When I first heard about OrderGroove, I immediately got it — from a technologist’s perspective it’s like an RSS feed of products you can subscribe to! I was going to be building a platform that would allow people to receive products in a continuous fashion, allowing them to manage the process all along. I thought this was going to be a straight forward initiative.

You see, on the most basic level OrderGroove can be seen as a single component: a tool to allow people to place an order with a given frequency. Just add a form element with a date select whenever people are adding products to their cart and then simply place the orders as requested. As an engineer I could see this specific aspect being developed in a relatively short period of time.

I was about to be pleasantly surprised. Here are some of the things I discovered while building the RetentionEngine platform and have realized are absolutely crucial for a successful subscription program:

Performance tracking

One of the biggest values of the platform in addition to the insertion of subscription offers on the eCommerce site is not how, but what you actually present there. In this phase, the platform acts similar to a banner serving system, and getting the right offer entails marketing, testing… and then testing some more. I found out there were people in the company solely focused on generating these offers, and using complex calculations decide which offer returns the most subscription sign-ups, every day of the month, every month of the year. Thanks to the magic of javascript, we can serve any combination of HTML we want, basically modifying the customer’s page in a myriad of small ways, seeing which ones get a better response from the customer. I was told by our “Retention Experts” (our client service and marketing teams) how just one percentage point in subscription conversion can mean millions of dollars per year that a company can earn or leave on the table.

It’s all about the customer

One of the most important pieces of the platform is how easy it makes it to maintain the customer relationship all along. This is far from being an easy task. The amount of learning I received, thanks to years of experience with real life clients and customers was amazing, and any client that uses the platform immediately inherits this knowledge — it’s like a Wikipedia of continuity. From the My Subscriptions Interface that allows customers to edit, change or cancel any part of their subscription workflow, to the Customer Service Admin that allows clients to support administrative tasks, OrderGroove enables any company to have the platform and tools at their disposal to become a continuity expert in a matter of days. This is powerful and ultimately what is driving customers to sign up and stay with the program.

Data and Analytics are king

OrderGroove allows clients to track, in real time, how their programs are performing and track their customer engagement — down to the smallest details. There are a number of benefits from this: from inventory forecasting to subscription monitoring, the platform feels like a Google Analytics for retention and lifetime value. Does your marketing team want to know how frequently your subscribers are purchasing? Or how about the five year dollar value of these subscribers? The dashboard provides complete insight into these critical metrics.

Constant innovation

Another huge value is the fact that OrderGroove is learning every single day what works and what doesn’t for our clients and what to innovate and iterate on next. Everything we learn is incorporated in the platform without our clients needing to write a single line of code or modifying anything on their site. We release new code all the time and clients automatically get this benefit as part of their relationship with OrderGroove.

Fast implementation

Implementing a basic continuity program, from scratch, at first appeared straightforward to me. I quickly realized there was a fundamental difference between launching a basic functionality and an effective and successful subscription program that makes real money for companies. There are a lot of moving parts: from the subscription offer optimization, order placement, performance tracking, customer service, email notifications to the customer facing control panel. And the moment you release it you are going to need constant tweaking and innovation. With OrderGroove, this process can happen in as little as 30 days, including Q/A. This allows a client to offer, in little time, a full subscription platform without having to divert engineering resources from critical aspects of the business

At the end of each client implementation I have a moment I’ve enjoyed immensely every single time. It’s right after the production launch, when the client’s engineering lead tells me how easy it was to implement OrderGroove, but how complex the whole system behind it feels. They look like rock stars to their organization.

And me? I just enjoy seeing my baby grow every single day.

Let’s hear it for the subscription model!

Too many firms are quite content to “acquire” a customer and then push the relationship along, one transaction at a time. They hope that each transaction deepens the relationship, but they’re often surprised when the customer suddenly jilts them for another provider in the same category—or drops out of the category entirely. Worse yet, many firms have no idea that the customer is “dead” until long after the last transaction took place.

Enter the subscription model, in which customers willingly choose to lock themselves in for a period of time, and don’t need to be nudged along. They appreciate the option value that the subscription offers, particularly if it has an “all you can eat” aspect to it. This keeps them around for a long time, even if they don’t make any active decisions for a while.

Furthermore, inertia kicks in, and they keep renewing the relationship for numerous periods, even if they’re not actually doing anything. This combination of option value and inertia is absolutely delicious from a revenue standpoint. And, as icing on the cake, the customer needs to announce that he’s leaving (by failing to renew the subscription), so the firm can take action relatively quickly to try to salvage the relationship.

