Diapers by subscription or How to sell more to the same customers
When customer acquisition channels are clear, positioning is developed, the cost of a new customer is optimized, how can you increase the company's profit? One of the most effective ways that marketers undeservedly underestimate is the return path.
The purpose of the article is to tell in simple words about this possibility of obtaining additional profit.
What is the return path?
Return path (or return path) is a pre-sale to current customers of goods or services based on recurring payments. For marketing, it is an opportunity to make big profits by selling to existing customers. For the user - support after purchasing the main product or easy access to products that you need to buy all the time.
When does the return path work?
Examples:
How it works?
Let's look at the most popular products of the return path, which offer customers in addition to the main product:
A person acquires the main product, for example, a course on a healthy lifestyle. During this course, the client cultivates new habits - he goes in for sports several times a week, eats healthy food and drinks enough water. But after completing the course there is a great risk that he will return to the old way of life. The client is afraid of such an outcome, so he wants to receive support after the end of the course.
The marketer offers him the club “Healthy and happy”, in which regular meetings are held and members share their achievements. The club is paid by subscription, each month - $ 5. The company wins: they get a source of steady income, while spending money only on setting up a group and organizing several meetings a month. Moreover, customers who are in the club will be more susceptible to new health products from the same company.
Some products people have to buy periodically. For example, razors and blades, products for lenses, creams and shampoos.
From time to time the product either ends or expires. A person needs to spend his time again and make a purchase again. Among dozens of brands, he again must choose the best. Walking along the path of least resistance, people will tend to buy the same product if it came to them last time. Or a modified product, for example, a cream with a different smell or a razor with a different gel.
The task of the marketer is to provide a choice of such products and make re-purchase as simple and energy-consuming as possible.
Dollar Shave Club - an example of a subscription to the delivery of goods, which quickly ends. The company delivers razors and cosmetics for men by mail every month, so that the owner does not worry about the standard purchase and does not spend time on it.
The Alaska Water Delivery Company application reminds its users of water replenishment and offers to repeat the previous order with just a few clicks.
A subscription to listen to music Shopify makes it possible not to worry about buying new songs, a subscription to the Kindle allows you to read books marked with a special sign without payment. However, the user has the opportunity to buy books that are not marked with a symbol separately.
Such programs are called SaaS or software as a service, which implies paying for the application as a service on time.
Valuable information, tips and reviews that solve the user's problem will return it to the site many more times. For example, the knowledge academy from the Hubspot company, constantly returns clients of their product to the site. In the articles, they learn about new opportunities and trends in marketing and want to try them. To do this, they need to make an additional payment for the new product functionality and get the opportunity to apply their new marketing knowledge right away, using the company's main product.
Educational product marketers also often create subscriptions to new materials / courses.
My product is not like that! We have no regular customers
There are areas in which the product line is small, and the main product can be bought only once. For example, surgery and removal of tumors. For such products, you can also find offers for recurrent (permanent) payments. For example, it is a subscription to the survey every few months to monitor the state of health. The cost of such a subscription may be high, but lower than for customers who have not performed the operation. The company does not spend money on attracting a client and can reduce the cost of the service, thereby making the purchase profitable for the client.
Another example is the purchase of a “green” wall of plants that is difficult to care for. Re-sales may relate to the support of this wall: monthly removal of dead plants, replacing them with new ones, watering, fertilizer.
Even companies selling funeral services can expand their product line. In addition to the main product, they can offer care for the grave, or separately landscaping in the spring and cleaning in the autumn.
People who attend low-cost meetings with like-minded people from a brand are more loyal to its products. Promo of new products and services in such clubs will be a much greater response.
Why? First, people already know the brand well. If they continue to visit the club, they like it, which means there is more confidence in the brand compared to competitors.
Pre-sales can be carried out either by the club’s leader or by posting information about the club in a chat / group or on the club’s page. The more unique the offer, the higher the conversion. For example, if a marketer offers special conditions for a new product for members of a club for a healthy lifestyle, for example, a lower price or additional advice from a nutritionist, the club will be considered more valuable.
What is useful for marketing?
How to implement a return path for a product?
