How to build customer loyalty with subscription marketing?
The subscription revolution hit the UK by storm as we descended into our first lockdown in 2020. Consumers now limiting their journeys, trips to the shops, and other day to day activities meant most retail encounters resided online or locally. It was an uncertain time, so saving money and convenience fed the fire that became the subscription revolution. An astounding 90% of retail subscription services saw their customer base grow in the first lockdown, with the other 10% maintaining steady traffic. Since then, the retail trends have altered massively. Although subscription culture has remained steady, brands must turn their hand to new means of customer communication, business models and more to stay ahead of this year’s trends.
The latest Royal Mail report forecasts the subscription market will grow a whopping 72% by the end of 2022, taking the value from £583 million in 2017 to just over £1 billion. 58% of retailers already offering subscription services are looking to increase product lines to keep up with demand, which also means more competition for consumer loyalty.
Over a quarter of UK consumers already have at least one subscription service, and half of 25–34-year-olds will have a new service by the end of Q2 this year. We are a nation of convenience lovers, and it doesn’t look like it will be slowing down anytime soon.
Here are our subscription marketing trend predictions for 2022 and how to keep your brand’s subscription service above the rest with accurate, timely and personal marketing.
Since the highstreets closed their doors, then opened them and then closed them and then re-opened them, we have seen a massive push towards hybrid retail for 2022. Brands utilising both online and offline channels of communication such as direct mail, door drops, email marketing, social media advertising to give consumers a more rounded multi-channel experience.
Cancel culture comes to an end:
The UK lockdown opened a whole new way of consumerism through the subscription service. But it also encouraged a new form of cancel culture for the retail industry. As brands were urging consumers to buy with them, offering free trials and financial incentives when referred friends and family. It also created a spike in un-subscriptions. 48% of those using a new subscription service back in 2021 cancelled after just the first two months. Whether they were making the most of a good deal or were unsatisfied with the product, the need to shop around was still very prominent.
Thankfully in 2022, we see a much different story for the subscription retailer. In December of last year, the cancel rate was down to just 14% and going down, which moves us on to our next 2022 trend – Customer Loyalty!
Loyalty feeds business growth:
Subscription services are getting personal. They know how often we need our deodorant updating, our loo roll stocked up, our weekly meals delivered and even the condition of our hair and skin. The knowledge these brands have on their consumers is incredible, and to keep those consumers loyal. They need to use it wisely. Ensuring communication is timely, accurate, and on time is essential and offers flexibility in payments and the opportunity to delay deliveries for the most convenient experience. Retailers will need to be centred on retaining existing customers as the subscription industry has its second boom.
80% of consumers are more likely to purchase from a retailer that sends personal content. Use what you know about your subscribers to your advantage. Personalisation attracts loyalty!
Last year’s Cop 26 ignited an eco-movement in the retail industry. From recycled packaging, carbon neutral deliveries to eco friendly fabrics, the retail space is now being driven by green consumerism.
- 17% of consumers buy from brands because they have an eco-friendly supply chain
- 12% buy from brands that share the same environmental values as them
- 65% of consumers are willing to pay 20% more for sustainable purchases
Find out more in our latest Green paper!
Find the best-fit business model for your brand. As hybrid retail becomes the new way of shopping, brands need to move their focus to online and offline forms of communication, online retail spaces and customer convenience.
In short, understanding your customer’s needs is more important than ever. With the second wave of subscription culture hitting the retail space, brands need to be targeted, accurate and timely when communicating with new and existing consumers. Use the knowledge you have from subscription services and use personal approaches to make the experience seamless and convenient. Change your business model to accommodate for a more eco-friendly way of working, and don’t underestimate the power of personalisation.
Molly Kayll, January 27th 2022
How to engage consumers this festive season
While Christmas is the most wonderful time of the year (according to Andy Williams), it is also the most important time of the year for retail brands.
But after a rollercoaster couple of years, and with 2021 the year in which COVID-19 finally killed off some of our most-loved brands, what’s in store for retailers this festive season? We’ve taken a look at some of the key statistics and trends in retail shopping habits and furnished you with tips and tools to help you capitalise on these trends and make the most of the upcoming festive period.
Retail ho ho’s no no’s
The last two years have hit the retail industry incredibly hard. Thanks to the coronavirus pandemic, retailers have had a challenging time, with stores closed, staff furloughed and supply chain issues. At the same time, multiple lockdowns caused a significant shift away from the high street to e-commerce.
Research from the ONS, published earlier this year, revealed the extent of the changes wrought on the retail sector: in 2020, total retail sales volumes fell by 1.9% compared with 2019, the largest annual fall on record. However online sales rose to a record high of 33.9% as a share of all retail spending, the highest growth seen for 13 years, according to e-tail association IMRG.
More than 8,700 British chain stores closed in the first half of 2021 and while some brand names have disappeared from the high street forever (goodbye Topshop, Debenhams and Thorntons), some brands – especially those with a strong e-commerce presence – have thrived, especially the “Big Four” supermarkets, Amazon, Marks and Spencer and Boots, according to Statista.
