What is auto-renewal?

Auto-renewal is a feature in subscription services that automatically renews a customer’s subscription at the end of each billing cycle, without the need for manual intervention. This ensures that the subscriber continues to receive products or services seamlessly unless they choose to cancel before the renewal date. Typically, customers are charged the same rate as their original subscription unless otherwise specified.

Why is auto-renewal important?

For customers, auto-renewal adds convenience by eliminating the need to remember renewal dates and payment schedules, ensuring uninterrupted access to a service. For ecommerce businesses, it provides a consistent revenue stream by reducing churn and increasing customer retention. However, it’s important for companies to communicate auto-renewal terms transparently to avoid potential disputes or dissatisfaction from customers unaware of the recurring charges.

What is a billing cycle?

A billing cycle refers to the interval at which customers are charged for a subscription service, typically occurring on a monthly, quarterly, or annual basis. The billing cycle is the period between one payment due date and the next, and it determines how often a customer is required to make payments in exchange for continued access to a service or product.

Why is the billing cycle important?

A billing cycle refers to the interval at which customers are charged for a subscription service, typically occurring on a monthly, quarterly, or annual basis. The billing cycle is the period between one payment due date and the next, and it determines how often a customer is required to make payments in exchange for continued access to a service or product.

What is pro-rated billing?

Pro-rated billing refers to charging customers for only the portion of the service they use within a billing cycle when they make mid-cycle changes to their subscription. For example, if a customer upgrades to a higher-tier plan halfway through a month, they’ll only be charged for the remaining days at the new rate, rather than the entire month.

Why is pro-rated billing important?

Pro-rated billing ensures fairness for customers by accurately charging them for the services they’ve used, which can improve trust and satisfaction. For businesses, implementing pro-rated billing can reduce friction during subscription plan changes, making customers more willing to upgrade or modify their plans. It’s an important factor in reducing churn and retaining customers by offering flexibility in plan management.

What is an onboarding flow?

An onboarding flow refers to the series of steps or actions a new customer takes after signing up for a service or subscription. It typically includes account setup, tutorials, and product tours designed to familiarize the customer with key features and encourage early engagement. A well-structured onboarding flow ensures that customers can easily get started and understand the value of the product.

Why is the onboarding flow important?

A smooth onboarding flow is crucial for reducing churn, particularly for subscription services. When customers understand how to use a service and see its benefits early on, they are more likely to continue using it and eventually become loyal subscribers. For ecommerce businesses, improving the onboarding process can directly lead to higher conversion rates, better customer satisfaction, and increased long-term retention.

What is a subscription cancellation flow?

The subscription cancellation flow is the process a customer follows to cancel their subscription. It typically includes a series of steps or prompts aimed at confirming the cancellation and may offer retention strategies such as discounts, free trials, or feedback forms to better understand why the customer is leaving.

Why is the cancellation flow important?

For customers, a smooth and transparent cancellation flow builds trust and reduces frustration. If the process is difficult or unclear, customers may become dissatisfied and less likely to return in the future. For ecommerce businesses, a well-designed cancellation flow can provide valuable insights into why customers are leaving and offer last-minute retention tactics, such as offering discounts or addressing concerns, which can reduce churn and improve overall retention rates.

What is cart recovery?

Cart recovery is the process of re-engaging customers who have added items to their online shopping cart but left the website without completing the purchase (otherwise known as Abandoned Carts). This strategy involves using various tools and techniques, such as automated emails, retargeting ads, and personalized offers, to remind and incentivize shoppers to return and finalize their transaction. Cart recovery is an essential aspect of ecommerce because it directly addresses the issue of cart abandonment, which can significantly impact a retailer’s revenue.

Why is cart recovery important to your ecommerce strategy?

Cart abandonment is a common challenge in e-commerce, with studies showing that up to 70% of online shopping carts are abandoned before purchase. This means a substantial portion of potential revenue is left unclaimed. Implementing an effective cart recovery strategy can turn these abandoned carts into completed sales, boosting your overall revenue and improving your return on investment (ROI). Additionally, cart recovery helps maintain customer engagement and encourages brand loyalty by providing timely and relevant follow-ups to shoppers.

What is a customer winback?

A customer winback, or win-back, is when a business regains its inactive customers or former customers. This is often achieved via a win-back campaign, or a calculated marketing plan aimed at recapturing lost customers. The goals of a customer win-back strategy are primarily to increase customer retention, reduce customer churn rate, and increase customer lifetime value (LTV). These efforts can also have the potential to increase customer satisfaction.

Customer win-back strategies

In order to recapture lost customers, a business must first determine why customers have stopped using their products or services, which can be done through studying trends in customer feedback and purchase history. This can identify potential pain points to improve in the buying process, identify high-value customers, and pinpoint existing customers to target with winback strategies. 

It can also be helpful for businesses to segment their customer base so they aren’t applying the same win-back strategies to every existing customer. By making sure that win-back strategies are tailored toward a particular segment, brands can reach the right customer with the most compelling effort for their unique preferences and needs, be it win-back emails or a special discount on certain products. After all, there is no one “right” win-back strategy—it all depends on the needs and preferences of a business’s unique customer base.

What is order processing?

Order processing is a key element of order fulfillment that occurs on the business end after a customer places an order. It begins when a business receives an order, and ends when the order is shipped. Several aspects of inventory management, including batch picking, as well as shipping, packaging, and sorting inventory, fall under the order fulfillment process. Depending on the size and nature of the business, order processing can be conducted by a single individual, or it can occur in order processing operations like distribution centers or warehouses. By handling order processing efficiently and accurately, businesses can decrease the amount of time it takes to fulfill customer orders.