A company that sells contact lenses in the order form offers to remind you to replace lenses by SMS / email:
It is important to treat the return path as a separate product that has its own customer base. Ask current customers what services they would like to receive from you, and based on their wishes, form a product for a subscription.
Take an online retail store for an example and see how it can get more profit with return paths. The shop sells children's goods, clothing and toys. There are categories of products that moms buy periodically: socks, children's toys, diapers. Marketers need to determine which of these products most buyers buy regularly and how often.
Then you need to understand whether this service will enjoy success among moms and conduct surveys.
Suppose a third of mothers buy diapers for children every month and would not want to go to the supermarket for them or repeat the same purchase online every time. And what if we offer diapers by subscription? In this case, the mother will save her time and will not need to go through the painful procedure of entering card data every time.
Due to the fact that more mothers will buy diapers regularly and pay for this service in advance, ROMI (return from the spent marketing department funds) will be higher.
The chance that mom will buy diapers in the store itself is minimal. She has already paid and can be calm: there will be enough diapers and they will be delivered on time. Conversion to purchase will grow, the more invisible service the company will offer and the greater pain to close. In the case of moms, it may make sense to create a “Mom” package, which will include diapers to choose from, baby wipes, toys / rodents and also sell a more valuable and expensive package of goods.
How to understand that the return path works?
The customer return path is an opportunity for businesses to receive periodic payments from current customers, increase their loyalty and build deep relationships with consumers. The low cost of creating a club or a subscription to a new product will pay off due to a long subscription period.
In every business, you can come up with a product line for an effective return path; you just need to remember that such products must cover chronic pain or a user's problem.
The purpose of the article is to tell in simple words about this possibility of obtaining additional profit.
What is the return path?
Return path (or return path) is a pre-sale to current customers of goods or services based on recurring payments. For marketing, it is an opportunity to make big profits by selling to existing customers. For the user - support after purchasing the main product or easy access to products that you need to buy all the time.
When does the return path work?
- you see chronic need or pain
- a person needs support for a long period after the acquisition of the main product,
- payment in small installments instead of one lifetime payment is better perceived by the buyer.
Examples:
- goods that need to be bought periodically. For example, contact lenses or beauty products.
- support group for slimming girls,
- communication with other amateur athletes who are preparing for a triathlon,
- monthly subscription for a software product,
- subscription to access to the online library.
How it works?
Let's look at the most popular products of the return path, which offer customers in addition to the main product:
Club
A person acquires the main product, for example, a course on a healthy lifestyle. During this course, the client cultivates new habits - he goes in for sports several times a week, eats healthy food and drinks enough water. But after completing the course there is a great risk that he will return to the old way of life. The client is afraid of such an outcome, so he wants to receive support after the end of the course.
The marketer offers him the club “Healthy and happy”, in which regular meetings are held and members share their achievements. The club is paid by subscription, each month - $ 5. The company wins: they get a source of steady income, while spending money only on setting up a group and organizing several meetings a month. Moreover, customers who are in the club will be more susceptible to new health products from the same company.
Product
Some products people have to buy periodically. For example, razors and blades, products for lenses, creams and shampoos.
From time to time the product either ends or expires. A person needs to spend his time again and make a purchase again. Among dozens of brands, he again must choose the best. Walking along the path of least resistance, people will tend to buy the same product if it came to them last time. Or a modified product, for example, a cream with a different smell or a razor with a different gel.
The task of the marketer is to provide a choice of such products and make re-purchase as simple and energy-consuming as possible.
Dollar Shave Club - an example of a subscription to the delivery of goods, which quickly ends. The company delivers razors and cosmetics for men by mail every month, so that the owner does not worry about the standard purchase and does not spend time on it.
The Alaska Water Delivery Company application reminds its users of water replenishment and offers to repeat the previous order with just a few clicks.
Subscribe to the app
A subscription to listen to music Shopify makes it possible not to worry about buying new songs, a subscription to the Kindle allows you to read books marked with a special sign without payment. However, the user has the opportunity to buy books that are not marked with a symbol separately.
Such programs are called SaaS or software as a service, which implies paying for the application as a service on time.
