What are entitlements in a digital subscription?
An entitlement refers to the digital permission or access right granted to a customer based on their subscription status, billing event, or payment success. In the context of subscription commerce, entitlements determine what a customer can access, such as premium content, app features, or connected device functionality and for how long.
Entitlements form the backbone of digital and hybrid (phygital) business models by ensuring that access always matches what a customer has paid for.
What is dynamic pricing?
Dynamic pricing, also known as real-time pricing, is a strategy where prices are adjusted based on market demand, competitor pricing, and other external factors. This flexible pricing model allows businesses to maximize revenue and profit by responding swiftly to market changes. Unlike static pricing, which remains constant, dynamic pricing leverages data and algorithms to set prices that reflect current market conditions. This strategy is widely used in various industries, including ecommerce, where it plays a crucial role in staying competitive.
Why is dynamic pricing important to ecommerce strategy?
Dynamic pricing is vital for ecommerce because it helps businesses stay ahead of the competition. In the fast-paced world of online shopping, prices can fluctuate frequently due to changes in demand, stock levels, and competitor actions. By implementing dynamic pricing, ecommerce businesses can optimize their pricing strategy to attract more customers, increase sales, and improve profit margins. This approach ensures that prices are always competitive, enabling businesses to respond to market trends and consumer behavior in real-time. Dynamic pricing offers numerous benefits, including more precise pricing, efficient inventory management, and enhanced customer trust and loyalty, making it an essential component of a successful ecommerce strategy.
What are tiered discounts?
Tiered discounts refer to a strategic pricing approach that incentivizes customers to purchase more by offering them increasingly attractive discounts as they buy in larger quantities or reach specific spending thresholds.
This dynamic pricing model empowers businesses to reward customer loyalty while driving higher sales volumes. As customers add more items to their cart or exceed predetermined spending limits, they unlock greater discounts, creating a win-win scenario that boosts both customer satisfaction and business revenue.
Why are tiered discounts essential to ecommerce strategy?
Ecommerce businesses can use tiered discounts to encourage customers to explore additional products, increasing their average order value (AOV) and overall revenue per customer. This pricing strategy cultivates a sense of exclusivity and urgency, motivating shoppers to capitalize on the escalating discounts before they expire.
With proper implementation, tiered discounts not only stimulate immediate sales but also foster long-term customer loyalty, positioning ecommerce brands for sustained success in the digital marketplace.
What is ecommerce personalization and why is it important?
Ecommerce personalization is the practice of delivering shopping experiences that cater to individual customers’ needs, preferences, and statuses throughout the user journey. It bridges the physical gap between online retailers and individual customers through features like targeted discounts and personalized recommendations.
This creates a seamless shopping experience, akin to asking the floor sales associate for help finding what you’re looking for. This can improve both your conversion rates and customer satisfaction, and is useful for engaging customers and building trust in your brand.
What are the benefits of ecommerce personalization for brands?
The benefits of ecommerce personalization span many key business metrics, and can improve overall sentiment toward your brand. Many businesses who implement a strong ecommerce personalization strategy will see a direct impact on their KPIs.
Increased conversion: tailored online shopping experiences can generate higher conversion by putting the most desirable products directly in front of customers.
Increased average order value (AOV): related to increasing conversion, personalization can also increase AOV with tactics like strategically-placed upsells and cross-sells that customers are likely to add on to orders.
Increased retention & customer lifetime value (CLTV): by listening to customer preferences you build and deepen the relationship between the brand and the consumer, making personalization an excellent strategy to build customer loyalty and retain customers.
Increased customer satisfaction: a personalized experience provides a better experience for customers, encouraging them to increase their engagement with and loyalty to your brand.
The advantage of customer loyalty
Loyal customers are more likely to make repeat purchases, resulting in higher lifetime value. They’re also more likely to act as advocates for your brand to others, helping offset customer acquisition costs through word of mouth, affiliate marketing, and social proof like customer testimonials for your website.
Within a saturated market, your personalization efforts can also improve the overall share of voice (SOV) of your brand and provide a competitive advantage.
How do I implement commerce personalization on my website?
You can implement commerce personalization on your website through a variety of features like quizzes and promotions. Below are some ecommerce personalization examples:
- Targeted discounts
- Personalized product recommendations
- Flexible order options, such as dynamic pricing
- Targeted promotional campaigns through marketing automation
- User-generated content
- Personalized customer service
- Targeted email campaigns
Verve Coffee Roasters is an example of a business offering personalized product recommendations. They use a quiz format to guide a customer through questions that inform which specific products might suit their taste, engaging the customer before they even encounter your products.
