Driving greater loyalty

Six in 10 (59%) subscription box businesses intend to invest in new or existing subscription services in the next year, according to our latest research.

More than half (52%) of the businesses we surveyed also agreed that subscriptions are set to be a major focus for their company in the future.

You can now listen to the third episode of the Royal Mail podcast below, highlighting findings from the latest instalment of our report on the UK Subscription Box Boom.

Delivering brand loyalty

Driving greater brand loyalty is a key motivating factor behind the launch of many subscription schemes and is cited by almost half (45%) of those operating such a service. In an increasingly competitive retail environment, subscription box services offer an enticing option to lock consumers in to regular purchasing.

Other important reasons for starting a subscription box service include the desire for greater control, in particular, control of distribution (35%), control of marketing and promotion (24%) and lower start-up costs (24%).

Linked to the desire to drive greater loyalty, retaining customers is seen as one of the key challenges associated with operating a subscription box scheme (21%). The average retention rate for almost six in 10 (59%) of the businesses surveyed is three months or less. On a positive note, subscription box businesses tend to see a return on investment relatively quickly, with 62% achieving this within three months of a customer being signed up to a service.

International opportunities

Nine in 10 (90%) of businesses surveyed make at least some of their subscription revenue from outside the UK and just under a quarter (24%) make more than half of their sales from abroad. Low growth in UK retail sales and the growing attractiveness of UK prices is making international expansion opportunities increasingly appealing.

With relatively low start-up costs, subscription boxes are an attractive option for businesses targeting overseas markets. Popular overseas markets include the Republic of Ireland and France - where 46% of subscription businesses which export overseas make at least some of their sales – as well as Germany (39%) and Spain (31%).

UK businesses are really buying into the growth opportunities that subscription services can deliver. Driving greater brand loyalty is a key motivation for launching subscription box services and we are also seeing lots of international opportunities for subscription businesses. We’re here to help these businesses along the way, wherever they are in the UK.

With the UK’s largest by far ‘Feet on the Street’ network covering 90,000 postmen and women, we are playing a key role in keeping carbon emissions low. The vast majority of subscription items are letterboxable and so are ideally suited for on-foot delivery and do not require a van delivery.