Dose #113: Active Customers versus Subscribers

Matt here with your weekly Subscription Prescription 💊

This week’s dose is about unlocking better value from your best customers. Courtesy of an interview with Ryan Rouse, a founder of Factor Meals and the current President of MALK Organics, we unpack Ryan Rouse’s favorite north-star metric: active customers. We explain that and how to keep focusing on them to drive better revenue from repeat customers.

This week’s dose came from an incredible interview with Ryan Rouse, live at SubSummit! This is one you’ll want to listen to in addition to reading below:

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We push for subscriptions because it means higher LTV. Higher LTV usually equates to better profits.

But subscriptions are not the only path to higher LTV.

Depending on what you’re selling and who you’re selling to, sometimes subscriptions aren’t a great fit.

When we take a step back and start looking at how to enable the best experiences for our best customers, we find different ways to unlock that value.

Subscriptions are often a big part of that, but memberships and loyalty can also be a big part. This week, we discuss how you can unlock more value by focusing on Active Customers.

Let’s dive in!

What is an Active Customer?

Active Customers are anyone who makes a purchase—that isn’t a first purchase—within a given timeframe, like 45 or 60 days.

Think of it like this: someone makes a purchase, 6 months go by, they purchase again. OR —> someone buys once, then buys again 10 days later. Now they’re an active customer.

This can mean a subscriber, but an Active Customer is anyone who is making a one-time or subscription purchase that has bought from you before.

Most of what we talk about in this newsletter is enabling the right experiences for subscribers. But when you focus only on subscribers, you miss out on a lot of value from other customers.

The more your Active Customer count grows, the better off your brand is doing.

Why Subscriptions Can Be a Problem

Active Customers encompass everyone who purchases again from your brand. While we’d love for everyone to be a subscriber, the reality is that many people don’t like subscriptions.

Call it fatigue, or they’ve been burnt before; there are various reasons why customers are willing to buy one-time from you on repeat.

So, while most brands focus on pushing subscriptions to one-time purchasers, this method is about giving people more of what they want - even if that isn’t a subscription!

How to Get More from Active Customers

The first step in this process is focusing on increasing your Active Customer count. This does include subscribers, but anything we can do to enable more repeat purchases inside of our timeframe means we’ll be making our customers more profitable for our business.

The second step is understanding consumption behavior. What is the average amount of time it takes for one-time subscribers to make a second purchase? How much of your product are people consuming within 45-60 days? For example, if a bag of protein powder lasts 3 months, then we need a longer window for evaluating active customers (instead of 60 days, for example).

The third step is developing flows to ensure repeat purchases happen when we expect them (or even sooner). You can develop post-purchase flows via email and SMS to engage non-subscribers. This means you can leverage discounts how you would to get a subscriber, but instead, to get them to make another purchase.

The fourth step of this process is to leverage data and customer feedback. When we segment further inside of our Active Customer list to find the most profitable customers (could be product, AOV, location, or use case, for example) and then leverage our retention flows specific to them.

What it All Means

Let’s go from general to specific because that’s what we do at Subscription Prescription: We give you real, hands-on advice you can start using today.

The first thing to do is look at repeat purchases within a 45- or 60-day window. These are your active customers. Then, get into who they are and why they’re buying from you. What’s working for them? What isn’t? Even if many are subscribers, what’s keeping people from subscribing? What can you do to make their purchase process easier?

One way to do this is to leverage great post-purchase survey tools like KnoCommerce. You can trigger questions based on whether they’ve purchased from you before to ask more specific questions, like what brought them back today.

You can also email survey one-time repeat buyers to find out what they love and want more of. You should also test more offers for this group (easy to segment Active Customers in Klaviyo) to see if you can get more purchases from them.

Having the north star metric of Active Customers means you have something you can focus on growing, not just count but LTV as well.

Final Thoughts

The main takeaway for this week’s dose is that you don’t have to push everyone to a subscription. Our job as a brand is to enable the right customers to purchase more from us. While we want that to be a subscription (because it feels easier at times), we can leave a lot of money on the table by ignoring repeat customers in general.

So take a chance this month and test some offers for repeat purchasers. Getting them to purchase again can be profitable too!

That’s it for this week! Stay tuned for next dose #114 out next Tuesday.

 - Matt Holman 🩺

The Subscription Doc