Tip: have multiple touchpoints for personalized content throughout the customer journey
The best way to optimize personalization is to curate a personalized shopping experience at every step of the customer journey:
- Before the customer gets to your online store, through personalized marketing like targeted ad campaigns
- The first interaction with your ecommerce website
- The pathway to the products through site navigation experience and page flow
- The product description page
- Adding the product to the cart, through upsell and cross-sell recommendations
- Within the cart
- At checkout
- Post-purchase, via the customer portal
- Post-purchase, via email marketing & retargeting
How to leverage the data to deliver personalized experiences
To improve online shopping experiences, businesses can use customer data in two key ways:
- Segmentation
- Predictive forecasting
Customer segments
First, they can group customers based on factors like age, buying history, and browsing behavior. This helps tailor marketing messages and product suggestions, such as analyzing a customer’s past purchases and offering an upsell opportunity to add products that similar customers have purchased before. For example, considering a customer’s location can inform promotions for seasonal products—such as suggesting products for warmer weather during the summer of that particular geographic region.
Predictive forecasting
Second, businesses can use data on customer behavior to predict what customers might buy next. This helps suggest products that match their interests, making the shopping process smoother and boosting sales. For example, brands offering prenatal vitamins might then offer multivitamins specifically formulated for pregnancy.
What are product bundles?
Product bundles offer multiple products sold as one SKU, often at a discounted price. Merchants can decide if they’d like to allow customers to create bundles on their own, or they can curate bundles for them.
With customizable bundles, customers can choose which products they’d like and how many, giving them freedom to choose exactly what they want as they create their own bundles. Curated bundling, on the other hand, gives merchants the chance to personalize the shopping experience and offer products together that are complementary to each other. With multiple product bundles, your customers will have options and be able to choose exactly what they want.
How does a product bundle strategy increase average order value?
A product bundling strategy can increase average order value by encouraging customers to purchase complementary products together, at a reduced price. In this way, merchants with an effective product bundling strategy actually have customers that purchase multiple items at once, leading to higher average order value.
Product bundles can also help your business save on marketing and distribution costs. As a store, you can save money on shipping when bundled products are sent together, and you can help your customers save money too by offering a special bundle price. Even by offering your product bundles at this discounted price, you can still boost sales by selling more products overall. Create product bundles that make sense for your customers and their needs—with strategic bundle pricing—and watch average order value grow.
What is free shipping?
Free shipping is a marketing and sales tactic that is primarily geared toward consumers who shop online. By eliminating shipping costs on eligible items, online retailers incentivize customers to purchase those products. Similar tactics include offering free returns, coupons, and discount codes. Sometimes, customers who place an order online will qualify for free shipping if they meet a certain order minimum at checkout—this can help increase average order value. Other times, an online store may always offer free shipping, regardless of how much money a customer spends on their purchases—this can help improve the customer experience and increase brand loyalty.
Reduced shipping costs & the membership model
Free or reduced shipping is frequently offered as a benefit of access or membership subscriptions, where customers will pay for exclusive access to gated content, deals, and other benefits. For example, an Amazon Prime member will consistently receive free two-day shipping for select items on the site as one of their membership benefits. When these value-adding shipping and return policies are limited to members, brands can incentivize customers to sign up for a subscription, increasing customer lifetime value for their business.
What are customer portals?
A customer portal is a secure hub on your ecommerce website that gives your customers easy access to all relevant information about their business with you. Customer portals can contain a variety of different features depending on your business, including invoices, account and billing information, access to support features or a knowledge base, options to swap products, and more. For subscription services, who interact with their customers on a recurring basis, customer portals are especially important. When built effectively, these tools have the ability to facilitate stronger merchant and customer relationships, increasing customer satisfaction and brand loyalty.
Strategies for optimizing your customer portal
To optimize your customer portal for your subscription business, it’s important to think about customer flexibility. Empowering your subscribers to manage their own subscriptions increases flexibility and improves the customer experience, as they can update their active subscriptions on their own timeline in a few clicks, all without having to engage your customer support team. Making sure your customer portal is accessible via a mobile device is another important way to optimize your omnichannel strategy and ensure your customers can control their orders via the portal whether they’re at home or on the go.
What is a promo code?
Promo codes (short for promotional codes; also known as discount codes, coupon codes, and offer codes) are alphanumeric codes that customers can enter during the checkout process to save money on an order. They are often used to incentivize customers to make a purchase, adding value for the customer and building loyalty for both new and returning customers. A coupon code can be applied to both one-time purchases and subscription products.
Coupon code benefits
In addition to their money-saving benefits for customers, coupon codes serve as a valuable tracking tool for merchants. They are often used as part of a larger promotional marketing strategy to track the effectiveness of a campaign or advertisement. For example, stores can create platform-specific promotions to target the platforms that are most effective at generating conversions or site traffic.
