Increasing Subscription Take Rate with Bryan Starck

Introduction to First Order Take Rate

0:00First order take rate outcomes compound massively over time. So imagine you have three identical brands. Each one starts off with the same active subscriber count. Customer acquisition churn is all the same. The only difference is their first order take rate. Brand A is at 15%. Brand B is at 40 and brand C is at 60%. If you change none of the other inputs, the outcomes just based on this one KPI. What percentage of the new customers come in on subscription massively changes the trajectory, right?

0:29Brand A, they've they end the year at 2200. Brand B 40% take rate ends at 5,500 and brand C that maintained 60% over the course of a year ends up 8xing their subscriber base. So pretty massive change just by defaulting to subscriptions. So if you have that on the left, you're defaulting to one time. nothing changes about the offer, but you default to subscribe and save, you're probably going to boost your take rate 5 to 10%. Typically, the increase in MR and subscription growth really makes it worth doing this and figuring out how can we approach this as a customer service team to handle a bit of those upticks. And a lot of that can be offset by the way that you present and are transparent about your subscription offering on the front end. So, as long as you're transparent, you default it.

1:16Don't fight against people's default action. It makes a big difference. All right, guys. It's so good to be here with you today. Thanks so much. if we haven't met before, my name is Brian Stark. I'm a subscription consultant. And I know we have a lot of folks here in the room with subscription programs or recurring revenue. And so, I am really excited excited to spend the next 20 or so minutes talking about what I think is probably the simplest but most powerful concept in MR and subscription growth. and that is your subscription take rate. And so I I want to talk

Case Study: Brez's Subscription Growth

1:54about Breeze a little brand. You haven't heard of them before. When they when we started working together, like Nick said, they were already really prioritizing subscriptions. So at the end of last year, they were bringing on about 2,700 new subscriptions every month, which was amazing. fast forward a couple of months, end of Q1, they jumped about 1,400 subscriptions to about 4,100 per month. And that's growing every single week. So, it's it's it's clear that they're doing a hundred different things, right? And Nick, Dan, Aaron, the team, they're amazing. And the cool thing about this jump, though, is that it didn't require some massive change in their conversion funnel. Didn't require massively increasing ad spend. What they did to do this was focus on the subscription take rate. So their first order subscription take rate. Basically this is the percentage of firsttime customers who order on subscription right away versus on a onetime purchase. So you can actually look at these numbers. at that point end of 2024 they were bringing on 2700 with

3:02approximately 11% take rate on subscriptions. And so even though the number was very healthy as a percentage of their total customer acquisition it was actually quite low within 3 months they tripled it and were able to get that up to 31% and it's growing even faster now. So in digging into the numbers it was very clear that this was one of if not the biggest driver of that lift is their subscription take rate. just like it was for them. I really believe that this is probably the biggest lever in terms of growing your subscription base faster. For the majority of you, right? Maybe for some it's churn, maybe for some it's increasing ARPU and things like that, but for the majority of you, increasing the percentage of new customers that come in on subscription is probably the biggest lift. So, my goal for today is to give you a handful of ways that you can very quickly and very easily increase take rate for your business without having to completely rejig your conversion funnel, really scale up ad

4:05spend. and it's going to be a good time. So, we'll hop into it. Before we

Understanding Subscription Take Rate

4:11get into the actual tests, I think it's important to all be on the same page about exactly what this looks like, what it is, and why it's important. So your subscription take rate is very simple. It's the percentage of your new customers that come in on subscription for their first purchase. You calculate this by taking your total new customers subscription orders divided by your total new customer orders over a given period. So for example, if you had 100 new customers in a month and an 11% take rate, 11 of those customers would come in on subscription and then 89 as a one-off purchase. There are three main reasons why I think subscription take rate is really the king of of MR growth levers. And the number one is value. when we look at most of our clients, the average firsttime subscriber tends to have about a two to four time higher lifetime revenue over the course of a year than a one-off customer. And if you've done any analysis like this, you may see a

5:10similar distribution, right? Subscribers, all things considered, tend to come back more often for repeat purchases. They tend to have a higher lifetime revenue. Good example of this, one of our clients after 6 months, their first time one-off buyers have about a $68 lifetime revenue. And firsttime subscribers over that same period have about a $130 lifetime revenue. So that's like literally a 2x. And we see this all the time that subscribers are much more valuable all things considered than than one-off buyers. In addition to the value is a question of timing. Every brand is different but across the board all kinds of different verticals you know health and wellness food and beverage skincare. We typically see that if somebody is going to subscribe at any point, they're probably going to do it on their first order. Trying to convince people to subscribe after they've already purchased as a one-off is a lot harder.

