Ancient Nutrition needs some modern retention

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Today we're talking about Ancient Nutrition, a company that's revolutionized the nutrition market. We're going to learn how Ancient Nutrition applies historical knowledge and principles with current research to create a product that’s crushing the competition. After that, we're going to jump into what it is doing great - and not so great - with its subscription retention strategy, wrapping this all up into a nice case study for improvements for your own brand.

With ancient medicine making a comeback, Ancient Nutrition has developed the perfect product at the right time through a combination of historical knowledge and principles, and current research. In a multi-billion dollar industry, Ancient Nutrition is well positioned but how does its retention strategy measure up?

Key takeaways:

• Cancellation flows reduce churn
  You must keep in mind that not all customers who cancel are lost. There’s a whole list of reasons that have nothing to do with your company. So it’s crucial that you offer a smooth offboarding process with a one- to two-question survey on why they’re leaving that leads to a salvage offer or pause plan. It’s enough friction to help reduce some churn and increase the long-term possibility of reactivation.
  We’ve found that companies that properly offer up salvage offers and have a clear offboarding experience tend to save 15%-30% of cancellations.

• Offer the option to upgrade to a quarterly or annual plan
  Put together paths within the order flow and post-checkout to get your monthly customers to commit to longer-term plans. New customers may want to try the product out before committing to something longer term, so remind them through a plain text email with an offer, and then a one-click upgrade to a longer-term plan. 
  Quarterly, semi-annual, and annual subscriptions all improve retention immensely, and tend to have 200%-400% higher lifetime value.
  
• Credit card failure process needs attention
  When a credit card fails or declines, it is absolutely crucial to include an intelligent email drip campaign based on the customer's behavior. Include the following:
   
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Ancient Nutrition

Ayurveda and Traditional Chinese Medicine (TCM) are two of the world's oldest health care systems and originated three to five centuries ago.

Ayurveda began in India. The term is a Sanskrit word, which is believed to be the world's oldest language. It means a combination of ayur (life) and veda (knowledge or science). This "knowledge of life," which includes ingredients that support a healthy diet, has been passed down through many generations. TCM also uses herbs and diet, among other techniques, to help prevent or treat health issues.                                                     

Today, these principles are being repurposed to help stand up to the stress of today's fast-paced lifestyles. One modern company melded these philosophies together and created Ancient Wisdom. The brand applies the knowledge and principles from these ancient health care systems and marries them with current research. The result is a line of products that are rooted in tradition and supported by science.

Ancient Nutrition was launched by two authorities in the health and nutrition space: Dr. Josh Axe, a certified doctor of natural medicine, chiropractor, clinical nutritionist, and author, and Jordan Rubin, eco-entrepreneur, health and nutrition expert, lecturer, andNew York Times-bestselling author. 

Both were in search of ways to improve their own health and that of family members facing challenges, so they decided to combine their expertise to pursue their personal missions of healing. They brainstormed product concepts based on timeless nutritional principles with the potential to promote worldwide healing and founded Ancient Nutrition in 2016.

Ancient Nutrition's success

There are two components that have led to Ancient Nutrition’s success: the established credibility of the founders and their commitment to producing quality products.

Ancient Nutrition's founders were already trusted leaders in the health and wellness space, and their existing following helped fuel the growth of the brand’s customer base. They’re a trusted source and authority within the industry.

Quality products backed by science are the other contributors to Ancient Nutrition’s success. Dr. Josh Axe and Jordan Rubin are completely invested in the goal of providing guidance and quality products that improve health. Potency and ingredient quality are monitored through every step in the manufacturing of its products.

Ancient Nutrition provides an assortment of products that support health, function, and appearance at any age. Products include collagen, protein, probiotics and digestion, vitamins and minerals, herbals, and essential oils.

Its products are created by leveraging the principles from Ayurveda and Traditional Chinese Herbalism that have continued through generations and combine them with current research to provide supplements that are rooted in ancient tradition, but also supported by modern-day science.

Ancient Nutrition uses  authentic preparation methods like fermentation as well as traditional combinations of ingredients from ancient health care systems. These processes improve bioavailability and absorption of nutrients, which makes  the products unique and highly supportive of health and wellness. Additionally, Ancient Nutrition  works with regulatory agencies to ensure its products remain pure. 

Ancient medicine seems to be making a comeback as more and more people search for natural ways of supporting their health. And with the human nutrition market predicted to hit $465.4 billion by 2025, Ancient Nutrition has managed to develop a quality product with the perfect combination at the exact right time.

Retention Review

Not everything's amazing about Ancient Nutrition’s strategy though—but there’s still a lot to learn from it. It does a great job at really leaning hard into its wide variety of customer personas. That being said, we need to remember: retention is key and an area where most brands mess up.

Why is retention important? 

You spend half of your budget and time acquiring customers, but to be successful, you need to keep them. The beauty of the subscription model is that the relationship with the customer is baked directly into how you make money. If that customer is happy, they'll keep buying from you in the long term. If they're upset or not seeing the value, they'll cancel—quickly.

Plus, money talks here. Subscription ecommerce companies using the tactics we're going to talk about have 2x the customer lifetime value (LTV), 2x the average order value, and 3x higher growth rates, because they're not worried about plugging a leaky retention bucket.