Useful new content on the site
Valuable information, tips and reviews that solve the user's problem will return it to the site many more times. For example, the knowledge academy from the Hubspot company, constantly returns clients of their product to the site. In the articles, they learn about new opportunities and trends in marketing and want to try them. To do this, they need to make an additional payment for the new product functionality and get the opportunity to apply their new marketing knowledge right away, using the company's main product.
Educational product marketers also often create subscriptions to new materials / courses.
My product is not like that! We have no regular customers
There are areas in which the product line is small, and the main product can be bought only once. For example, surgery and removal of tumors. For such products, you can also find offers for recurrent (permanent) payments. For example, it is a subscription to the survey every few months to monitor the state of health. The cost of such a subscription may be high, but lower than for customers who have not performed the operation. The company does not spend money on attracting a client and can reduce the cost of the service, thereby making the purchase profitable for the client.
Another example is the purchase of a “green” wall of plants that is difficult to care for. Re-sales may relate to the support of this wall: monthly removal of dead plants, replacing them with new ones, watering, fertilizer.
Even companies selling funeral services can expand their product line. In addition to the main product, they can offer care for the grave, or separately landscaping in the spring and cleaning in the autumn.
Upsell in club
People who attend low-cost meetings with like-minded people from a brand are more loyal to its products. Promo of new products and services in such clubs will be a much greater response.
Why? First, people already know the brand well. If they continue to visit the club, they like it, which means there is more confidence in the brand compared to competitors.
Pre-sales can be carried out either by the club’s leader or by posting information about the club in a chat / group or on the club’s page. The more unique the offer, the higher the conversion. For example, if a marketer offers special conditions for a new product for members of a club for a healthy lifestyle, for example, a lower price or additional advice from a nutritionist, the club will be considered more valuable.
What is useful for marketing?
- No additional costs to attract customers
- LTV clients increase at minimal cost.
- Customer loyalty rises
- There is an opportunity to keep constant contact with people, while giving them benefits.
- Typically, the costs of creating a club or marketing communications with pre-sales are low. People in the mailing list already have a favorable attitude towards the brand and have a history of relations with the company.
How to implement a return path for a product?
- Email to current customers
- retargeting
- selling on webinars and articles on the site
- in personal communication with customers
- page immediately after the sale of the main product
- posts in social networks
- SMS notifications.
A company that sells contact lenses in the order form offers to remind you to replace lenses by SMS / email:
It is important to treat the return path as a separate product that has its own customer base. Ask current customers what services they would like to receive from you, and based on their wishes, form a product for a subscription.
Take an online retail store for an example and see how it can get more profit with return paths. The shop sells children's goods, clothing and toys. There are categories of products that moms buy periodically: socks, children's toys, diapers. Marketers need to determine which of these products most buyers buy regularly and how often.
Then you need to understand whether this service will enjoy success among moms and conduct surveys.
Suppose a third of mothers buy diapers for children every month and would not want to go to the supermarket for them or repeat the same purchase online every time. And what if we offer diapers by subscription? In this case, the mother will save her time and will not need to go through the painful procedure of entering card data every time.
Due to the fact that more mothers will buy diapers regularly and pay for this service in advance, ROMI (return from the spent marketing department funds) will be higher.
The chance that mom will buy diapers in the store itself is minimal. She has already paid and can be calm: there will be enough diapers and they will be delivered on time. Conversion to purchase will grow, the more invisible service the company will offer and the greater pain to close. In the case of moms, it may make sense to create a “Mom” package, which will include diapers to choose from, baby wipes, toys / rodents and also sell a more valuable and expensive package of goods.
How to understand that the return path works?
- The customer chooses the maximum package from the return path goods / services. For example, a subscription for a year to the club “Healthy and happy”, although there are subscriptions for a month and 6 months.
- customers do not cancel a subscription for more than a year
- NPS is growing, people recommend an additional product.
Conclusion
The customer return path is an opportunity for businesses to receive periodic payments from current customers, increase their loyalty and build deep relationships with consumers. The low cost of creating a club or a subscription to a new product will pay off due to a long subscription period.
In every business, you can come up with a product line for an effective return path; you just need to remember that such products must cover chronic pain or a user's problem.