Getting Started with Continuity Ecommerce, Part 2: Steps to Success

Continuity ecommerce creates recurring revenue by means of a combination of connected devices and auto-ship functionality. It is subscriptions on steroids. In”Part 1: Approaches, Expectations,” I explained how continuity ecommerce can construct high-margin earnings flows. In this guide, I’ll concentrate on how to generate continuity programs a success.

The key to making continuity work is at the backend. Which products should you provide? How can you optimize the stick rate and decrease churn? When should you send goods, and when should you collect payments? How often if you retry a payment to minimize write-offs? How can you avoid cannibalization and substitution?

Let us begin with a story.

A heating appliance firm knew that customers needed replacement air filters for their furnaces, but its clients were only buying a tiny fraction of what they ought to be. Numerous factors were at play, including customers needing to change the filters and difficulty in locating the proper part number. A different approach was required.

For the manufacturer, selling replacement air filters proved to be a low-volume, high-margin enterprise. Increasing sales would generate earnings. By establishing a continuity program and promotion in the perfect intervals, the manufacturer was able to radically expand its sales of air filters while offering a handy consumer experience.

Additionally, the manufacturer revealed that the growth in the ability to predict demand enabled it to decrease production costs, which increased profits even further.

The fiscal impact can be spectacular. I have seen continuity programs with client involvement at 25 percent at the end of their initial 12 months. From the end of this first year, many such apps experience a rise of 25 percent in product revenue and a rise of 40 percent in total product-line profit.

…many such programs experience a rise of 25 percent in product revenue and a rise of 40 percent in total product-line profit.

Let us take a look at what it takes to achieve those outcomes.

7-step Continuity Guide

With any continuity program, begin by taking a look at your back office capabilities, particularly your visibility and control of stock.

Step 1: Describe the products. Not all products should be on continuity. Begin by identifying candidates. Normally, these are high-margin consumable items with a latent demand and a simple and consistent supply. The target is to increase inventory turns and consequently supply products more cheaply.

You can’t afford to run out of stock of a product on continuity. It can cause immediate customer cancellations. Have a clear image of stock and prioritize continuity orders over the rest of the business, even if it means making out-of-stock finds in different channels. A robust order-management capacity will make this easy by automatically allocating inventory to continuity consumers.

Step 2: Track sales and inventory. Slow-moving consumable items are another choice for continuity programs. With careful monitoring, it is possible to see where stock is rising faster than earnings. This is a traditional early warning sign. Many brands and retailers do not do so well, and it leads to inevitable markdowns.

Products wherein sales lag stock growth may benefit from temporary continuity programs. The products are also great candidates for a “`surprise and pleasure” marketing promotion, which present new products or groups to present continuity customers.

Step 3: Make it easy to purchase, change, and cancel. A continuity program ought to be simple to register, modify and cancel — with two or three taps within an app, using a chatbot, or using a simple phone call. Beyond making it simple, concentrate on preventing churn in the first place via”save the sale” type applications.

Step 4: Know churn patterns. Auto-replenishment programs can anticipate a churn issue — typically 60 percent of consumers after the third shipping and 80 percent by the sixth.

It’s critical to comprehend the client drop-off points. In my experience, they vary among products, as the optimal delivery period will be unique to each item. Machine learning can significantly help. It may determine when to automatically ship goods, expect the crucial churn points, and activate remedial actions. From the sixth turn, by way of instance, you can retain 50 percent of consumers. AI is one of the vital secrets in continuity.

Step 5: Surprise and pleasure. One of the best ways to get ahead of churn is a series of surprises to delight customers and keep them interested. By intervening before the drop-off stage, a free sample may considerably reduce churn while introducing goodwill customers to other product lines. By way of instance, a customer purchasing dog food on continuity could be given a surprise chew toy with a delivery, delighting both dog and owner and lessening the odds of cancelation (and increasing the probability of buying dog chews on continuity).

Step 6: Independent deliveries and payments. Conventional auto-replenishment programs collect payment at the point of delivery. This strengthens the cost of the program to the client, perhaps when they were not quite prepared for the next delivery. It’s not optimal and will increase churn. Separating deliveries from collections can help clients see the recurring payments as a normal household expenditure.

Step 7: Optimize collections. By billing on various days of the week and month, you can decrease continuity churn and maximize high conversion intervals, such as proximity to the weekend and payday. Experiment to find your own magic formula or use AI to do it automatically. The same applies to payment retries: How many times if you retry given every retry typically costs $1? Assessing when to collect payment and when to retry can make a massive impact on retention rates.

Experiment and Discover

Continuity, done well, can provide powerful results. But it takes effort. You might have to modify your order management system and integrate machine learning and optimization technologies. With the proper mindset and a willingness to experiment and learn, many brands and consumer-packaged-goods companies can achieve substantial gains in revenue and profit.