How to Add a Free Gift to the Nth Delivery of a New Subscription
If you’re an e-commerce brand with a subscription component, you’re likely concerned about your rate of cancelled subscriptions (aka “churn rate”), and you may be asking yourself, How can we hang on to our subscribers for longer?
This question gets to the core of retention strategy for subscription brands, and there are many different tactics you might employ to address it.
In this post I want to focus on one of those tactics: incentivizing your subscribers to hang on for longer with the prospect of an upcoming free gift. A dangled carrot, if you will.
You’ll want to make the free gift valuable enough for it to be an effective carrot, which means that the gift will come at a cost to you. Therefore, you must ensure that you’re giving your subscribers the freebie at the point where they’re most likely to cancel their subscription, to maximize your ROI.
In this post we’ll first discuss how to determine where your subscribers are most likely to fall off.
We’ll then walk through how to use Shopify Flow to add a free product to a specific delivery, while using Wonderment and Klaviyo to build the subscriber’s anticipation for the upcoming freebie.
How to Determine Where Your Biggest Falloff Point Is
Your subscription software — whether that’s Recharge or Skio or Awtomic or another – will have a built-in analytics tool, which will include analytics about your cancelled (aka “churned”) subscribers. And it will likely include a graph like this:
Let’s assume that the time period selected for this graph is the last 90 days.
What this graph is telling you is that during the last 90 days, 580 of your subscribers cancelled after having previously received one order, 319 of your subscribers cancelled after having received two orders, and 182 after having received three orders, etc.
The percentages shown in between the bars shows the percentage of customers that you retained in the transition from order 1 to 2, 2 to 3, etc. In other words 55% of subscribers who had previously received a first order received their second order during the last 90 days, while 57% of subscribers who had previously received a second delivery received their third delivery during the last 90 days, and so on.
As noted below the graph, the biggest falloff for this brand is between orders 1 and 2. But that is probably true of most subscription brands in this day and age, with savvy customers taking advantage of an intro offer and then canceling after the first delivery.
Ignoring the first falloff, then, we can see that our next biggest falloff is between orders 2 & 3. Beyond order 3, we reach more of a comfortable cruising altitude, where if someone receives a subsequent order, they’re increasingly likely to remain subscribed to your products.
In other words, if you’re this brand, your goal should be to get your customers to hang on past that falloff point between orders 2 and 3. If they do, the data shows that they are more likely to reach that comfortable cruising altitude.
How to Automatically Add a Free Gift to the Nth Delivery
Now that we’ve determined that we want to add a free gift to the 3rd delivery of a new subscription, we can set up our automation to actually add said gift to the third 3rd order.
Every subscription app will be different in how they handle this part.
We’re going to use the app Awtomic for this example. Awtomic includes a feature called “Moments,” which allows you to trigger a reward based on certain conditions. Our Moment will look something like this:
Since we want the free gift to be included with the 3rd order, we actually need to add it to a subscription that “has 2 orders” — meaning that it will appear in the customer’s portal for the period of time after the second order has shipped but before the third order does.
We then add messaging within the customers subscription portal via the Moment (pictured under “Reward” above), letting the subscriber know that they have a free gift coming their way with their next delivery. This way, if they log into their portal at any point between the 2nd and 3rd delivery to cancel their subscription, they’ll see that they have a free gift coming and might reconsider cancelling.
How to Proactively Communicate the Free Gift to Your Customers
So far so good, but what if someone doesn’t log into their customer portal? How will they know that they have a free gift coming to them?
This is where a few additional apps will come into play. We’re going to use Shopify Flow in tandem with Wonderment and Klaviyo.
Shopify Flow is a free app developed and maintained by Shopify that allows users to automate workflows in their Shopify store. It monitors the store for events and creates automated actions in response. You can add it to your store via the Shopify App Store.
It’s beyond the scope of this post to explain the intricacies of Shopify Flow, but just know that Shopify Support is always happy to help you troubleshoot your flow.
Our flow, once built, will look something like this:
Since this brand is using Awtomic for its subscription software, we’ve selected a flow trigger from the Awtomic integration, which starts the flow whenever someone is successfully charged for an upcoming order. The flow then checks if the order in question is the third order of that subscription, and if so, it will tag the order with “3rd order of subscription.”
We also want to build similar Shopify Flows to tag 1st and 2nd orders, so that we can use these three tags to build our Klaviyo flow.
Building a Klaviyo Flow Using a Wonderment Trigger + Order Tags
Now that we are tagging 1st, 2nd, and 3rd orders of a new subscription, we can use these tags to branch our flow logic depending on which order the customer is on, and tease out the free product in our messaging.
In the following example, we’re going to use a Wonderment event to trigger the flow. Wonderment is a Shopify App that gives you more control over the post purchase customer experience than you get out of the box with Shopify, including a host of transactional events that it passes through to Klaviyo (in this case, “Carrier Picked Up”).
Note that you don’t need Wonderment for this. You could instead trigger the flow using a subscription event that your subscription app pushes through to Klaviyo, such as “Upcoming Subscription Order” or the like. Our example brand just happens to use Wonderment to notify its customers of shipping events, so we’re using that opportunity to tease out the free gift.
Breaking down the steps from the top: When the carrier picks up an order, that event triggers this flow, which first checks whether that order is part of a subscription, or just a one-time purchase. If the latter, the customer gets an email that tells them their order has been picked up by the carrier, and links them to a tracking page.
If the order is part of a subscription, a cascading series of branches checks whether this is a 1st, 2nd, 3rd, or 4+ order, and then delivers a different email depending. Here you can see the different messaging for second and third orders:
And there you have it. We now have a system in place that automates a free gift at the point when a subscription customer is most likely to churn.