What is order processing software?

An order processing system, which captures all necessary information related to a customer and their order, can be either manual or technology-based. Once businesses reach a certain size, their order fulfillment operations may gain complexity. In these situations, it may be valuable to invest in order processing software, such as an order management system (OMS). This software can help automate certain manual processing operations, helping minimize human error and ultimately increasing sales. These order processing systems can store order data, check inventory availability, and track deliveries—actions that can increase customer satisfaction and increase sales by improving order accuracy and reliability.

What are automatic payments?

Automatic payments (also referred to as automatic bill payments) are payments that a merchant automatically withdraws from a customer’s bank or credit union account. An automatic payment arrangement is often used to pay bills—for example, a monthly credit card bill. Automatic payments are also frequently used for paying utility bills, mortgage payments, and more. Subscription merchants can also set up an automatic, recurring payment arrangement for their products and services, such as gym memberships, curated subscription boxes, newspapers, and gated digital content.

How does an automatic payment work? 

To set up automatic payments, first, customers must choose a payment method; i.e. a bank account, credit card, or debit card. Then, they must enter their payment information—depending on the payment method, this can include the account number for a checking account, routing number, the name of the account holder, credit card number, etc. The customer must also give the company explicit permission, or authorization, in advance to withdraw the money from their account at certain intervals. An automatic bill payment can be set up to charge the same amount at each interval (for example, digital streaming services), or for different amounts within a certain time period (for example, a utility bill that changes in pricing month-to-month depending on usage).

What are the benefits of recurring payments?

For merchants, recurring payments provide a reliable stream of recurring revenue, which can facilitate greater ease and accuracy with essential business tasks, such as inventory management and forecasting. However, businesses must maintain accurate account information for their customers, or they can run the risk of involuntary churn if customers’ payment details become out of date.

For consumers, recurring payments can offer enormous convenience and value. For example, a customer of a utility company can avoid making late payments by signing up for automatic payments, thus avoiding late fees. Certain businesses may offer their customers a discount for a subscription—this type of agreement is called “subscribe-and-save.”

What is order management?

Order management is a process used by businesses to digitally manage the entire lifecycle of a customer’s order. The typical order management process begins when a customer places an order, and ends when the customer receives their purchase. In between, the order management process includes other essential operational functions such as order processing, inventory management (including inventory visibility), sales, order fulfillment, and returns. Because order management is so closely tied to customer satisfaction, it is an essential consideration for customer relationship management.

What is an order management system (OMS)?

An order management system is the way that businesses organize their order management processes and strategy. Order management systems can take a variety of different forms, including various types of order management platforms and order management software. As businesses grow, order management needs may gain complexity. Certain manual processes of order fulfillment may be subject to human error—but by automating those business processes, businesses can better meet or exceed customer expectations.

What is customer retention?

Customer retention refers to the ability of a company to keep current customers with their business. For subscription brands, having an effective customer retention strategy is particularly important, as the subscription business model depends on recurring revenue. Having a high customer retention rate increases customer lifetime value for your business, improving customer loyalty and customer satisfaction. Retaining your most loyal customers can also help improve average order value (AOV) for your online business.

Customer retention strategies 

There are a number of strategies your brand can use to improve customer retention. Investing in analytics and collecting customer feedback in your customer retention program are both valuable tools for establishing a baseline for your business. Make sure you effectively set customer expectations for your products and services through your messaging and imagery. 

Tracking key metrics over time—such as customer lifetime value, customer churn, customer acquisition costs, etc.—can help you identify trends in customer behavior and business performance and assess the effectiveness of your retention strategies. Another business strategy for retaining existing customers is to offer a customer loyalty program. 

Retain customers with the right strategies

Subscription businesses can increase customer retention when they empower customers to manage their own subscriptions. For example, make it easy for an existing customer to skip or reschedule a delivery, or swap or add on a new product or service to an order, without having to engage your customer support team. This creates a more seamless experience for the subscriber and lessens the chance that they will churn out of your business. 

With the right loyalty-focused strategies, your brand can improve upon retaining customers and strengthening customer relationships, even as the number of customers you serve increases. Continually tracking customer retention metrics will also ensure your brand is headed in the right direction. 

What is order fulfillment?

Order fulfillment is the steps a business takes to deliver orders to customers. The order fulfillment process begins with receiving customer orders. In between, the complete process can include sending order confirmation emails to customers, locating items in warehouses or fulfillment centers, managing the shipping process, sending the customer tracking information about their purchase, and more. Optimizing your order fulfillment strategy plays a key role in increasing customer satisfaction, boosting customer retention, and driving revenue for your business.

Considerations for optimizing your order fulfillment strategy

The order fulfillment process is hugely important to customers. When customers have a negative delivery experience, their opinion of your online store can plummet—but ship in an orderly and timely manner, and you can build trust in your brand. Therefore, before implementing an order fulfillment strategy, be sure to compare shipping costs between different shipping carriers to determine which and how many options you should provide. For inventory management, consider the amount of incoming inventory you expect to bring in and how much space you’ll need for inventory storage. Depending on your unique business needs and resources, you can opt to provide in-house fulfillment or outsource some or all of your fulfillment needs to third-party fulfillment providers.