For the second episode of Merchantry, we had Leo Strupczewski, the Head of Marketing at Repeat, drop by for a candid conversation on the subscription economy and how Repeat is driving the change with a re-thought approach to the DTC subscription stack.
Subscription is a highly popular business model utilized by millions of companies around the world. As a brand, what’s not to love about it? You get a steady stream of income and a growing lobby of customers to fuel your growth quarter to quarter. Plus it keeps the investors happy. But can it really be that simple and straightforward? (Hint: no)
When asked about the thesis behind Repeat, the answer is straightforward from Leo.
"To turn one-time buyers into repeat customers".
This basically comes down to making the re-ordering process a more streamlined offering. Instead of shoving a generic reminder at the customer’s face every X amount of days, Repeat strives to be at the ‘right place at the right time with the right message’. This means investing time and effort into learning more about the consumer and their ordering habits and personalizing the reorder process for a more individualized approach among other things.
“To put it bluntly, re-ordering stuff online sucks” says Leo when speaking of the subscription stack as it is generally utilized today. Most brands offer a generic ‘Subscribe & Save’ option that interests only a small portion of their customer base. According to Repeat’s insights, this outdated model of subscription has led to companies essentially turning over their entire customer base every year. Unsurprisingly, the average customer does not want to commit to a monthly subscription for socks that turn up at their doorstep whether they need it or not.
Of course, there are outliers whose affinity for socks has clouded their judgment to the point where they don’t mind a new pair of socks every couple of weeks but they are few and far in between.
"Subscription is fantastic if you have a rigid, predictable behavior set but that most of us only have that for one or two products in our lives”.
With a personal anecdote preceded by a ‘TMI’ warning, he explains how even though he uses the same body wash on a regular basis, his preference of scent tends to vary, making subscriptions a less than ideal choice for him.
So how do brands overcome this customization barrier to engineer the transaction in a customer-friendly way? That’s the challenge that Repeat is trying to solve. This starts with ingesting Shopify data of the brand to get a better understanding of the end-user and figuring out the replenishment rate for that product. Then, the customer is notified through either text or email just as they are running out of the product and re-directed into a pre-populated cart with options for customization. Or as Leo calls it ‘being in the right place at the right time with the right message’.
In an ideal world, the perfect subscription strategy lies in between customer agency and the predictable income companies have grown to expect from subscription.
For a brand that started in the last decade, subscription is often the go-to business model for creating a reliable source of revenue. Tinkering with this golden goose is not something that brand owners are keen to do. So how does Repeat carry out what is essentially a religious conversion for these brands?
The challenge for them lies in getting brands to see past the role that subscription plays in quarterly or yearly revenue and work towards the bigger picture. This means giving customers more flexibility when it comes to re-orders and might even mean bringing them into the subscription model at a later stage of the funnel.
Leo goes on to share a poignant insight he learned from one of Repeat’s investors,
“There’s no better way to lose a customer than to have your product pile up in their home”.
Apart from being a contender for the ‘quote of the day’ title, this tidbit basically sums up everything wrong with the current model of subscription. Brands are sacrificing longevity for the quick boost in numbers in the short term. Sure, you might get a few customers to bite and turn them into subscribers but can you retain them in the long run? What does the churn rate look like a year down the line?
There’s also the phenomenon of ‘subscription fatigue’ that one needs to address when talking about subscriptions. How many subscriptions does a user really need?
For most of us, there are only one or two products in our lives that we love enough to want on a regular basis (aside from Netflix and Prime subscriptions of course). Whether it’s the subscription themselves or the process associated with them, fatigue starts setting in sooner or later. While meant to make one’s purchases more streamlined, subscriptions sometimes do the opposite by adding onto our already existing pile of responsibilities. Managing a laundry list of subscriptions is not an easy task and not something consumers really want to spend their time doing. This is where companies like Repeat come in.
With the subscription business desperately in need of optimization in approach, rethinking the subscription stack is the first step in fixing the system before it breaks.
But are brands ready to see past the engineered loyalty of their current subscription stack and the 12-month LTV numbers that look good on the surface?
Are they willing to rethink their approach if it means sacrificing short-term revenue goals for sustainability and organically grown loyalty in the long run?
These are the questions that need to be answered moving forward. Tune in to the full conversation with Leo Strupczewski for more insights into the subscription economy and how Repeat is changing the game, one re-order at a time. Merchantry is now streaming on all major streaming platforms including Spotify, Apple Podcasts, Google Podcasts, Anchor, and more.
Every week we send out one deeply researched essay that captures the eCommerce industry and its evolution, right to your inbox. 50%+ open rates for a year now.
Trusted by 22,804 DTC & eCommerce industry insiders.