6:12It's like fighting upstream. every every business is very different, but we typically see the distribution looks a lot like 70% or so of your new subscribers are going to come in on their first purchase and about 30% are going to come in on a returning. This is a good example. Fast growing supplement brand we work with. 87% of their new subscribers come in on the very first purchase and only 13% come in on a returning purchase. So yes, you should nurture your one-off customers. Work to bring them back, but don't fight against don't play play the game on hard mode. Basically, if you know most people are coming in on their first purchase as a subscriber and you know that they're more valuable, it's great to index on your first order take rate. And then guys, finally, and this is where it gets exciting, the first order take rate outcomes compound massively over time. So imagine you have three identical brands. each one starts off with the same active subscriber count, customer acquisition,

7:16churn is all the same. The only difference is their first order take rate. Brand A is at 15%, brand B is at 40, and brand C is at 60%. What's crazy is you change none of the other inputs, the outcomes just based on this one KPI, what percentage of their new customers come in on subscription massively changes the trajectory, right? Brand A, they've they end the year at 2200. Brand B 40% take rate ends at 5,500 and brand C that maintained 60% over the course of a year ends up 8xing their subscriber base. So pretty massive change. and I really feel that if you want to grow your subscription base, your MR faster, take rate is the way to do it. So, over the next 10 to 15

Strategies to Increase Take Rate

8:06minutes or so, what I'm going to do is I'm going to show you really quickly how you can easily benchmark your subscriber versus one-off LTV, how to calculate your take rate using some very simple Shopify reports, and then we're going to get into five updates you can make to your plan picker and to your website. It's not going to require a big change in conversion funnel or any really big strategic changes at all for the most part, but you can

Benchmarking and Calculating Take Rate

8:43rapidly time here. at the end of this, you'll be able to download these slides. So, if anything's small, you can't see it, just know that you can download these and get all the click streams. But Shopify has a couple of cool pre-built reports that allow us to a get a sense for how much more valuable our subscribers or our one-off customers are, and then b calculate our take rate. So, if we want to benchmark our subscriber LTV, you can use Shopify's customer analysis.

9:13And all you got to do is switch the metric to amount spent per subscriber and then add a first order include subscription toggle. And boom, you're easily able to benchmark the difference in LTR based on these two different cohorts. If we want to take calculate our first order take rate, you can hop over to the new versus returning customer report in Shopify and identify how many new customers you brought in over a period. and then add a filter. it's a little hard to read there, but you can see it's subscription or one time and then set that equal to subscription. Identify how many new customers you brought in on subscription. And you take those numbers, divide them by each other, and it gives you your take rate. So, in this example, we had 1259 new customers on subscription, 9,300 total new customers, and that gets us a 13.5% first order take rate.

10:11Once you calculate your ratio, you're probably asking, well, is this good? Is this bad? Where do I stand? every business again is different, but in broad strokes, I typically look at anything above 50% take rate on subscriptions as excellent. Some of you guys here in this room, I know for a fact and even work with some of you that are pushing 60, 70, 80, even 90% of your new customers on subscription. But if you offer one time and subscribe and save 50% you're doing really really well. 40 to 50% very good. 30 to 40% solid like you've got a good offer. It's dialed in but definitely room to improve. imagine if you can go from 30% to 45 that's a huge difference at scale. 20 to 30% meaningful opportunity.

10:58And if you're below 20%. for for me that's kind of like a call to fire brigade like something is up whether it is a product issue, it's a acquisition funnel issue, a presentation or an offer. But if you're below 20% and you want to u make subscribe and save a meaningful part of your business, this is a huge opportunity. All right guys, so we know what take rate is, we know why it's important, we know how to calculate it. Now let's talk about how to increase it for your business.

