How we boosted LTV by 6.9% with one simple hack
We made subscribers “activate” a discount they would get anyway. The A/B test lifted click rate almost 4x and 90-day LTV by 6.9%.
Today I want to talk about something we implemented for our supplement client that had a big impact on LTV and repurchase rate.
And the best part? It took almost no time to set up.
And this is not just based on theory because we literally A/B tested it to be sure.
What we did
Most CPG brands offer both one-time purchase and subscription options on their product pages.
They typically offer a % off the first subscription order compared to a one-time purchase. Then they offer a smaller % on every recurring subscription order by default.
But here is where you are missing a huge opportunity to collect Zero-Party Data (ZPD).
For our supplement clients, we like to send a survey in the founder thank you email they receive immediately after their first subscription order.
That is when people are the most hyped and engaged. We want to capitalize on that energy and collect as much ZPD as possible to tailor their post-purchase experience down the line.
If the brand offers a gift on the second subscription order, we usually make new subscribers claim that gift, which is typically done by completing a survey.
We couldn't offer a free gift in this case because the brand does not offer them yet. Instead, we came up with another idea. We simply made people “activate” their recurring subscription order discount by completing a short survey.
How it works
If you are a subscription brand that also offers one-time purchases, you’re likely already offering a discount on recurring orders.
Why not use that as an incentive to collect customer data and make people activate something to increase the chances of them staying for the next rebill?
This discount is already built into your margin. Every subscriber will get it anyway on their recurring order.
We simply ran an A/B test.
- Holdout group received a regular thank you email with a CTA saying “take a short survey”.
- Test group received a thank you email that said “activate 15% off your recurring subscription orders by taking a short survey.”
The results
In the test group, the thank you email resulted in an almost 4 times higher click rate.
17.4% vs 4.5%
That is massive.
In the test email, that means almost 20% of all customers who receive the founder thank you email end up taking the survey, and by analyzing our Typeform data, we see that 87% of those people end up completing the survey.
That is a ton of zero-party data we can use to tailor the post-purchase experience without giving away any additional margin.
The impact on LTV and retention
Other than getting us much more zero-party data that we can use to personalize customers' journey later on, the test email also had an impact on LTV and retention.
We tagged every person who received the holdout email and every person who received the test email. After almost 3 months, we compared LTV and repurchase rate data for each cohort.
The results were incredible. The test group had a:
- 6.7% higher 30 Day LTV
- 6.9% higher 90 Day LTV
- 8.89% higher repurchase rate
Why it works
People who put in the effort to “activate” or “claim” something are more likely to stay. It is micro-commitment bias.
When you have already completed the first step, you are more likely to follow through with the entire thing. In this case, if you have activated your discount, you want to stay subscribed so you receive your next shipment with the discount you activated.
The trick is the discount is already available by default for anyone. Even those who did not claim it will get it.
Whenever you make people claim something, they are more likely to appreciate that reward as opposed to just giving it to them.
That is why we are big on making people claim things, even if they are available by default.
Every time they claim something, they micro-commit.