Retaining a customer is more profitable than acquiring a new one. And subscription services do a tremendous job in keeping your loyal customers engaged.
In fact, 70% of business leaders say subscription business models will be key to their prospects in the years ahead.
Think about it.
A system where you can keep earning from a customer on a weekly, monthly, or yearly basis, and as a business owner, your only job is to maintain the quality of the offered service.
Tein Tzou(Founder, Chairman, and CEO of Zuora), mentions in his book that…
“subscriptions are the only business model that is entirely based on the happiness of your customers. Think about it—when your customers are happy, then they’re using more of your service, and telling their friends, and you’re growing.”
– Subscribed: Why the Subscription Model Will Be Your Company’s Future – and What to Do About It
This will blow your mind:
“According to a report by Zion Market Group, the global subscription and billing management market was valued at USD 3.8 billion in 2018 and is expected to reach USD 10.5 billion by 2025, at a rate of 15.5% between 2019 and 2025.”
Every major online business is adapting this model of success and if your online store is on WooCommerce, then you are in the right place. The WooCommerce Subscriptions plugin can help you implement subscriptions successfully on your eCommerce store. More on this later.
In this article, I will further discuss the importance of subscription products and services and how to set up WooCommerce subscriptions.
Let’s get on with it.
Importance of Subscription Products And Services
Subscription business models have been implemented by sellers of tangible products and virtual goods alike.
But it is slightly difficult in the case of tangible products due to its dependency on physical distribution. Which, as we all know, has been severely affected by the pandemic.
However, when it comes to the digital distribution of goods and services; there is no such hurdle. You can provide a seamless experience to your customer with ease.
Online streaming services like Amazon Prime, NetFlix, and Hotstar are making millions of dollars in profits. Amazon Prime alone has 10 million subscribers in India, NetFlix has 4.6 million paid subscribers and Hotstar has over 8 million subscribers.
By providing quality content and maintaining the level of services, they have created such huge subscriber bases. And those millions of loyal subscribers keep on paying monthly. This monthly recurring revenue keeps the business running smoothly.
The same goes for SaaS businesses, as they too rely on subscription models for the sale of their software programs. The subscription model lowers customer acquisition costs and increases customer retention.
And it’s not a surprise that the subscription economy grew more than 350% over the last 7.5 years.
Overall, the SEI data reveals that subscription businesses grew revenues about 5 times faster than S&P 500 company revenues (18.2% versus 3.6%) and U.S. retail sales (18.2% versus 3.7%) from January 1, 2012, to June 30, 2019. (Graphic: Business Wire)
I will show you some more examples of successful subscription products below.
Successful Subcription Products
Birchbox: Birchbox sells beauty products such as makeup, skincare, hair products, etc. in subscription boxes. As you can see, they offer tangible products as part of their subscription programs and they have monthly and yearly subscription plans.
Dollar Shave Club: This brand has been so successful that you will find tons of case studies on it. Dollar Shave Club made a mark in time through its subscription-based business model. Its customer-centric service has resulted in high recurring revenue.
Dear readers, now we are on the technical part of this article and here you will learn the ways to create subscription products and services for your WooCommerce store.
How to Setup WooCommerce Subscriptions?
An important fact to remember is that the core WooCommerce plugin is free but the WooCommerce subscriptions is paid.
So, if you wanna play, you gotta pay.
But before you proceed, check if you have all the system requirements to run WooCommerce subscriptions. Here is a list of requirements from the official WooCommerce website.
If you have an outdated version of WordPress, make sure you update it. But do backup your data before making such changes to your WooCommerce store.
Install And Activate WooCommerce Subscriptions
1. From the official WooCommerce product page, purchase and download the .zip file.
Next, go to your WordPress backend, click on “Plugins” and then click on “Add New”.
2. Upload the WooCommerce Subscriptions zip file and click on “Install now”. Then “Activate” the WooCommerce Subscriptions plugin.
Configure WooCommerce Subscriptions Settings
First, you have to uncheck the “Accept Manual Renewals” because your customers might forget to renew their subscription and so, an unexpected halt in the services might impact your store negatively.