11:28The simplest way, the easiest win is just to default to subscription. Like it's this is crazy. it's like about as simple as it can possibly be. But what we find is that a lot of businesses have some objections to this. We did. We we had we had tons of objections to this. mainly because we the number one is they're going to feel deceived. Totally. That's the first one. The second one is like, well, what is a conversion gonna do for me on my the people that actually don't know about my product? We're new. That's the issue that you and I had to walk through 100%.

12:02I mean, and that's, you know, it's it's very it's very reasonable to think about that. And I think we we honestly get this a lot, which is like my customer support team is going to get bombarded with all kinds of like, I didn't know I was subscribed and like cancel and refund. And yes, you are going to see an uptick in some of those complaints, but generally speaking, just by defaulting to subscriptions. So, if you have that on the left, you're defaulting to one time, plain Jane plan picker, nothing changes about the offer, but you default to subscribe and save, you're probably going to boost your take rate 5 to 10%.

12:37we saw that with Breeze, right? We were we were Q4 of Q4 of 2024 we were 12% take rate. Yeah. Yeah. And how much did that I mean improve just making that change? Stupid but it put us into the into the ball range. Yeah. Right. So I mean it obviously it's a larger business conversation but typically the increase in MR and subscription growth really makes it worth doing this and figuring out okay well how can we how can we approach this as a customer service team to handle a bit of those upticks and a lot of that can be offset by the way that you present and are transparent about your subscription offering on the front end. So, as long as you're transparent, you default it. don't fight against people's default action.

13:23It makes a big difference. All right. So, default to subscriptions. If you're worried about that, come talk to me afterwards. I will I will turn you into a believer. Take great win. Number two is reduce

Reducing Anxiety Around Subscriptions

13:36anxiety around subscribing. So, we've all been burned before, right? We've all subscribed to something and it's been hard to cancel. we have had a poor experience with customer service and for that reason this is a very common consumer psychology thing. People abandon things when they feel risky or confusing. generally speaking a lot of studies have been done on this that if you want to incentivize a behavior you're much better off actually making that behavior less risky, reducing confusion, reducing friction than even making it more valuable. And we can use this to our advantage when it comes to converting people on subscription. So remember, we have this very plain 10% off subscribe and save offer. In this example, we might improve our take rate about 10%, right? So maybe that gets 15, maybe we're getting 25 here. We're not changing anything about the offer. All we're doing is reducing friction. So we're doing things here like we are calling out, hey, pause, edit deliveries, or cancel anytime, right?

14:40We're calling that out. Maybe we want to proactively address that objection of I know I'm going to forget so I don't want to subscribe because I know I'm going to get rebuild and I'm not going to remember an MC. So we actually call out hey we send renewal reminders 3 days before renewals. Maybe we recommend the ideal delivery cadence for people reduce the friction there. Maybe we call out usage. So like hey one bottle lasts the average user 25 to 30 days. And if we have a guarantee or a satisfaction promise, we can include that as well. Literally, nothing changes about the offer, guys, but we're just making it easier for people to say yes to subscriptions, and that's going to increase the uptick. All right, so we're building off of each other. Default to subscriptions, make it easy to say yes, improve transparency. Take rate win number three

Improving Subscription Offers

15:32is going to be to improve your first order subscription offer. Couple of insights. So, your subscription offer makes a huge difference in your take rate. If you've got a lame offer, you're always going to be capped at how many people are going to choose to sign up for subscription, right? It's more friction. It's much more a commitment. On the flip side, if your offer is really, really good, if it's a no-brainer, you're going to have a way better take rate. But something I want to get you guys thinking about is this. That the discount or the offer that convinces somebody to subscribe to your product for the first time does not necessarily need to be the offer or the discount that keeps them subscribed. And in this environment right now, especially with tariffs, with a lot of uncertainty in the market, I think everybody's looking for ways to to put money back to the bottom line to pre improve profitability. And what we're seeing is that a lot of brands right now can actually unlock a lot of

