaluable.

3. Experience Continues To Rule

Thinking Inside The Subscription Box is a study by McKinsey. This research reveals that customers want excellent end-to-end experiences and are only willing to commit to subscription boxes where tangible advantages, such as reduced prices and personalization, are provided through their recurring payment.

For each brand, the precise concept of a great experience would be different. This is why you need to consider the particular expectations and needs of your customers.

You should engage with your clients in real-time to achieve this. To ensure that they deliver long-term value, you need to make use of feedback and data to customize your subscription items.

If there's a generation that cares above all for experiences, they're millennials. Unfortunately, they are known as the generation of 'ME ME ME ME' and all of them are about preferring experiences over goods.

Therefore, as opposed to only giving consumers more things, the best subscription boxes for 2020 will be the ones that help satisfy a real need.

4. Niche Products Will Continue to Reign

Niche products such as coffee, milk kits, tea, etc. are leading the subscription box market. Some 20 percent of the overall market is made up of these niche products. People are often attracted to boxes that appeal to their hobbies by subscription. Around 15% of the market accounts for these hobby-based subscription boxes.

Niche products such as coffee, milk kits, tea, etc. are leading the subscription box market. Some 20% of the overall market is made up of these niche products. People are often attracted to subscription boxes that appeal to their hobbies. Around 15% of the market accounts for these hobby-based subscription boxes.

5. Men Will Take Out More Subscriptions

The McKinsey study found that subscribers are typically between 25 and 44 years of age with incomes of between $50,000 and $100,000. Women constitute more than 60 percent of subscribers and males constitute 42% of subscribers, they also found.

However, 42% of male subscribers are more likely to have three or more active subscriptions, compared with 28% of female subscribers.

The most popular male subscriber boxes include:

• Dollar Shave Club
• Harry's
• Bark Box

As this comes with less liability, this may mean that men prefer the ease of automatic recurring payments. To suit this 2020 pattern, both male and female customers should be drawn to your subscription box.

This pattern of more than two or three subscriptions for male subscribers is not reserved for the U.S. market alone.

There is great potential for growth in the male grooming subscription box market, according to a report by the UK's Royal Mail. They predict that by the year 2022, male grooming subscription boxes in the UK will rise to around 2 million subscribers. They also found that, compared to only 24.3% of females, 30.6% of males signed up for subscription box services.

Make sure to take a look at your repeat transactions and salesforce metrics or whatever CRM you use to store your customer base details.

6. Traditional Retailers will Continue to Venture into Subscription Boxes

The boom in delivery boxes by major retailers hasn't gone unnoticed. With beauty products subscription programs, Walmart and Target have agreed to plunge into the subscription box craze.

Amazon has also got in on the act and has around 18 different kinds of boxes for a subscription. Before they dip their toes in the sea, other big brick-and-mortar retailers are likely to try out the subscription box scene.

A good subscription box service for struggling brick-and-mortar retail companies will provide a lifeline. In this market, large retailers can become major players.

Although offering big discounts, they have the purchasing power to curate a broader range of items. They may also use their market share to acquire already popular subscription box businesses, just as Unilever acquired the Dollar Shave Club for $1 billion.

7. Artificial intelligence (AI) Will Play a Larger Role

Businesses with subscription boxes have a large amount of data at their fingertips. The companies that are going to thrive in this market are the ones that will use this knowledge to increase the power of personalization.

Custom-picked items no longer mean that human hands prefer them. Instead, through distinct touchpoints, artificial intelligence (AI)' knows' about the needs of a customer, such as what a customer holds and returns. For their fashion subscribers, Frank and Oak's Style Plan incorporates AI and stylists to select the best choices.

The AI pattern in subscription box companies is not only going to be limited to better product curation. This can extend to chatbots and intelligent cognitive videos and images. AI can improve the satisfaction of customers by using email marketing for e-commerce brands.