WooCommerce Subscriptions automatically renews subscription through your customer’s payment method on every billing cycle. You can continue to provide a seamless experience without worrying about renewing subscriptions.
Later in the article, I will discuss it in more detail.
Guest Checkout And Account Creation Settings
It is obvious that WooCommerce subscription services need an account to deliver subscription services. So, allow your customers to create an account during the checkout process.
You can enable the automatic account generation feature, which will create a customer’s account based on their name, surname, or email address. Customers will receive their username and password after check out.
Payment Method Settings
The whole design of subscriptions is based on recurring payments, so make sure you have at least one method of recurring payments enabled for your customers.
Select the credit card as the recurring payment method because it’s the easiest option available.
Now, all is done. Let’s move on to the most interesting part.
How to Create a WooCommerce Subscription Product
Go to “Products” and click on “Add new”.
Type in the product name and from the Product data drop-down list, select “Simple subscription”.
Note: This option is only available after the activation of the WooCommerce Subscriptions plugin.
You can set the subscription price of your product and it’s payment cycle. For example, if my subscription product is green tea, I want to set a monthly subscription period at a price of 10 dollars.
You can set the “Expire date” on your subscription and also decide the signup fee if you want to.
You can also offer a free trial period of your subscription product. The length of the trial period usually ranges from 7 days to a month. Trial periods are common for virtual products like software programs, plugins, etc.
Now, you have to add a product image by clicking on the “Set product image”
After setting up the product image, click on “Publish” to post your subscription product.
Now, test orders your subscription product by using incognito mode or by visiting your website from another device. Place your order and after checking everything, cancel the order from the WordPress backend.
In the general section, you can see there is an option to create a free trial period of your subscription product.
For example: if you create a subscription product for 10$ a month and offer a one month trial period, then the total length of the subscription period will be 7 months. The first-month use would be free and the rest would be charged.
If you have no free trial, then the first subscription payment will be the sum for the signup fee and the first month’s subscription cost. And if you do, then only the signup fee will be charged for the first month of the billing cycle.
The signup fee is paid at the onset of the subscription period. It’s an addition to the overall subscription payment but it is paid only once.
For example- for a 10$ subscription product, you can keep the signup fee at 2$ and receive 12$ total payment for the first month of the subscription period.
But as I mentioned above, if you have offered a trial period with your subscription product, then only the signup fee is charged at the start of the subscription period.
How to Create WooCommerce Variable Subscriptions
Earlier we created a subscription product i.e. green tea but green tea has variations too. There are lots of them actually but for the sake of simplicity, we will take mint green tea as our product variation.
Now, we have a variation of a subscription product that we want to sell as a part of our subscription.
1. Again, add a new product. In the product name, type “Mint Green Tea”. Scroll down to “Product data” and click “Attributes”.
Note: Here, you will keep “Product data” as ‘Simple product’ while adding attributes.
2. Select “Customer product attributes” and click add. In the name section, type “Weight” in the name section and “1 pound | 5 pounds” in the Value(s) section.
3. Time to change “Product data” to “Variable Subscription”. Go to Attributes, check “Used for variations” and then click on Save attributes.
4. Next, go to “Variations” and select “Create variations from all attributes”. And click “Go”.
Here, you have to add information about each variation separately. And also add product images of both variable subscriptions. And then click on save changes.
5. Then click on “Publish” and your variable subscription will be live. But make sure you test the order this time as well. It’s crucial to see how things turn out on the front end.
How to Create WooCommerce Subscriptions Coupon
Subscription coupons work the same as other coupons. It offers discounts on signup fees and recurring payments. It’s a great way to reward customers and increase customer loyalty.
Follow these simple steps to create WooCommerce subscription coupons:
1. First you have to enable coupons on your WooCommerce store. So, go to WooCommerce > Settings > General > Enable coupons.
2. Check “Enable the use of coupon codes” as shown below and save changes.
Now, it’s time to create coupons.
a. Go to Marketing > Coupons.