16:30additional profit and increased take rate by doing what we call a staggered subscription offer. Meaning something like 20% off your first subscription order and then 10% off recurring orders. You can see what this looks like here. So if this if this plan picker generated about a 20 to 25% take rate, this might be at 30 to 35. And all we're doing is we're beefing up the first subscription purchase offer. So we're upgrading order discount for order one to 20%. And then we're swapping it on the back end to 10%. And you can see that called out in the checkboxes. So subscribe and save 20% on your first order, 10% on recurring orders. We can also include a little freebie to juice that first offer a bit. What's really cool here, guys, is that we increase take rate. we improve margin. Imagine if you just got 10% margin back on every recurring subscription order. Like that stacks up massively over time. And what we found is that actually this has a much lower impact on churn on on retention than

17:37you might expect. I I don't know exactly why this is. I think it's because people don't really dimensionalize the difference in price that much on recurring orders compared to that first one. But if you make the hook really really good and if you're transparent, you can definitely test this and I would highly recommend it especially in this environment. All right, this is where we start getting a little bit more involved, but also really well worth it.

Adding Multiple Subscription Options

18:01Take rate number win number four is to add a second or a third subscription option. There's something in consumer psychology and it's called the decoy effect and you see it all over the place, right? It's, you know, good, better, best. You see it at McDonald's. And the idea here is that when you have three or more tiers or options, the middle option typically looks the most appealing. We can use this to our advantage as it relates to getting people onto subscription. And so the application here is this that if we give customers two or more subscription options and only one-time purchase option, far more people are going to choose subscribe and save. And you probably have started to see this in the market for a lot of the supplements or things that you start to shop for.

18:46You're seeing this type of approach. So instead of doing like subscribe and save one time, you start seeing things like one month supply shipped every month, two month supply shipped every two months, one time purchase, right? whether it's in sort of like a vertical stack format or other formats, there's this idea that you're offering multiple subscription options and the one-time purchase just becomes like the third or the fourth worst value. And so what happens here is that a far larger percentage of people are going to choose the monthly supply. Some people are going to choose the two-month and that's going to increase your AOV. Overall though, this is going to be a probably a higher AOV funnel and you're going to get a much better take rate on subscriptions. Typically, we see 40 45% plus of people will come in on subscription for this. And then final win and this is

Visual Loss Aversion Techniques

19:41really cool. This is to incorporate visual loss when switching off subscriptions. Another principle in consumer psychology, loss aversion. Right? People hate losing things more than they love getting things. You can increase take rate by visually showing people what they're going to lose when they buy as a one-off versus on subscription. I know the outline's not quite there, but this is this is a an example from a partner of ours called B TOC Pages. They're a really good CRO agency, and they did this for a mutual client. What you can see here is on the left you have this subscribe and save plan picker and you have you know six check marks. It's all the benefits you get. This could be anything. Freebies, extra subscriber VIP perks. When you switch off and you toggle the buy once, those four check boxes turn to X's. You're like, "Ooh, I'm losing." The prices increase and it visually shows you exactly what you're losing. Normally what we see is brands that incorporate some sort of visual

20:47component to dimensionalizing the loss along with things like risk reduction providing additional subscription offerings etc. You could easily get this to 45 50% plus in terms of take rate on subscriptions. So again if you're currently in that 10 15 20% range just doing a couple of these things can make a huge difference and get you there really really fast. So, if I was going to prescribe a oneweek takeway take rate sprint, right? Take you from wherever you are right now to a really, really high converting plan picker and offer on subscriptions. I'd look at those five things. I'd want to make subscription your default option.

21:29I'd want to add a couple of anxiety and friction reduction elements. I'd think about boosting your first order subscription offer. How do we make that one a a no-brainer? Even if that involves doing a swap and turning over to something a bit more sustainable on recurring orders, I'd take a look at adding a second or third subscription tier. And then I would visually show customers what they're losing when they don't choose to subscribe. All right, y'all. Well, hope this was helpful. Hope it got you thinking about some ideas that might help. You can download these slides. All of the click streams and everything is going to be there. And I think we have time for some questions. I do. Yeah, you

Q&A Session

22:08killed it. First, Brian, round of applause for Brian, guys. This it's it's weird to say this, but like you subscription is not a natural thing for a lot of us on the marketing side to really just focus and spend time into unless you have done the business like this before or not. So, I think it's a good time to to ask questions, spend time with this. If not, he's easy to get a hold of on Twitter. that's how I found him and that's how I communicate with him. But, if there's any questions around subscription, yes, there is. Good. Why not?