With this contrast in mind, every firm should strive to create a subscription relationship with its customers, even in settings where such an arrangement is relatively unconventional. Think about the items and services that you buy (or at least consider buying) on a somewhat periodic basis already: flowers, oil changes, vitamins, batteries and manicures. Even big-ticket items (such as cars and copy machines) can be treated as subscription relationships—with greater profits to the seller and more convenience/satisfaction for the buyer.

So stop pushing products and services and start to focus more on creating “customer lock-in” instead. You’ll be glad you did.

View Peter’s post in the Wharton Magazine.

I’m excited and honored to announce the addition of Professor Peter Fader to the OrderGroove Advisory Board.

Peter joins OrderGroove from the Wharton School at the University of Pennsylvania where he is currently the Frances and Pei-Yuan Chia Professor of Marketing. Peter’s spent much of his career focusing on the value of customer retention and lifetime value and the differences/interplay between contractual (i.e., subscription) and noncontractual (i.e., transactional) patterns of customer behavior, and the right ways to develop, diagnose, and implement models of customer lifetime value in such domains.

When I first met Peter, I was immediately intrigued by the relevance and validation of Peter’s background to OrderGroove’s business and vision. Our plans include having Peter help with current and new models measuring client ROI and the impact on their businsesses and working directly together as well as with his students on client white papers and case studies.

We’ve been searching for this level of expertise and I couldn’t be happier to have him on board, so please join me in taking this opportunity to welcome Peter to the OrderGroove team.

Above, you will find a recent post on the Wharton Magazine by Professor Fader about the value of subscriptions – enjoy!

I grew up a competitive tennis player in South Florida. I would travel nationwide to earn ranking points and compete in the United States Tennis Association (USTA) sanctioned tournaments. Now for those of you who are not as in tune with the realities surrounding tennis equipment, breaking tennis strings was a common, if not daily, occurrence for competitive players. I would break at least one racket string per day during training, which consequently left me with two choices:

1) Go to the local pro shop and pay for the string + the cost of having the racket strung, for a total of $30.00…OR
2) Go to the local pro shop WITH my own string and pay only the cost of having the racket strung, for a grand total of $10.00.

Let’s consider this for a second – literally a $20 savings per visit for simply having my own string. Now, who wouldn’t prefer option two? I know I did. But, even with this convincing economic argument, I would always forget to order strings from the Tennis Warehouse catalog. My typical purchase quantity resulted in two cases of tennis strings per year, even though my real need and frequency called for at least six cases.

Translation: That’s four orders or 300% in lost sales for Tennis Warehouse per year. Multiply that figure by the number of customers who were in my shoes, and that’s a lot of money being left on the table for both Tennis Warehouse and me.

Fast forward to 2008… I noticed a trend in eCommerce and the online marketing world: a lot of money was being poured into acquisition and conversion tactics. At the same time, however, I noticed another concerning trend: as businesses poured billions of dollars into the front-end transactions, there was little focus on the opposite end – retention and maximizing the lifetime value of a customer. So with all efforts focused on acquisition and conversion, the real challenge seemed to be the gaping hole in the back of the ship allowing customers to escape.

I took a look at the eCommerce market – SaaS offerings and platforms like Bazaarvoice, Optimost, Demandware were thriving. The ROI was clear – outsourcing to the experts made sense. Yet, there were few platforms focused on retaining customers and improving the lifetime value of those customers.

Naturally, I had to scratch my entrepreneurial itch! I quit my job at a successful eCommerce startup, Liquidation.com that had just gone public on the NASDAQ, and decided to start OrderGroove. The vision – we were going to focus on improving lifetime value, customer retention and the frequency of customer purchases through a platform that focused on convenience through subscriptions.

The first thing we did was get those successful companies I just told you about on board. I invited Mark Wachen, Founder and CEO of Optimost, Julie Constantin, first investor in Bazaarvoice and Coremetrics, Paul Miller, Demandware Director and former SVP of eCommerce from Sears to join our Board of Advisors. We then raised a major investment round led by Members of investment group TIGER 21, early stage angel investors and venture capitalists and we were off.

We launched with our first client in 2009 and the success was immediate. Customers were subscribing and purchasing up to 262% more than standard customers and retaining at over 90%.  Actual data to quantify the power of continuity!

Today, the application is becoming widespread and the results are compelling – by making it all about convenience and putting customers in control, they are retaining themselves and retailers are able to successfully compete on convenience.

Welcome to the new age of online commerce – one focused on keeping existing customers for the long haul!