I’ve been marketing subscription boxes since 2017. Back in my early days at Hunt A Killer, it was a different world. Pre-pandemic. Pre-iOS update. Pre-inflation. We were very much still living in the golden era of Facebook Ads… and customer acquisition was pretty easy.
Then the pandemic struck. Consumer shopping behavior shifted from in-person retail locations to suddenly everyone in quarantine with nothing to do but shop online. Online sales skyrocketed. Brands flocked to get their websites conversion-ready and launch ads, which caused ad costs to skyrocket as well. Fortunately for most brands, while ad costs were higher, so was buyer intent, which meant that customer acquisition costs were generally still very profitable.
Enter March 2021 when iOS14 launches. We lose tracking signals from millions of iPhones across the world. The Facebook pixel becomes less effective, attribution becomes murky (at best), and the algorithm can’t optimize as well. Couple this with the fact that brands are still trying to pour money into ads in hopes of reliving the glory days of the pandemic... but consumer behavior has shifted (somewhat) back to in-person shopping. The buyer intent for online sales just isn’t as strong as it was in peak pandemic. Sales start to suffer, CPAs go up, and many brands really start to struggle.
Now we’re in what I would call the “post-pandemic” era. The pandemic is over. The dust has settled from the apple update, and generally speaking, things are “back to normal”.... or at least as normal as they have been in the last 3 years.So, how has the Subscription Box Marketing Playbook changed since Pre-Pandemic?
- You need to take more of a full-funnel approach. Pre-Pandemic, you could take a half-decent product with decent profit margins and an OK website and just rely on a good media buyer who knew what buttons to push in the ad account and they could probably make it work. Nowadays, EVERYTHING needs to be firing properly. You need a good media buyer, good ad creative with well-written copy, a great website with high conversion rates and high email opt-in rates, a well-built out email marketing backend, and excellent customer service and brand reputation.
- Creative matters more. Back in the day, the Facebook algorithm was so strong that you could rely on it to find the right person at the right time who was ready to buy regardless of the type of ad you put in front of them. Today, your creative needs to be much more compelling. This means that you need to test MORE creative. So you’ll see brands getting a higher volume of product shots, product videos, customer unboxings, customer testimonials, etc. The more you can test in your ad account, the higher your chances of success.
- You need to diversify (once you hit a certain level of scale). Too many brands relied strictly on eCommerce and ignored retail. Now that the online space is more competitive and CPAs are slightly higher than they were (especially for larger brands) they’re realizing the importance of taking an omni-channel approach. A diversified brand is a healthy brand.
- You need to play the LTV game. This also means you need healthy margins. Back in the day, it was actually realistic to achieve a decent level of scale AND be profitable immediately on acquisition. Nowadays, with customer acquisition costs slightly higher than they were, you need to rely on retaining your customers and making your profit from renewals. This means you need to focus on having healthy profit margins and an excellent customer experience. Healthy profit margins will expedite the time to payback. A great customer experience will keep your customers subscribed and maximize the amount of profit you make back over the lifetime.
- Subscriptions need to be flexible. This is a big shift that I’ve noticed in recent years. Consumers have become weary of subscription brands that make it challenging to cancel. Nowadays, they avoid them at all costs. So if you want to create a great customer experience, you need to allow customers to pause, skip renewals, and cancel their memberships very easily without jumping through a bunch of hoops. Believe it or not, this will actually INCREASE your LTV because those customers will be more likely to come back as opposed to being turned off by the horrible customer experience and avoid you like the plague moving forward.
In conclusion, it is still very possible to run a successful subscription box company. In fact, several of our clients are doing it as we speak. The playbook has changed, but good entrepreneurs with good marketing teams can still get the job done.