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Marketing Analysis for Subscription Companies:

It’s difficult to analyze the performance of a subscription company as getting a customer to convert isn’t the only goal. The real goal is getting that customer to stick with the subscription for many months if not years. This dynamic enables subscription companies to lose money on their first customer (assuming the company has enough cash for this strategy) with the knowledge that customers that don’t churn will become profitable over time. Lets walk through an example:

Acme Subscription Company

- Cost to acquire a customer: $100

- Monthly subscription cost: $50

- Profit margin: 50%

Now we can see how Acme’s profitability looks for different customers based on how long they remain a customer. 

The above calls out two important things:

1) Acme can’t just look at profitability based on the fact that someone became a customer. In the scenario above, all of the customers are equally unprofitable after 1 month. Acme needs to analyze profitability based on all the months that a customer remains profitable and continues to generate revenue for Acme.

2) Acme needs to uncover the marketing channels that drive Customers #3 an #4 (their profitable customers). Imagine if Google Analytics listed their marketing source as Direct -- Acme would have no idea what they could do to acquire more similar customers. On the other hand, if Acme worked with an attribution provider that could help attribute “harder to track” channels -- think TV, Direct Mail, Influencer, Facebook views, OTT -- then Acme would know where they should double down their marketing.

Fortunately Rockerbox can help with both. Lets see what setting this up in Rockerbox looks like:

Rockerbox Subscription Setup

1) Ingesting email capture (client-side):

Many companies have a time lag between a prospect first arriving on your site and them becoming a customer. A really important (and cost effective) way to help shorten that time horizon is to capture a prospective customer’s email as soon as they arrive on your website. Once you’ve captured the customers e-mail, there is a lot of marketing you can do -- remarketing via email or retargeting via custom audiences on Facebook. 

Rockerbox Solution: Rockerbox captures this top of funnel conversion event. This can either occur automatically via Automatic Email Ingestion or manually by implementing a specific conversion pixel for it.

2) Ingesting customer signup / first purchase (client-side): After some period of time, the prospect will hopefully sign up and become a customer. This is the 2nd event in the users path to conversion that Rockerbox needs to capture. We see this happening in two main ways.

1) On-site: Some companies have built the ability to capture the initial customer purchase on their own site. These are generally larger companies, often not built on Shopify.

Rockerbox Solution: This is pretty simple. Rockerbox will have a conversion pixel on-site that captures the specific event. A key thing to note however is that it’s critical to pass Rockerbox a 1st party identifier of the customer that we can use to connect this event to the email capture and to subsequent purchases. Our recommended method is via a hashed email address. 

2) Off-site: A good number of companies leverage third parties to initiate the subscription process. These companies use vendors like Recharge or Sticky.io to facilitate the recurring order

Rockerbox Solution: Here the customer is often redirected to a CNAME specific to the vendor. So for company.com, this could be a redirect to buy.company.com, a domain that’s managed by the subscription vendor. Rockerbox will place a conversion pixel on this domain as well to capture the initial customer signup event that occurs (also requiring the same 1st party identifier as the on-site case above)

This is why subscription companies are able to, at times, take a loss in acquiring a customer. As long as that customer doesn’t churn, they will continue to bring in revenue every month in perpetuity. For example, if a company paid $100 to acquire a customer that generates $25 dollars in profit every month, within 4 months the acquisition cost is paid off and everything afterwards is pure profit. 

From a data capture perspective, this is more difficult as the customer isn’t coming back to your website every month to “re-purchase.” Take a hair loss product like Keeps as an example. Once a customer signs up for their offering, they simply receive a refill of their subscription in their mailbox every month. This occurs without the customer having to go back to keeps.com. Why is this relevant? Because from a data capture perspective, the on-site pixel that Rockerbox has placed won’t be triggered for all of the subsequent orders. This means that all subsequent revenue associated to a user won’t be captured which throws off long term ROAS numbers.

Rockerbox is able to ingest these “recurring orders” in three ways:

1) Webhooks: 

These are server-to-server requests that are sent to Rockerbox to represent each order. As long as you include in the same 1st party identifier in each request, Rockerbox can connect the dots all the way from email capture->customer signup->subsequent orders.

Rockerbox has the ability to automatically capture these from certain vendors with our pre-built integrations (Shopify, Recharge). If you’ve built a custom system, you’ll need to have your engineering team ping Rockerbox with each subsequent order.

2) Batch Files: 

Rockerbox also has the ability to ingest files that “batch” up a day’s worth of orders into one entity. For some customers this is an easier way to send Rockerbox subsequent order data. Rockerbox can receive this data via either an SFTP or S3 bucket that we’ll create on your behalf. 

3) Shopify:

Do you use Shopify? Lucky for you! Rockerbox’s Shopify integration will automatically ingest the data being posted to Shopify for each subsequent order that’s occurring.