Researchers from San Diego State University, Rutgers University and Vienna University of Economics and Business have published a new report. Marketing Magazine Article examining how customer engagement in subscription box services can be transformed into results that benefit companies.
Work coming soon Marketing Journal, Nita Umashankar, Kihyun Hannah Kim, and Thomas Reutterer, author of “Understanding Customer Engagement Dynamics: The Subscription Box Example.”
The subscription box market has grown more than 100% year over year over the past five years. The most popular categories in this segment, accounting for 55% of total subscriptions, include companies organizing boxes containing clothing, dinnerware, technological gadgets, personal care or toys and delivering them to customers’ doorsteps at regular intervals. Such services aim to surprise and delight customers with new products and highly personalized experiences.
Established retailers like Sephora, Walmart, Nordstrom, and Target have developed their own subscription boxes as a way to compete with hundreds of newcomers like Birchbox and Stitch Fix. Subscription boxes offer customers an easy, convenient and consistent way to access a variety of products with little commitment. They can also skip boxes or return boxed products at any time. “While this kind of flexibility is attractive, the results are worrisome for companies. Customers often skip boxes and return 60 to 70% of the products in the box even when they don’t,” says Umashankar. Nordstrom and Target have since closed their subscription boxes, and although Sephora continues to offer one, it and other retailers are concerned about “box fatigue.”
How involved should subscription box customers be?
Hoping to improve their results, subscription box services began to engage customers throughout the box process through a series of digital touchpoints. For example, customers are invited to digitally preview an upcoming box, provide feedback on products in a delivered box, and give reasons to skip a box. The idea is to get customers to actively participate in the box process as well as learn about their tastes, which should result in fewer skips and more spending.
“Engagement is truly engaging, empowering and entertaining for customers, but it remains unclear whether customer engagement translates into objective outcomes that benefit companies,” says Kim. This new study explores this question using secondary data from a national clothing box company, which includes repeated engagement, closed and open-ended feedback, and box purchasing behavior of nearly 30,000 customers from 2015 to 2018.
In general, customer engagement in terms of previewing the contents of an upcoming box reduces future box purchases. If the partner box company had limited instead of encouraged upcoming box participation, the customer would have earned 14% in lifetime revenue. In addition, if the company had not encouraged its customers to provide concrete and specific reasons to skip a box, the customer would have earned 10% in lifetime revenue. However, if the company had encouraged feedback when subscription boxes are deliveredcould increase customer lifetime revenue by 5.7%. As Reutterer summarizes, “So when providing feedback with box delivered increases future purchases, engagement before And after that reduces box involvement and spending.”
Lessons for executives
For companies that curate subscription boxes, the researchers offer the following recommendations:
- Carefully encourage digital previews for upcoming boxes by letting customers be surprised rather than informed. For example, consider offering unique and exclusive products or early releases, enable preview for some product categories and not for others, or rotate these options to keep the surprise.
- Focus on the first box, not only in terms of products that fit customers’ preferences, but also in terms of customer engagement. If customers choose to skip the second box, they have a good chance of losing the customer, so avoid asking for extensive feedback on why they skipped the box. Instead, increase their interest in winning a new surprise.
- Analyze feedback on open-ended comments for sensitivity, knowledge, and linguistics, and capture word count, punctuation, and other text engagement metrics.
- Ask for emotional and tangible feedback for boxes delivered, especially the first box. Ask customers about specific product features (tangible feedback) and how they feel about the products (emotional feedback) and ask them to elaborate. For example, “How did you feel about what you saw in the box?” Ask questions like (emotional) or “List the first three things that come to mind when you try this product” (concrete).
- Avoid having customers explain in detail why they skipped a box. Don’t ask customers to explain why they skipped a box. If available, use closed-ended questions rather than open-ended questions.
Nita Umashankar et al, EXPRESS: Understanding Customer Engagement Dynamics: The Subscription Box Example, Marketing Magazine (2022). DOI: 10.1177/00222429221148978
Provided by the American Marketing Association
Quotation: Understanding customer engagement: The secret to seeking feedback for subscription boxes (2023, Feb 8), retrieved Feb 8, 2023 from https://phys.org/news/2023-02-customer-secret-feedback-subscription.html.
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