Note: If you haven’t created a coupon previously, then you will see a screen like this.
b. Click on “Add Coupon” to start the coupon creation process.
c. Enter a custom coupon code or click on “Generate coupon code”. Another benefit is that you can create personalized coupon codes for your loyal customers. If you are creating a coupon code, then make sure it’s alphanumeric.
d. Description is optional but it usually contains information about the name of the promotion or event, date of expiry, discount, customer’s name, etc.
Move to Coupon data, where you will notice three sections: General, Usage restriction, and Usage limits.
There are three types of discounts available to you; Percent discount, Fixed cart discount, and Fixed product discount.
Percent discount: This allows you to set a percentage discount on products. For example- if a customer adds 4 t-shirts to his cart and the total amount is 100$ and he applies a discount coupon of 10%, then he’d pay only 90$.
Fixed Cart Discount: It’s a free discount applied to the entire cart. Taking the same example, if there are 4 t-shirts in the cart for 100$ and the discount coupon of 10% would give a 10$ discount. The customer will pay 90$ as a total amount.
Fixed Product Discount: A fixed total discount for selected products only. For example- if there’s a 5$ discount on a t-shirt worth 25$ and the customer’s cart contains three of them, then the total discount will be 15$.
Coupon Amount: You have to enter the value of the coupon here.
Allow Free Shipping: Ensures free shipping for customers when the coupon is applied.
Coupon Expiry Date: Set an expiration date on your coupons.
The usage restrictions and usage limits section is dedicated to setting up constraints or rules on the use of coupons by customers. It is pretty self-explanatory but if you want to learn further, go to the WooCommerce official website.
Subscriptions work with recurring payments from customers at the start of every subscription cycle and that is subscription renewal.
Now, there are two types of subscription renewals:
1. Automatic Renewal
2. Manual Renewal
WooCommerce Subscriptions plugin automatically renews subscription on every billing cycle through your customer’s selected payment method. This is the most convenient subscription renewal process.
But it comes with few constraints. First, customers have a few payment options as compared to manual renewals.
Second, the subscription product is sent to the same address but if the customer changes his residence and forgets to update the new address, then the subscription product will be delivered to his old address.
Last, a customer’s credit/debit card may be declined due to a low balance and result in a stoppage of subscribed services or products.
Most of these issues may arise because of the customer’s negligence but the convenience makes it worth trying for. For store owners, it assures recurring revenue and helps them estimate their future growth with increased accuracy.
In manual renewals, you depend on the customer to pay their due amount at the start of every billing cycle, and subscription services are suspended until the customer pays for its renewal.
Manual payments are off by default and even I told you to keep that option unchecked but if you want to allow manual payments for subscriptions, you have to accept manual renewals.
Customers can choose to pay from any of the payment gateway extensions. Customers can use coupons to achieve discounts because manual renewal proceeds through the normal checkout process.
The biggest benefit that manual renewals offer is that customers can select a different shipping method for every subscription cycle. Also, they can change the shipping address during the checkout process.
Most store owners prefer automatic renewals for digital products and manual renewals for tangible goods.
I have laid the facts here but it’s entirely up to you, which payment renewal method you want to apply for your WooCommerce subscriptions.
WooCommerce Subscription introduces a Subscriptions section in WooCommerce Reports and that enables you to check how your subscription store’s and get valuable sales information.
I will explain to you how this feature works and how to use the insights gained from subscription reports to your advantage.
Simple steps to view Subscription reports are:
Navigate to WooCommerce > Reports and click on Subscriptions.
From the list, select the report you want to look at.
You can view the following reports:
- Upcoming Recurring Revenue Report,
- Subscription Events by Date Report
- Retention Rate Report
- Subscriptions by Product Report
- Subscriptions by Customer Report
- Failed Payment Retries Report
Note: To view the Failed Payment Retries Report, you have to enable the Failed Payment Retry System.
All subscription reports give you detailed information about the performance of your subscription products and services.
A successful subscription model generates huge amounts of profit and I have explained how to apply a subscription model through the WooCommerce Subscriptions plugin.
In this article, I have shown you how to create a subscription product, variable subscription, and subscription coupon. Follow these steps and enhance your subscription business.
And hey, check out our blogs If you want to learn more about the best eCommerce practices.