Ensure customer retention with an alternative recurring revenue model

Whether a customer has a backlog of stale coffee or runs out of moisturizer a week before their next shipment, an ill-fitting subscription is frustrating every time.

That’s where Inveterate comes in. We know how to help you get buy-in from your best customers and ensure long-term customer retention. We’ll help you build a membership program to replace or supplement your existing subscription plan. Upping the convenience factor increases customer loyalty and AOV — without locking customers into a subscription.

Read on to learn how.

What is an alternative recurring revenue model?

Inveterate’s alternative recurring revenue model is a paid membership program that offers preferred pricing on all purchases without the burden of a recurring order. Rather than restrict the discount to a predetermined cadence, customers buy into the program, ensuring ongoing loyalty. They turn to your brand whether they happen to run out of the product, need to buy a gift, or want to add on different products.

An alternative recurring revenue program works because it takes the pressure off the customer. People don’t pause or churn when they get too much product. Instead, they can make that next purchase whenever they want to. This strategy eliminates the most common subscription challenges: 

• Product build-up: If the subscription cadence is too fast, products can stack up or even expire before customers can use them. When it occurs to them to delay an order, their order may have already shipped. These customers often churn, especially if you don’t offer the order frequency or product quantity they need.
• Lower AOV: Customers often opt-in to subscription programs to avoid the frustration of running out of a commonly used item. If the subscription cadence is too slow, customers may not bridge the gap with additional purchases because they won’t get the same discount. Worse still, they may turn to a competitor. LTV suffers while AOV stagnates.
• Subscription abuse: Customers often want the discount but don’t want to commit to recurring orders. So they sign up for the subscription program and then immediately cancel it, preventing the repeat revenue and brand loyalty you intended to create. Even worse, this lack of brand connection opens the door for churn, especially because people may feel guilty returning after they’ve broken the rules of the subscription.

A preferred pricing membership works because it rewards an active behavior (completing a purchase) rather than a passive one (subscription and auto-ship). 

How to make the most out of an alternative recurring revenue program

While a flexible alternative to subscriptions can prevent customer churn, you’ll also stimulate broader purchase behavior with your brand — if you create a membership that customers want to join. To do that, we suggest three strategies:

1. Ensure customers recoup membership cost in three orders

There’s a simple formula for pricing your alternative recurring revenue: Customers should envision recouping the membership cost in about three orders. This is enough orders that loss-aversion motivates them to keep coming back, but not so many that they don’t swiftly recognize the value of the program. 

And you can add to, replace, or enhance your existing subscription with a recurring revenue model: 

• Adding a membership program allows you to meet the needs of any customer, reducing churn across the board. Magic Hour’s “The Connoisseur's Club” membership program runs alongside its subscription option. Subscribers save 5% on purchases while members save 11%. That benefit and other perks like quarterly gifts and members-only products have prompted members to spend 4X more than other customers. 
• Replacing your subscription program rejuvenates the customer base with discounts whenever they place an order. When Bambu Earth subbed out their points-based legacy system for cashback, they increased incremental gross revenue by nearly $740,000 in just nine months.
• Enhancing subscriptions with memberships can boost sales (and more) because it provides more ways for customers to engage with the brand. Wandering Bear did just that. 

2. Entice customers to purchase outside their usual cadence

A strategic set of rewards makes the alternative recurring revenue model tick:

• Members-only pricing: This rate should be the same as the subscription discount (or in addition to) and can be used at any time. One program isn’t better than the other, the selection is about giving the customer flexibility to choose how (and when) they get the benefits of preferred pricing.
• Early access: Whether customers gain access to sales or item drops first, this exclusivity shows your brand’s esteem for its new members. It entices members to check out your broader product offerings — even if they only joined for the subscription — and rewards further purchase behavior down the line. This is a great way to integrate components of alternative recurring revenue with our exclusivity model. 
• Shipping discounts: Free or discounted shipping ensures that customers are getting a better deal on their repeat orders with your membership program than without it. 

3. Launch and customize the model 

Our foundational loyalty programs unite the essential components of loyalty success with a strong base you can build on. Members-only pricing, early access to merchandise, and appropriate discounting make up a proven approach that drives subscription longevity and further purchases.

Once you have a sizable enough membership base, you can test and iterate to optimize results. Then we’ll help you customize the right program for your ideal customer. 

Best of all, each iteration is exceptionally dynamic. It’s easy to make changes, so you’re never forced to stay on any one loyalty path. We’ve perfected this strategy over time, and customers like Wandering Bear and immi Eats have benefitted massively.

immi’s exclusive perks boosted AOV by 63% for ‘Slurp Society’ members

For immi’s Slurp Society membership, Inveterate’s alternative recurring revenue model makes the customer’s ROI immediately evident because members easily earn back the $50 annual fee in three to four orders. If they eat one packet of ramen per week, the membership saves them $85 per year. 

Notably, the discount is the same as their pre-existing subscription, which offers 25% off each order and free gifts. With a Slurp Society membership, customers also get:

• Early product access creates esteem among members and rewards active behavior.  
• Sneak peeks generate excitement about new product drops to encourage conversion.
• Exclusive deals make members feel special and incentivize enthusiastic customers to join. 

With Inveterate’s alternative recurring revenue model, immi has seen results like: 

• 75% increase in shopping frequency
• 63% increase in AOV
• 186% increase in revenue per member

Sound like the conversion unlock you need? Book a demo.