22:43Hello. Hello. Hey. Hey. awesome. Wondering what some of the pros and cons are of a brand who would do an option of a one-time purchase versus the subscribe and save versus potentially not even offering a subscribe and save and only a full price subscription. and how you can really internalize and figure out what kind of brand works best for each of those tiers. That's a super good question. you know, I think it I'm a big fan a lot of really fast growing subscription brands do subscription only funnels. maybe one that comes to mind is I don't know if you've heard of like Everyday Dose for example, and they run a subscription only funnel and it's a cool starter pack. And I think if you build out an experience around it, like you really beef up that offer. It's a it's a program. It's a system. you can really make that work. And honestly, I would really test that. I think what a lot of folks see though is that there

23:44there is just a subset of your audience and your customer base that's never going to subscribe. And when you run subscription only funnels, sometimes your your cost of acquisition is higher on those and it's just harder to make the numbers work. Sometimes it's just difficult because like you if if you're worried about like defaulting to subscription on your plan picker, then you go to a place where you're only allowing people to subscribe. That like amplifies the concern around customer success and all that like to a different level. But I think it's something more brands should test.

24:19We we Yeah, go on. We I we had this issue because we were not defaulting to it and the brand was a big thing. We didn't want we thought it was going to be a bigger deal for people to complain about, hey, I didn't know it was on the subscription. You're going to get that anyways. Like these people, especially who's buying a product like ours or most of these are a little bit on the older side and so they have the disposal income. So there will be people are saying, "How did I get on this?" When we ran subscription only funnels, which we have two currently, we're trying to get a couple more. The issue was like they're they wouldn't stay with us as long and they wouldn't spend because we have to hit them with like a if our six-pack is 40 bucks, they're buying a $30 pack and we're incentivizing them with free gifts, etc. So, they weren't sticking with us past second month rebuill. Yeah. And so, I was like, well, I'd rather them find their way to the

25:05subscription with the discount rather than me going get this plus this plus this because the everyday dose people and anybody selling mushroom coffee, those guys hit you so hard with offers and mixers and stirs. I don't I just don't know, man. You know, it's it's tough, too, because it's like also think about if you think about your your customer cohorts, right? You have your one-time buyers, you have your your first-time subscribers, then you have your one-time buyers that go to subscription. Often times, the one-time buyers to subscription. It's a much smaller cohort of people, but they tend to be the most valuable. And I think that there's a level there of making a conscious decision to choose subscription that results in a higher value customer typically. Well, because we what matters to me right now is like how many second-time buyers, non-subscribers, I can get into subscription because they're already used to spending full price with me.

25:54They're like, "Why the wouldn't I spend a discount with you?" So that that I'm willing to sacrifice slower subscription growth for the longer LTV with the incentivized product after. Yeah, makes a lot of sense. part two of that question real quick. if you have a brand that really sees like a waterfall effect on let's say month five, month six, month three, and if people get there, they really tend to stay for the long term.

26:20Have you seen any type of like gamification really work for them that gets a higher percentage of people to that X month that then keeps them around for a long time? Oh, I got this. So, we did this without having to do anything. We do a free giveaway every month. So, it's like if you stay subscribed past May 25th, you're entered to win a free. We literally gave nothing away other than five free six-packs. And our our retention take rate or retention versus our take rate was the highest it ever been. So we we average like 3.5 to 4% churn right now and it was like 678 and all we did was hey stay past this month or stay past this date this month and you get a enter to win a free giveaway and that would took me no cost no gift no nothing. Yeah. Yeah. And so that's like a really cool way to do it is like sort of a for everybody. And then I think what you're talking about is like

