Retailers are seeing growing returns from recurring revenue programs such as subscription services, memberships, reordering and boxes.
According to “Retail 2020: Recurring Revenue Programs Deliver Results,” a new survey of retail executives from relationship commerce platform provider Ordergroove and Napco Research, 77% of respondents currently offering or considering offering recurring revenue programs report that a recurring revenue program is a “prerequisite for doing business.” The other 23% consider recurring revenue as “nice to have, but not essential.” No respondents said it has no importance.
A majority of respondents reported benefits from their recurring revenue programs including “greater profitability” (65%), “greater revenue” (59%) and “increased customer retention” (49%). No respondents reported not seeing any benefits from recurring customers.
Eighty-seven percent of respondents are seeing the revenue contribution from their recurring revenue programs grow substantially year-over-year, with 93% of them expecting that this trend will continue in 2020.
The most common metrics respondents are using to measure program impact include “purchase frequency” (69%), “repeat purchase rate” (66%), “total customer spend” (62%) and “average order value” (56%). On average, companies that offer recurring revenue programs report that 41% of their revenue can be attributed to them.
Napco surveyed executives at director level or above at retailers from $5 million to over $1 billion in annual revenue during Q4 2018.