Four Advantages of a C-store Subscription Program

NATIONAL REPORT — Subscription services have become ingrained in consumers' everyday lives. From gym memberships and Netflix accounts to ridesharing apps and grocery delivery services, subscription programs present huge opportunities to drive revenue and weave a brand into customers' daily lives — especially in the convenience store space.

A recent survey from Paytronix Systems Inc. found that consumers spend $640 annually on subscriptions and 34 percent of respondents will increase the number of subscriptions they have over the next two years.

"Seventeen percent of non-subscribers are 'very' or 'extremely' interested in subscription programs, and 25 percent are neutral on joining one. Combined, that's a huge amount of demand in the market yet to be met," Ryan DiLello, content specialist at Paytronix, explained during a recent Convenience Store News webinar. "Not only would these subscribers bring in steady income for your brand, but 80 percent are loyalty members and 60 percent find loyalty programs 'very' or 'extremely' important. That means your future subscribers are going to be active, loyal and highly valuable members of your customer base."

The four advantages of subscription programs for convenience retailers are:

• Additional purchasing — Discounting meals and products means customers have some extra money to spend on full-priced items, DiLello explained, adding that discounts drive business.
• Flexibility — Operators can keep pace with a changing marketplace with an adaptable program.
• Repeat customers and deep loyalty — "Customers want to gain max value from their investments and will most likely zero out their monthly meal packages and make additional purchases along the way," said DiLello.
• Differentiation — Subscriptions help accentuate unique services that define a brand's identity by way of popular subscription models such as item-based, free delivery, online discount, and insider perks.

Getting Started

Although simple to understand from a customer standpoint, subscription programs merit a fair amount of development and security consideration. There are seven key elements c-store retailers should consider in designing their subscription programs, such as:

1. Product — specific list of UPCs to be included
2. Price — monthly price to be auto-billed
3. Limits — contract terms specific from max amount per period and minimum time between redemptions
4. Payment platform — how will customers pay?
5. Communications — mix, channel and schedule
6. Channel usage — for example, mobile app, website, physical card, etc.
7. Roll out plan — collateral, employee training

As DiLello pointed out, a subscription program ensures services are available at a fixed price, so convenience retailers need to strike a compromise on a price that's financially viable for their brand, as well as optimally attractive to customers.

There are three main tools for helping operators do that. The first is financial modeling, which analyzes current purchasing patterns and behaviors specific to a category or product that your subscription operates on. Then, determine the product, price and limit so it is financially viable.

The second is consumer surveys, which gauge interest in the initiative and distinguish which products or services customers might be interested in subscribing to.

Thirdly, retailers should consider running a beta program in one or more test markets. Paytronix recommends giving the initiation four to eight weeks to determine the viability of a subscription program before diving into a more head-on approach.

Next, retailers need to find ways to tailor a subscription program to fit customers' needs. Some tools of customization include member perks, limited memberships and waiting lists, referral bonuses, and free trial periods.

The final step is to consider pricing. Operators can choose a subscription service that provides a product or service unlimited for a month or unlimited for a year. Other options include meal passes or a per-item-basis.

Leveraging Technology

A bad program managed well is better than a good program managed poorly. Technology is crucial from a managerial perspective, DiLello explained, adding that convenience retailers need to analyze their technology solutions to ensure it can maintain a subscription program.

Technology is also an important tool in engaging customers and encouraging them to join a subscription program. A survey from Paytronix and PYMNTS found that high-tech consumers show the highest level of familiarity with subscription services.

"Forty percent of high-tech consumers are 'very' or 'extremely' familiar with restaurant subscription services, and the same would carry over for convenience stores. This is important to recognize because it solidifies the importance that subscription programs will form most successfully and seamlessly with the technology to support them," DiLello pointed out. "But also having a tech-driven program is going to appeal to different customers, particularly high-valued customers."

Metrics for Success

There are four measurements retailers should keep an eye on: take rate, attachment rate, penetration rate, and registration volume. Altogether, these elements work together as metrics for planning out a subscription program, assessing viability and altering customizations, among other things.

"Subscription programs are flexible, so retailers should use their measurement data to their advantage by tweaking their programs over time as necessary," DiLello advised.

An on-demand replay of this webinar, "Mastering C-Store Subscription Programs," is available here. The program was sponsored by Paytronix.