Ready for the biggest subscription box sale of the year? Good news, Mother’s Day is right around the corner and Cratejoy is partnering with merchants to help you get as many new subscribers as possible.
In addition to PR placements, digital marketing, and content inclusion, we thought we’d share some of our best tips and tricks for maximizing sale orders without tanking your business.
There’s an art to effective discounting, and pulling it off can mean more subscribers, higher LTV, and lower churn for your subscription box business.
The flip side? Mismanaging a sales opportunity can frustrate current and potential subscribers, lose you money, and negatively impact your business long after a sale has ended.
If you’re ready to avoid those mistakes and capitalize on our biggest customer acquisition opportunity, check out top 3 tips below:
1. Don’t Over-Discount
Over-discounting can kill your business – plain and simple. It may be tempting to offer subscribers a stellar discount to get their business up front, but you need to consider the long term impact sales can have on your profit margin and life time value of (LTV) your subscribers.
Vend recommends having an “acceptable range of margin” in which you could still profit from discounting your box. Ideally your box’s normal pricing is at the cushier end of your profit margin spectrum, while the highest discount is where the “Acceptable” range comes to an end.
Don’t Forget! Orders made on the Cratejoy Marketplace are subject to an additional 10% fee. Keep this in mind when pricing your discounts.
Let’s look at an example:
Say your box is regularly priced at $30/mo and has a 40% profit margin ($12)
- A sale on Marketplace without a discount drops your profit margin to 30%, or $9
- A sale on Marketplace with a 10% discount drops your profit margin to 21% or $6.30
- A sale on Marketplace with a 20% discount drops your profit margin to 12%, or $3.60
- A sale on Marketplace with a 30% discount drops your profit margin to 3%, or $0.90
- A sale on Marketplace with a 40% discount drops your profit margin to -6%, and you lose $1.80/sale
Check our math to see how we got these numbers (box cost in this is example is $18)
|Discount Math||Marketplace Math||Take Home Profit Math||Profit Margin math|
|MP order with no discount||None||$30 – 10% MP fee = $27||$27 – $18 = $9||9/30 = 30%|
|Marketplace order + 10% discount||$30 – 10% discount = $27||$27 – 10% MP fee = $24.3||$24.3-$18 = $6.3||6.3/30 = 21%|
|Marketplace order + 20% discount||$30 – 20% discount = $24||$24 – 10% MP fee = $21.6||$21.6-$18 = $3.6||3.6/30 = 12%|
|Marketplace order + 30% discount||$30 – 30% discount = $21||$21 – 10% MP fee = $18.9||$18.9-$18 = $.90||.9/30 = 3%|
|Marketplace order + 40% discount||$30 – 40% discount = $18||$18 – 10% MP fee = $16.2||$16.2-$18 = -$1.80||-1.8/30 = -6%|
Pro tip: If you’re willing to take a loss to acquire customers, consider applying the discount to the first box only. This way you resume normal profit margins after the first month and aren’t losing money for the duration of the subscription.
2. Make Your Discount Text Direct
Cratejoy defines discount text as the messaging that accompanies and explains a coupon. The best discount text is short, straightforward, and should answer the following questions a potential subscriber may have:
- How much is the discount?
- What is the code?
- To what product[s] does the code apply?
- For how long does the code apply?
Great discount text is like effective editing or design – the user shouldn’t notice it. If a potential subscriber reads your discount code and is unclear on any aspect of the offering, it’s time to go back to the drawing board.
Check out these examples for an idea of what works in discount text:
Strong Discount Text
- Enjoy 15% off your first month’s box with the discount code SIGNMEUP
- $10 OFF 3 & 6 Month Plans! Use code “BAKERS” at checkout
- Use code TRYME at checkout to get 10% off for LIFE on all subscription levels
Weak Discount Text
- Use code Rad15 at checkout to get a special discount
- Take 15% off with SNACKI15
- Use code CJMP20 for free shipping on select boxes
3. Apply Your Discount to All Offers
(As long as it doesn’t conflict with tip #1!)
Taking advantage of a sale isn’t just about huge discounts – you’ll need to make sure your subscribe flow is as painless as possible for the customer. And though you’ll have put forth effort to make your coupon text as clear as possible, there will always be situations where a site visitor misinterprets the parameters of the sale.
One of the easiest ways to avoid confusion and spare yourself angry support emails is to apply your coupon to all subscription offerings. That means, 1,3, 6, and 12 month prepay options will all be subject to the same discount and code.
Pro Tip: Only follow this rule if you are comfortable with a reduced profit margin for the duration of a prepay. If you don’t price out a multi-subscription sale carefully, you may end up paying more to acquire a 6 month subscriber than you would have through other acquisition methods.
Ready to Set Up a Coupon?