27:10also the renewal based gamification like get a gift on renewal too on your first renewal and and second rebuild. I think it's a good idea. The where I really like doing it and where I think it really helps is layering those rebuill layering the the gifts in with the churn prompting touch points. So, for example, you send rebuild reminders. That's often if you look at where cancellations happen, it corresponds with the days like day 27, day 57. You send rebuild notifications and it prompts cancel. So, I really like having those things in the first couple of rebuilds and incorporating them into all of that communication that normally would prompt cancellations so that it again taps into loss version like hey cool I'm getting a free gift in my next order so I'm excited about that. I'm not just going to like click here to manage my subscription and cancel. Where I think people get into trouble though, another like margin protection thing is when you do these big long drawn out

28:05gamification ladders through like orders, you know, five, six, seven. Basically, what happens there is you're just like literally stealing margin from subscribers that are probably already going to stay subscribed anyways and that you need to actually subsidize your high churn in the first one to two rebels. So, I think it's a good thing. I think it's it's been very in vogue, but it maybe could be taken overboard a bit. real quick. as far as first of all, do you use We use a seal on our Shopify for our subs for the subscription app. What are you using or what are you recommending for the subscription app on the We use Seal looks just like that. Yeah. Yeah. Yeah.

28:43I you know, I think that there's a number of really good ones. I mean, we we're pretty agnostic as far as apps, but we really like Sko a lot. We really like Recharge. Yeah. so it doesn't matter as long as it looks like that. Yeah. Yeah, I mean I think I think that there's a lot of backend capabilities that some of the better apps have that allow you to do interesting things that maybe some of the other ones don't. But, you know, you don't need like a Ferrari subscription app to get good results. My bigger overall question though was so we got up to like a max about 17,000 subscribers monthly subscribers. I quarrel with the people who say that they have these really, really low subscription rates be or these really low churn rates because if you do the math, they're low because you're acquiring so many new customers inside of a single month. So, if you start with a hundred subscribers and you lose all of those hundred, but you gained a 100,

29:38you had a 0% churn rate and it's just not accurate. So, when people claim like, oh, I have a 7% churn rate, it's like, well, you're just doing really good marketing to make up for potentially what you do. So we look at the churn without new customer acquisition because we have about a 40% take rate right now. So my question is is and I know you didn't address this because this is all about take rate but if you have a if you have a 40% take rate what is the most important metric that you're looking at? Do you say do you get your take rate higher? Or in our case, if we were to not get a single new subscriber in a month, we would lose about 18% of our subscribers in that month. So that's our real churn rate, not 6% because our marketing's great, right? so would you put more emphasis on the take rate or would you put more emphasis on trying to get those people to stay longer? in in your case

30:38I' I'd churn would be yeah and also the sleeper might be ARPU so average average revenue per active subscriber on a monthly basis at once you start getting into that like 15 20,000 plus active subscriber base even making $1 more per active subscriber per month on average makes a big difference and that goes straight to your bottom line so I I'd probably look at churn and I'd look average revenue per active subscriber. It's a great convers. There's one last there. Super quick. Is this on this one?

31:19Let's see. Yeah, there it is. have you seen a direct correlation between an increase in take rate and an increase subsequently in your rebuill rates? or like providing that information upfront that increases your opt-in rates, right? your take rates. Does that help decrease then or increase your rebuild rates or decrease your turn rates subsequent months after? Usually, I mean it could be different for for every brand. I think we typically would see the opposite to be honest. as take rate increases, churn also tends to want to creep up. And so, you know, the the the brands like if you if you default to one time and you put like, minimum purchase, minimum of two orders on subscriptions and you're really trying to like dis almost like be really careful about this because you're committing, you're probably going to have lower churn.

32:14but yeah, I I think that proportionately it doesn't increase the same if you have both options. I think once you start getting into like subscription only funnels or like hiding the one-time purchase really make like you start getting up to like 70 80% take rate that's when you're typically going to see like a big jump in churn at that like 40 to 50% range it's it's manageable it will creep up but I think the game now is like okay let's what can we do to keep it as low as possible yeah for okay first off I would say very rarely do you get a dude that just speaks subscription with this much questions so thank you very much for answering great questions guys clap it up thank Appreciate it. Great to talk to you. Good job. Thanks, man.