What Every Merchant Should Know Before Selling Subscriptions


May 5, 2023

Although selling subscriptions is becoming increasingly popular, many merchants struggle to get started. Follow these tips to hit the ground running with your subscription program.

Merchant at his laptop to indicate selling subscriptions online.

With 24% of consumers using at least one retail subscription service, subscription shopping is quickly becoming the norm. As consumers become more interested in subscription shopping, they’re on the hunt for flexible and innovative ways to get their products.

The subscription model isn’t just convenient for shoppers, it’s also a great opportunity for merchants to earn predictable revenue and gain insight on customer buying habits from their subscribers.

However, while selling subscriptions is a great way to build your brand, there are several important steps to take before launching a program. We’ve included a few essential tips for launching a successful subscription program below.

Launching a subscription program

Create an Internal Subscription Game Plan

When deciding which products to sell as part of a subscription, think about which items have sold successfully in the past and which items customers need to be regularly replenished. Could they be incorporated into a subscription program and sold on a recurring basis? If you think this successful product may perform well in a subscription model, start out with that item then add more products later. It’s better to start small and scale.

Your internal plan should also detail the type of subscription you want to offer, such as 30-, 60- or 90-day subscriptions, seasonal subscriptions or something more unique. To ensure total transparency, make sure to disclose all details of the subscription including which products are available in the program, how much it will cost and how often the customer will be billed. More than 80% of consumers value clear information about charges, according to our September 2022 Subscription Commerce Conversion Index.

Some subscription services offer customers the choice of how often they want products shipped to them, while others don’t allow for the same flexibility. Either way, make certain that all members of your business know exactly what you’re selling so your team can deliver on the offer and keep customers happy.

Apply for New Merchant IDs

If you’re already selling one-time products, you likely have merchant identification numbers, or MIDs, that were only created to process one-time payments. When you start selling subscriptions, you’ll need to apply for a new MID that’s specifically for processing recurring transactions.

If you decide to forgo this step and attempt to sell subscriptions through your old MIDs, you’ll likely be flagged for suspicious activity due to recurring charges or more frequent chargebacks. This could lead to your MID being shut down.

To avoid unnecessary complications, make sure to apply for a new MID with a provider that’s aware of your subscription initiatives so you won’t be flagged for occasional chargebacks and other common occurrences specific to subscription commerce.

Anticipate Shipping and Fulfillment Needs

As your subscription program grows, your fulfillment operations will either make or break the business. To prepare your business for a successful future, make sure you’ve covered all the bases in the fulfillment process. This includes anticipating the costs of shipping, labor and supplies.

Today’s consumers often expect free shipping and can be hesitant to buy a product or subscription if it includes a transit fee. It may be worth it to offer free shipping or other deals to keep customers engaged. In fact, more than 86% of top-performing merchants offer free shipping, according to our April 2023 Subscription Commerce Readiness Report. Remember, customer loyalty is one of the most important factors in subscription commerce.

Most importantly, ensure your customers know the true amount of time fulfillment will take so you can give them realistic expectations for shipping. Not only do you need to allot time for manufacturing and packaging, but sourcing materials can take weeks or even months. The pandemic exposed issues in many supply chains and left manufacturers scrambling to source materials at a normal rate.

“[The customers] don’t think about where these ingredients, parts or raw materials are sourced,” explains client Emma Rainville of Shockwave Solutions. “You have to think about what’s going on in the countries where you are sourcing the materials.”

Subscribers expect their products to arrive in a timely manner — failing to fulfill orders on time could shorten customer lifetime value and hurt future sales.

Migrate or Integrate to a Recurring Billing Platform

Your current ecommerce platform might be great for selling one-time purchases, but you need a recurring billing platform to sell products on a continuous basis. Luckily, merchants can easily integrate a subscription application with their current ecommerce platform. Another option is to simply migrate to a recurring billing platform.

In order to make data-driven decisions and better understand your customers, you’ll need a platform with advanced analytics to track sales, churn and other important factors for maintaining customer relationships. When equipped with the right data, it’s much easier to avoid common challenges related to recurring billing, such as outdated payment methods or fraudulent charges.

Having the right set of tools to handle complex subscription needs will keep your business running smoothly and your sales growing quickly.

Keep Convenience in Mind

When it comes to online shopping, convenience is king. Selling subscriptions is all about offering customers the flexibility to shop around their schedules. The more flexible a subscription experience, the more likely customers are to stay subscribed.

Be creative with offering convenient solutions for customers’ needs, such as subscribe-and-save models and other options for flexibility. If customers don’t feel like they’re trapped in a contract, they’re more likely to stick around for the long haul.

Today, many customers enjoy the ability to self-manage their subscriptions through an online portal. This allows customers the ability to pause, change the frequency or change the components of their subscriptions starting from Day 1. These capabilities can extend customer lifetime value and save your customer service teams time and resources.

Entice Potential Customers

While you may have the best product on the market, consumers likely won’t be interested in your subscription service without some type of promotion. Drum up excitement about your offerings by allowing free trials, discount pricing and rewards for subscribing.

Although free trials don’t generate revenue right away, they extend customer lifetime value by weeding out short-term subscribers and attracting quality prospects.

If you decide to offer exclusive deals for new customers, promoting through online marketing campaigns will attract a large pool of people who could potentially be interested in your business. The average subscription consumer uses four retail subscriptions per month and is always looking for more convenient ways to get their products. You can gain loyal subscribers by targeting these consumers who are already using subscription programs.

Test to Learn and Grow

It may be easy to go into autopilot mode after setting up your subscription campaigns, but you can navigate a path to greater success by actively analyzing data.

A successful subscription model relies on customer loyalty, which means you should pay attention to customer lifetime value, churn rates and other metrics that gauge retention levels.

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Keeping this data in mind, you can adjust accordingly with pricing, promotions, bundles and other factors to keep customer loyalty and subscription revenue at an all-time high.

Take the next step to launching a subscription program. Read our guide to starting and growing a successful subscription business and keep your customers coming back.

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