Why CPG subscription brands need a totally different approach
Welcome and abandonment flows mostly convert people your ads already closed. For subscription CPG brands, email's real leverage is with the customers who already said yes.
It took me personally almost 2 years to understand that there are a few levers that you can pull to massively impact retention for CPG subscription-based brands with emails, and they have almost nothing to do with the email marketing “foundations” and “best practices”.
This will be of interest for every subscription-based CPG brand out there.
The Overrated Foundations
You’ve been taught that you have to put the most effort into optimizing the core email flows:
- Welcome flow
- Cart abandonment
- Checkout Abandonment
- Browse abandonment
While this is the standard "best practice," if you run or manage a CPG subscription-based brand, I would feel sure enough to say this is not the optimal approach.
When you think about it - what does the welcome flow do? It targets non-customers and tries to convert them into first-time customers.
What do the abandonment flows do? They target both non-customers and customers, but if you analyze your data, you will notice that the most entries in these flows come from non-customers.
These flows are primarily focused on converting non-customers into first-time customers.
The Data Reality Check
If you analyze your data further, you will likely notice that 80%+ or in some cases even 90%+ of all first purchases happen on the exact day a person subscribes in your popup form, usually within a few hours.
What does this tell us?
- In the majority of cases, the ads are already doing the job of closing the first sale.
- In the majority of cases, the credit doesn’t belong to the email & retention team, which is evident by the fact that the majority of people convert almost immediately after signing up in the popup form.
I also like the recent study conducted by Josh Tay and his team on their subscription-based CPG client, which showed that only 16% of email revenue attributed to first-time customers was actually incremental, further adding to this thesis.
(Disclaimer: this does not mean this applies to every single CPG brand but it gives us a great general picture.)
What about abandonment flows? Again, important, but still overrated in the context of subscription brands. Most entries come from non-customers, and email’s incrementality is pretty bad when it comes to converting non-customers into customers.
Where the Real Impact Lies
If data is telling us all that, why do so many agencies and brands still keep focusing on these flows?
Am I saying they aren’t important? Hell no, just stating they’re not the highest leverage for a subscription-brand to optimize.
Because here is the most interesting thing — the same study conducted by Josh and the team revealed that 84% of email attributed revenue was incremental when it comes to returning customer revenue!
That’s huge. This means email has more than 5 times bigger impact on existing customers than it has on non-customers.
But despite this, most subscription-based brands still stress over optimizing their pre-purchase welcome flows hoping that’s something that will drastically improve things.
And when it comes to engaging with their existing customers, they just send 2-4 generic campaigns weekly to their entire engaged segment of people to stay top of mind, because that’s a “best practice” too.
The Strategy for Subscribers
Most subscription brands have absolutely no regard for their most valuable customer cohort - their product subscribers. These are people that have already given them trust by subscribing to their product with their hard-earned money.
The only type of communication brands have toward them is spamming them with random weekly campaigns that have CTAs to buy more products, with no regard for the fact they are ALREADY subscribed.
Your subscribers need a totally different approach. They need dedicated and targeted post-purchase flows that cover their entire journey from the point of subscribing to the point of rebilling and potentially buying a new product from you.
This can’t and shouldn’t be done through manual campaigns. It should be done through targeted, automated flows, where every email is a touchpoint that has a strict purpose:
- Product Onboarding: Driving adoption in the first 14 days so they actually use what they bought.
- Habit-Forming Content: Helping them integrate the product into their daily routine.
- Usage Guidance: Addressing common mistakes and sharing recipes or tips to ensure they actually see results.
- Churn Reduction: Identifying and addressing passive churn before the next rebill happens.
The Conclusion
In the subscription game, if people don't use the product, they don't see results. If they don't see results, they cancel.
If they are being spammed with random emails with no regards to where they are in the customer journey, they cancel out of frustration.
Email marketing shouldn't just be top of mind awareness tool, it should be a product adoption machine.
Stop over-engineering your welcome flow and start focusing on the people who have already said "yes" to your brand. That is where real LTV is built.