Three Ways C-stores Can Leverage Subscription Services
NATIONAL REPORT — As consumers across the country change their purchasing habits in response to the COVID-19 pandemic and other factors, convenience store operators may find opportunity in a type of purchase not typically associated with the channel: subscriptions. In recent years, subscriptions have seen a boom in popularity.
"Subscription customers tend to be much more loyal customers," Jessica Shelcusky, convenience store marketing specialist at Paytronix, explained during a recent Convenience Store News webinar. They also tend to fall into a younger age bracket. "It's a really desirable target market," she added.
In the basic form of a subscription, a customer signs up, is entitled to some benefit or goods over the length of the subscription, and is automatically billed on a recurring basis. However, different versions exist that may be more or less suitable to c-stores, depending on their customers' needs and their target market.
Today, $640 is the average annual spend on subscriptions. Thirty-four percent of Americans feel that the number of subscriptions they hold will increase over the next two years, and grocery subscriptions in particular have seen 45 percent year-over-year growth.
So, how can c-store operators translate this trend for their business?
According to Shelcusky, there are three different subscription types they may find appealing: recurring payments; one lump sum payment with unlimited redemptions during the time period it covers; and one lump sum payment with limited redemptions that can be used up.
Recent subscription examples in the c-store industry include Cumberland Farms' Coffee Cup-Scription program, which lets customers pay $25 per month for two cups of coffee each day, resulting in a price of 40 cents per cup if two are consumed every day; and RaceTrac Rewards VIP, which lets drivers pay $2.49 per month to save 10 cents per gallon on their first 40 gallons of fuel purchased and 3 cents per gallon afterward.
Shelcusky pointed out that some subscriptions may not be big moneymakers on their own, but boost sales in other ways. For example, customers who stop in for their daily subscription coffee are more likely to add other items to their basket.
Whatever subscription model retailers decide on, she advised that they should take these practical considerations into account:
- What reward is the customer eligible to redeem? Do coffee subscriptions include any size? What about cappuccino?
- Are there daily or monthly limits?
- How to track redemptions.
- How to track subscription renewals, as different members will have different enrollment dates.
- What new emails will be triggered by subscription-related actions.
Program promotions can include temporary free membership, refer a friend programs with rewards for the original member, and a variety of other creative initiatives. Paytronix advises that if something works for a retailer, "run with it."
As a case study, Shelcusky described the results of Panera Bread's coffee subscription that launched earlier this year. For $8.99 a month, customers can receive unlimited coffee. The program so far has resulted in: more than 800,000 enrolled members, visit frequency rising more than 200 percent for customers after signup, a 70 percent increase in food attachment for subscribers, and a boost in customer value as MyPanera members have a lifetime value approximately five times that of a non-member.
An on-demand replay of this webinar, "Subscription Solutions to the Pump-to-Store Challenge," is available here. The program was sponsored by Paytronix.