Want more happy customers? Earning consumer loyalty is simple: give customers exactly what they need, at the precise moment when they need it. Of course, this is one of those things that is “easier said than done.” That said, thanks to predictive technology, it’s much more achievable than ever in history.
Thanks to advances in IoT and AI / Machine Learning technology, consumption-based refill subscription is now achievable.
The Problem with Scheduled Subscriptions
Schedule-based subscriptions are based on usage estimates. When actual usage doesn’t match the schedule, consumers cancel the subscription because they have too much product (and are automatically spending money on products they do not need).
The common mismatch between delivery and actual consumer usage causes many consumers to end up with more stock than they need. Consumers have to modify their schedules, which counters the convenience benefits. They end up canceling their subscription as a result.
As a result, brands trying schedule-based subscriptions end up saddled with extremely high rates of consumer churn.
Steep acquisition costs and high churn rates often leave brands questioning whether the subscription model is worth its costs.
Churn is a big problem to solve. According to Retail Dive, nearly 40% of subscribers of any service type cancel. That's a big chunk of consumers abandoning subscriptions after just a few months before brands can break even on their acquisition costs.
We believe there are two big reasons for the high rates of churn:
First, standard scheduled subscription models don't match consumption patterns accurately enough.
And second, consumers experience 'subscription fatigue' when they have to keep adjusting their subscriptions to match their consumption.
When a subscription is paused or canceled, it is less likely due to customer dissatisfaction with the product and more to do with the shipment timing according to consumer needs. Consider your own consumer experience with subscriptions - how many times have you unboxed yet another package of protein powder when you’ve already got three in the pantry?
Why Smart Reorder Subscriptions Are Better
If brands can better deliver the value and convenience of the subscription model through a superior consumer experience, they can win long-term subscriptions. That’s where smart reordering and connected commerce come into play.
When IoT meets e-commerce-connected products, true customer usage is monitored in real-time, and automated shipments are sent based on product level.
For example, oLivery, a European olive oil company uses a connected bottle to monitor the exact moment customers need replenishment. This triggers a push notification to customers' smartphones, where they confirm that they would like a refill. The refill is delivered within one business day in a recyclable plastic pack.
This is a win-win for both consumers and brands because:
More control over subscriptions to order the amount of product they need at the time that they need it - eliminating the issues of product overstock in the home and a need to cancel or pause subscriptions to “use up” excess product.
A “no-touch” experience that reduces 'churn fatigue' and the need to make constant decisions concerning which products to buy, remembering when to buy them, and spending time placing orders or shopping in stores.
A sustainable solution that minimizes packaging and waste, contributing to a healthier planet. A reusable container with smart capabilities creates a circular chain of reuse with the ability to connect multiple products in the home with their reorder sources.
Revenue and retention growth. Smart replenishment solves these issues and offers consumable brands several additional benefits to their top and bottom lines, including more predictable product revenue; improved LTVa, loyalty, and ROI; reduced acquisition cost and churn; and reduced product cost (refill packaging).
Expanded product innovation and marketing opportunities. Achieve more sales through smart packaging differentiation in highly competitive categories.
Personalized brand connection. Smart products enable new channels of consumer engagement to drive revenue and loyalty.
Richer post-purchase consumer insights. Additional insights on usage generated from connected products help brands understand how to better serve their customers in the future.
Ready to Get Started With Smart Replenishment?
Smart replenishment presents an exciting shift in commerce for both brands and consumers. Brands benefit from better returns and a richer understanding of consumer behavior smart replenishment brings about the convenience consumers crave.
At Adrich, we have a vision of products that reorder themselves and connect consumers, homes, and brands sustainably.
Adrich is a consumer insights and smart replenishment platform powered by AI and IoT. We aim to help brands and retailers build better products, deepen consumer engagement, and accelerate the adoption of refill consumables.
We are powering new levels of post-purchase consumer insights and smart auto-reordering solutions for the largest brands in the world with patented technology and e-commerce partnerships.
Would you like to see how smart replenishment can work for your business?
Get in touch for an overview and demo.