You know that feeling when you realize you’re just one punch away from getting that free coffee at your local spot? You become pretty much an unstoppable force: nothing will stand in the way of you and that final purchase so that you can earn the caffeinated reward. Well, that fierce motivation is the foundation behind one of our favorite subscriber retention features here at Stay: the Digital Punch Card (or DPC).
Now, over 1 million Digital Punch Cards are in circulation across Stay brands, and customers have redeemed over 500,000 rewards.
In honor of these milestones and the awesome ways we’re seeing brands use the DPC, we’ve put together this playbook to help you increase subscriber retention. Ahead, you’ll find real-life examples from top DTC brands, design tips, and how-tos for putting the Digital Punch Card into action.
It’s time to wield your retention secret weapon. Let’s dive in.
The real value of subscriber retention
Subscription loyalty and retention are some of the most valuable parts of a business – even more so than new customer acquisition.
Why?
- Retention drives revenue: Our partner, Rivo, says that increasing retention rates by 5% can increase profits up to 95%. Retaining existing customers is always less expensive than acquiring new ones, especially in this environment of rising acquisition/ad costs
- Loyalty leads to higher spend: Loyal subscribers tend to spend 43% more than other customers. They know your brand/product, they love it, and they don’t want to leave it
- You can reduce CAC: A 2% increase in customer retention can reduce ad costs by 10%. You don’t need to spend as much to acquire new customers when your current subscribers keep driving revenue (and organically recommending you to their friends), and you have more data about your loyal customers, so you know exactly where to put your ad dollars to acquire a similar audience
Consider also the benefits of gamifying subscription loyalty programs, like increasing customer engagement, driving even more revenue, and fostering loyalty.
Now imagine a subscription loyalty strategy that’s super effective at tapping into the consumer psychology behind spend and retention, with the advantages of gamification. And boom: you have the Digital Punch Card.
DPC in action: subscription retention strategies from top DTC brands
Let’s see how a few of the biggest DTC brands in the biz are increasing subscriber retention using the Digital Punch Card:
Alice Mushrooms
You can’t talk about the DPC without mentioning Alice Mushrooms. This functional chocolate brand is doing incredible things in their customer portal (and beyond) to highlight their rewards program and build subscription loyalty and excitement.
“We want to really lean hard into the digital punch card and give really great offerings that are only for subscribers, which include a bit of some exclusive merch for subscribers too, and really amazing rewards as they continue in their journey.” – Talya Benjamin, Manager of Marketing & Operations at Alice Mushrooms
The reasons that this piece of their subscription retention strategy works so well is that it has the right design, rewards, and marketing:
- Design: A super compelling visualization of the rewards journey in the banner ad, with the exact gifts spelled out so subscribers know what to expect
- Rewards: Exclusive merch and discounts (customers go crazy for the crew socks!)
- Marketing: Highlighting the rewards in their banner ads, emails, and cancel flows
PS – We spoke with Charlotte Cruze, Co-Founder of Alice Mushrooms, on our podcast about how she grew the brand into one of the most sought-after subscriptions in the wellness space, including an in-depth discussion of their subscriber retention and rewards strategy. Catch the full episode here.
Happy Howl
Fresh dog food brand, Happy Howl, has a Digital Punch Card that rewards customers after 4 orders with a free product: the Happy Joints – Cartilage & Mobility Supplement. (And let’s not overlook those adorable custom paw icons!)
The shorter rewards journey – just 4 orders needed to complete the DPC – is based on their LTO (lifetime orders). Happy Howl’s average product value is high, which means customers are usually making just one purchase at a time. With a shorter LTO, the brand needs to make sure the rewards journey still feels achievable. By using a smaller number of orders in their Digital Punch Card, Happy Howl is still able to give subscribers that feeling of achievement and satisfaction – it’s just adapted for their brand’s unique products and customer behavior.
Curie
Clean deodorant and body care brand, Curie, shows what a paunch card can look like somewhere in the middle – more than the four punches of Happy Howl, less than the 10 of Alice Mushrooms. They use six punches, with a reward after the third and sixth orders, to keep subscribers sticking around without overwhelming them with too many order requirements.
And here’s a key aspect: the rewards are increasing in value. The first reward is a Body Wash Bar, while the second is their Whole Body Deodorant. Increasing the value of the incentives is a useful subscriber retention strategy that helps customers feel like the longer they stick around/the more loyal they are, the bigger their rewards. It’s like unwrapping the smaller present first while eyeing that big gift in the corner still waiting for you.
First Day
First Day’s organic multivitamins for the whole family are a natural fit for subscription retention strategies built around rewarding routine use, like the Digital Punch Card. Similar to many wellness brands, habit is practically built into their product, as the benefits are felt only with continued use. So to incentivize subscriber retention and have them stick to a healthy routine, First Day offers them a discount after three renewals (their term for orders).
Also, they make subscribers feel like they’re unlocking even more value by setting up the subscription as a VIP program, including a callout of rewards/perks in the banner ad, labeling the DPC as a VIP rewards track, and offering exclusive discounts only to subscribers.
Barnakl
Barnakl encourages customers to replace their fan filters every 60-90 days. Beyond highlighting the benefits of regular filter replacement, the brand also improves subscription retention with the promise of a free order after 10 punches.
By punch #10, subscribers are generally loyal to Barnakl, familiar with the product’s benefits, and excited to stick to their routine. So offering a free 11th order as a reward is just the icing on the cake to boost subscription loyalty and turn excited customers into true fans.
How to improve your subscription retention rate using the DPC
Let’s get into how to set up and optimize your own Digital Punch Card so you’re maximizing all the awesome subscriber retention benefits.
Setting up
The Digital Punch Card lives in the Stay customer portal. It’s a fully no-code subscription loyalty solution that’s designed so anyone on your team can set it up quickly and easily.
Some key features of the DPC:
- Rewards: Either discounts ($ or % off), or a free gift with purchase
- Punches: Maximum of 12 punches
- Redemption: Customers need to log into the portal to redeem their reward with their next order
Optimizing for subscription loyalty
There are a few ways to design and market your Digital Punch Card that can help boost subscriber retention, like:
- Use custom icons: You can upload custom icons that give the DPC a more fun, immersive, and branded feel. Mushrooms, bumblebees, herb, we’ve seen it all!
- Highlight in your banner: The banner ad space in your subscriber portal is the perfect place to show off the Digital Punch Card, outline the subscriber journey, and remind customers of the rewards that await them. We love it when brands use this space to show a visualization of punch card progress, like a treasure map leading to awesome rewards
- Notify about wins: Using your ESP, you can set up emails that notify customers when they’ve earned a punch and/or reward. For emails about punches, it’s a great opportunity to encourage higher AOV by reminding customers they can earn another punch by moving up their next order. And for reward reminders, it’s a chance to increase subscriber retention and happiness by making a big deal out of their achievement and making them feel valued
Give your subscribers another reason to retain
From frequent flyer programs to your coffee shop’s stamp card, there’s a reason why customer loyalty strategies have withstood the test of time. They’re incredibly effective at building your brand’s value, delighting customers, and giving subscribers tangible reasons to keep spending (and spend even more) – all of which goes a long way to increase subscriber retention.
With Stay’s Digital Punch Card, you can enjoy all the advantages of subscription loyalty programs by giving your customers a gamified experience right in their customer portal. Ready to join the best DTC brands in the industry that have already rolled out over 1 million of these loyalty cards? Talk to us today.