Where and how are consumers spending?
But it looks like consumers are planning to buck this trend in 2021: Statista research shows that in the 2021 holiday season, the average Christmas spending on gifts in the UK was higher compared to the previous two years. UK consumers were expected to spend the most on consumer electronics, at around £51 in 2021, compared to £49.20 in 2020. Compared to the previous year, per capita spend on clothing and footwear saw an increase in 2021 going from £26.94 to £38.79, although this is still far below the levels observed in the pre-pandemic period.
Research from Canopy Media shows that the pandemic also affected how people shopped for gifts in 2020. The number buying online grew to 85%, up from 78% in 2019, while, due to a mix of store closures and consumer concern, the number shopping in-store dropped from 77% in 2019 to 58% in 2020.
When are consumers shopping?
New research from Kantar’s GB Target Group Index (TGI) consumer data has found that 21% of adults (over 11 million people) are planning to start their present purchasing in November. Kantar also found that, amongst the November Christmas shoppers, 44% of them (5 million people) buy Christmas presents for six or more people. November Christmas shoppers can also prove to be a lucrative group in their gift purchases: the data shows that well over half of them (55%) claim to usually spend £200 or more on Christmas gifts, compared to just 37% of those who start their Christmas shopping in December. This means that now is a key time to engage consumers with products and services that will be gifted during the festive season.
Christmas shopping trends
The likes of Facebook, Twitter, Instagram, Tik Tok and Pinterest account for approximately 60% of all Gen Z and Millennial holiday purchases.
Nearly 70% of Gen Z and Millennials are actively looking to engage with brands both online and in-store that have a clear sustainable mission. Gen X is not far behind, with 59% seeking out ethical brands. For more on Green consumers view our Green Paper.
After the ‘pandemic puppy’ boom, it will come as no surprise that 64% of pet owners have said they will be buying presents for their furry friends. For more pet specific marketing data visit our page.
Shopping the sales
In 2020, consumers used incentives like Black Friday (39%), Cyber Monday (24%) and Amazon Prime Day to bag their bargains. In 2021, Klarna expects that figure to increase to 72% of shoppers who will rely heavily on similar incentives, seasonal sales and offers to stretch their budgets.
81% of shoppers expect to buy for family, while nearly half plan to purchase gifts for friends (44%). 34% will shop for their significant other, while a mere 7% plan to shop for work colleagues.
43% of Millennials and 38% of Gen Z plan to buy gifts from their wish lists for themselves if they don’t receive them from others, up from last holiday season, when 41% of Millennials and 32% of Gen Z said they purchased gifts for themselves.
Wisdom of the silver surfers
55% of Baby Boomers are more inclined to forgo participating in holiday sales altogether, but Klarna’s silver surfers are still savvier than most. Older Klarna shoppers are much more likely to take advantage of the holiday deals than the
average Joe, with only 43% of Klarna Baby Boomers saying they won’t shop sales.
How we spend it
While we’re feeling more excited about the first ‘normal’ Christmas since 2019, a number of factors are stretching the purse strings: personal finances are under pressure, unemployment and inflation are both on the rise; and cost of living is expected to go up in 2022. New research from VoucherCodes and GlobalData has found that, while consumers feel stretched financially they also want to make this Christmas extra special. As a consequence, many admit to being more inclined to rely on loans than their earnings to finance Christmas gift spending this year. In 2020, consumers expected to finance 75% of their Christmas gift spending via their earnings, compared to 62% in 2021. This year, people anticipate relying on credit cards, store cards, loans, and payday loans more than in 2020.
Data – your helpful Christmas elf
It is no secret that early to mid-November is the best time for direct mail (DM) campaigns during the festive period. And with the right data at their disposal, brands can further optimise their campaigns to reach the right consumer at the right time. And as we’ve seen, bricks and mortar is far from being obsolete: with the right planning and analysis of customer data, brands can drive footfall and traffic over typically quieter times with incentives or offers. With more than 44% of consumers purchasing presents for six people or more, they’ll be keen to make the most of incentives and sales.
But not only that, retailers need to ensure they are embracing a more omnichannel model. Klarna’s omnichannel research found that retailers’ main motivation when it comes to developing a more omnichannel approach is to better understand customers, but other factors also came into play.
Build a winning strategy
Consumers’ buying habits are changing, making it an optimal time to tap into new opportunities. Brands must take the insights from the past year and use them to build a winning strategy. Getting personal with consumers with tailored, relevant and timely communications and marketing will not only drive engagement but also optimise return on investment (ROI) and long-term value (LTV).
With access to a data asset repository of multiple, trusted sources of consumer data, brands can build an accurate, in-depth, and insightful view of the consumer population in the UK. By understanding who consumers live with, what they earn and spend, how they transact and what their hobbies are, for example, they can gain huge customer insight, enrich their marketing comms, build profiles and personas and select the appropriate recipients for their campaign.