Categories of promo codes
There are three main types of promo codes:
- Fixed amount discounts subtract a specific dollar amount from a purchase. Merchants can ensure that fixed amount discounts apply to any order value, or limit them to orders that meet a specific minimum order value.
- Percentage discounts offer a specific percentage off the purchase amount. For example, a store might offer a discount code for 15% off some purchases, such as all their subscription options.
- Shipping discounts provide reduced-price or free shipping for an order. For example, Amazon Prime offers free expedited shipping for members on eligible items—a brand could offer a similar benefit for select items on their store using a promo code.
Merchants can place a variety of limits on promo codes. For example, codes can be limited to a specific time frame, first-time purchases, a certain number of customers, or customers with member status. Merchants can also set limits on whether the same promotional code can be used more than once by the customer.
What is cross-selling?
Cross-selling is a sales tactic that attempts to increase the value of an order by showing customers related or complementary products or services they can add on to their original purchase. In subscription ecommerce, cross-selling can mean offering the customer one-time purchases or add-ons related to their subscription or a separate, related subscription. The goal of this strategy is often primarily to increase average order value and revenue of a business, but when done well, cross-selling is also an effective strategy for improving the customer experience, increasing engagement, and even testing the viability of new products.
Cross-selling vs upselling
Like cross-selling, upselling also attempts to increase the value of an order, both financially for the store and in terms of customer satisfaction. The difference: While cross-selling focuses on adding related or complementary items and services to a customer’s order, upselling aims to convince the customer to purchase a related but higher-quality, higher-value product or service.
Cross-selling strategies
A common location for cross-selling opportunities is on individual product pages, where merchants can show shoppers product recommendations for related items. Cross-sells can also be offered on a customized cart page or on the customer portal. The more personalized and tailored these product suggestions are to the individual customer and their purchasing preferences, the more effective the cross-sell is likely to be. Leveraging data and analytics and making use of features like product recommendation quizzes are all effective strategies that can help merchants target their cross-selling recommendations.
What is a discount code?
Discount codes (also known as promo codes, coupon codes, and offer codes) are codes provided to customers and applied at checkout that reduce an order’s price. They are often used in ecommerce as a tool to add value to the order, incentivize purchasing, and build loyalty for both new and returning customers. They can be applied to both one-time purchases and subscription products.
Discount codes are often used as part of a larger promotional marketing strategy, as they can increase site traffic and conversion rates. They can also be used to track which platforms are most effective at generating interest or conversions, and be tied to certain campaigns or advertisements for tracking purposes.
Types of discount codes
Promo codes typically fall into one of three categories: fixed amount discounts, percentage discounts, and shipping discounts. Fixed amount discounts offer a specific dollar discount off a purchase, which can be tied to a minimum purchase amount or applied to any order value. Percentage discounts offer a set percentage off the cost of the shopper’s order. A shipping discount provides reduced shipping charges or free shipping for the customer’s order. Merchants can also set limits around the time frames of the offers, as well as if coupons can be recurring, only used once, only used for first-time purchases, or limited to a certain number of total customers.
What is upselling?
Upselling is a sales tactic that offers customers a personalized product recommendation, based on their intended purchase, that provides more benefits for a price increase. By definition, an upsell is a way to encourage customers to purchase an item of higher value. Typically, the primary goal of upsells is to increase average order value, revenue, and customer lifetime value for ecommerce businesses. However, companies can also use upselling to increase buyers’ satisfaction, boost customer engagement, and increase brand loyalty.
An upsell is most effective when targeted toward existing consumers with confidence in your store. Due to the relationship-based nature of the repeat purchases they offer, subscription businesses are uniquely suited for upselling opportunities.
The difference between upselling and cross-selling
Upselling and cross-selling are both important sales techniques for increasing AOV and customer LTV for ecommerce businesses. Both upselling and cross-selling recommendations have the potential to streamline the shopping experience for customers, and both should be highly customized to fit shoppers’ needs. However, while an upsell aims to convince customers to purchase higher-quality products or services at a higher cost (upgrades), a cross-sell aims to add related items or services (add-ons) to a customer’s order.
Upsell strategies for ecommerce businesses
Merchants can offer upsell opportunities on an individual product page or customized cart page, via pop-ups or follow-up emails, and even on the customer portal. Tailoring these product recommendations as much as possible to fit the customer via product recommendation quizzes, customer data, and analytics increases the probability of an effective upsell. Modifying your site functionality to accommodate these upsell suggestions will allow you to showcase items on your product pages, checkout pages, and the other key areas of your online store.
Being upfront about the value propositions of a product upgrade is also important, with supplemental educational materials if customers are newer to the offering to improve the customer experience. With effective cross-selling and upselling options, your business can improve AOV and LTV while creating a more personalized shopping experience for consumers.