8. . Personalization Will Remain King

The McKinsey report found three different types of subscription boxes were earned the highest patronage:

1. Replenishment subscription boxes offer a steady supply of products. Billie (a female shaving company) and Dollar Shave for men are examples of this.
2. Curation boxes offer customized and personalized items based on what the consumer prefers – for example, Birchbox.
3. Access offers exclusive selections or discounts on products a consumer normally buys, such as The Farmer's Dog.

Curation boxes are the most prevalent category of subscription boxes. And immediately following is replenishment and then access.

A study by McKinsey reveals that 28% of respondents said that the most important aspect for them staying a subscriber of the boxes is the personalized customer experience. As a result, customers are very eager to cancel a subscription box that does not have a tailored experience. There should be no client who has to go through a poor experience.

In 2018, brands like StitchFix experienced a 25% rise in consumer acquisition to show that personalization is the way to go for subscription box services. Until signing up, they crafted a multimedia questionnaire along with lifestyle quizzes for clients.

This implies that they have a comprehensive knowledge of what their customers want and then tailor the subscription to these preferences.

Subscription box services, like Netflix, could take a leaf out of the book of general subscription services. According to the material their clients have watched already, they give recommendations. Netflix sends notification emails with messages such as "we have just added a movie you might like," based on viewing habits.

The key is to pay attention to paying people — both your new and existing customers. Analyze your customers’ comments and feedback and adjust their products in relation to their preferences. Pay attention to customer experience to maintain loyal customers.

9. There Will Be an Increase in Worldwide Expansion

A trend in the subscription box market model is that it provides opportunities to grow globally, according to the Royal Mail's survey. They find that some of their revenues abroad are made by nearly 90% of subscription firms.

U.S. brands have already entered the UK market with some success, including Birchbox, Harry's, and Dollar Shave Club. The UK subscription box, Graze, which provides nutritionist-approved snacks, earned over 150,000 U.S. customers in just three months when it was released in the U.S. in 2014, and when it comes to U.S. snacking, it continues to be a big player.

Given this international aspect, you should consider taking opportunities to extend into global markets.

10. Churn Rate Reduction Will Still Be a Challenge

McKinsey has also found that customers do not waste time canceling programs that they think do not live up to their promises or have a bad customer experience.

A bad experience may have been anything from:

• Being unhappy with their products and offer
• The customer can’t see the value
• Poor-quality products

Companies would have to constantly provide excellent value for money with their subscription boxes. If they don't, because of a bad encounter, their existing clients will be gone. Customer retention figures also suggest that consumers are more likely to change if the goods they purchase are not properly personalized, so products end up piling up in their homes.

As Churn continues to be one of the subscription box companies' key obstacles in 2020, it is up to companies to keep repeat customers engaged in various ways. They need to think about new ways to diversify their services beyond the 'subscription box' and also cater to the needs of customers to create meaningful experiences.

The consequences of churn may be disastrous. Even a small percentage of churn can have very detrimental effects on the bottom line of a company.

Customers and interaction will minimize turnover and provide ideas to make their customers part of the brand, such as sharing content. A shaving subscription box company called Cornerstone, for instance, produces a 15-minute male lifestyle magazine and has confirmed that this added value has decreased customer churn and improved brand loyalty.

The Solution to Subscription Box Churn: Chargezen

As consumer churn continues to be a burning concern, companies need to step further beyond the software dunning form of subscription boxes. You should consider working with specialists who understand the psychology of subscribers and have a full-time emphasis on maintaining clients and restoring lost payments as part of the consumer churn strategy.

This is where Chargezen comes into play. Their expertise is to make the most of technology and to improve your subscription company with the power of human empathy. They collaborate with subscription-based company owners to work out the true cost of customer churn first and, more importantly, to recover and re-engage payments and customers.

The organizations we represent have been on the receiving end and have seen countless clients re-engaged, repurchased, and re-enjoyed.

If your goal is to be the consumer's favorite subscription box of choice, to save your missed payments, and keep your current customers, Chargezen can help make these realities.

To explore how we can partner to make this year your most successful yet, book a free talk, hit the Get Started link below, or write me at success@trychargezen.com.