To highlight the importance here, let's look through Ancient Nutrition's retention strategy and break down what they're doing well, and not so well, so you can learn for your own DTC business.

Retention has three parts:

• Active churn, which are customers who are actively choosing to cancel your product.
• Expansion revenue, which are your existing customers that buy more product. 
• Delinquent (or involuntary) churn, which are customers who's credit card or payment has failed, which sadly is one of the largest single buckets of where you're losing money.

Active Churn

When we look at Ancient Nutrition's active churn, there are so many reasons why a customer may cancel — some you can control, others you can't. We want to make sure Ancient Nutrition is not only setting up their customers for long-term retention in the initial purchasing process, but that they're also collecting information on why someone's cancelling, if they so happen to, in order to get a clean cycle of retention improvement.

Ancient Nutrition’s active cancellation strategy needs a lot of work, so let’s get started. First, it has  a decent “subscribe and save” feature that includes 15% off and free shipping for certain-sized orders. This is fine, but it should offer more exclusivity. 

We’ve found that although subscribe and save is a good gateway to the world of subscriptions, it’s not great in terms of keeping customers around because it commoditizes the value of the subscription. Instead, Ancient Nutrition should add in some other elements as you should with your own brand. It doesn’t take much to add benefits like exclusive items, early access, and community to subscribe and save to make it a full-blown membership. 

I feel the same about Ancient Nutrition’s  offboarding flow. Right now, it has the basics, but there is so much more that it could be doing to keep customers from leaving. This includes collecting feedback and  offering some sort of salvage offer based on survey responses. Right now, it just has some basic copy to try and keep folks subscribed. 

Like  we say time and time again, we've found that those companies that properly offer up salvage offers and offboarding tend to save 15-30% of those customers trying to cancel. This is based on data, a study we completed on just over 1,000 DTC subscription companies. 

One last area of focus for Ancient Nutrition is its  term optimization by putting together some paths to get monthly customers to commit to quarterly, semi-annual, or annual plans both in the order flow and after the purchase has been made. Quarterly, semi-annual, and annual subscriptions all improve retention immensely. In fact, quarterly and annual customers tend to have 200 to 400% higher lifetime value, mainly because they aren’t making purchasing decisions every month when they see the receipt. 

Keep in mind that new users may want to try the product out before committing to something longer term, so reminding them through a plain-text email with an offer and then a one-click upgrade to a longer-term plan will help in boosting overall lifetime value considerably. 

Remember, and we've published a lot of research on this, using physical amounts for the discount, whether it's offering a free product or a physical dollar amount off, works roughly 2x better than using a percentage off. Ancient Nutrition is made for this as it could include exclusive samples when you upgrade to a longer-term plan.

Expansion Revenue

Expansion revenue is crucial, because your existing customers are more than willing to buy 3x more from you—you just have to make sure to ask. Plus, those customers who have at least one add-on or additional purchase tend to have 18-54% higher lifetime value, meaning they're paying you more over the life of the subscription, but they're also sticking around longer, because they're more ingrained within your product.

Ancient Nutrition is doing essentially the basics when it comes to expansion revenue, and that’s not necessarily a bad thing. It has  a lot of relevant add-on product suggestions through its "you may also like" feature, and I also really love how it shows up right in the middle of the order flow. Some of the extensive options do get a bit overwhelming so more curation wouldn't hurt. Overall, though,I think this is still a good process.

The brand is at  least doing something, but a little bit of extra curation would go a long way. For your brand, keep in mind that you only have so much attention from your customer, so make sure to use it wisely. Not saying Ancient Nutrition isn’t doing that here, but it certainly could go a step further.

One thing that could help Ancient Nutrition’s expansion efforts is to offer up sample packs somehow with smaller amounts of different supplements. We’ve seen sampling work really well as a gateway to more permanent subscriptions, and since Ancient Nutrition is already so focused on variety and curation, this may be a good way to boost AOV and long-term retention.

Your brand should also consider this option especially since it’s relatively straightforward based on all the sourcing and shipping legwork you’ve already done. 

One other interesting option I think Ancient Nutrition should consider is a fast-track shipping option. We’re seeing this more and more, but it’s an exceptionally easy add-on that simply requires you to upgrade product shipping options.

Time is a great value metric, and people are willing to pay for speed. You can boost your margins a good amount, especially on products like this by simply prioritizing their order over others. The big takeaway for your brand is to just make sure you’re considering all the options when it comes to add-ons, especially when you don’t necessarily have the ability to always spin up brand new products.

Credit Card Failures

Now let's talk about the sexiest topic in the world—credit card failures. We know you don't wake up sweating in the middle of the night thinking about credit cards—that's our job—but here's why we obsess over things like this: just under 40% of the customers that leave you are leaving you because of failed payments. To get these folks back, we want to make sure Ancient Nutrition is treating these folks like a marketing channel, sending them messages before the point of failures, all the way to after the point of failure through email and text messages.

Like most brands, this is where Ancient Nutrition needs a good amount of work. It needs  to make sure to send out  4-5 plain text emails that appear as if they’re coming from a person rather than anything markety and over-designed. Plain-text works so much better than HTML, markety emails because they build reciprocity with the customer who feels more obligated to respond to a “real” person., This is especially true if you include the value messaging within your cancellation flow.

Don’t forget SMS notifications either. These messages get 90% open rates within 3 minutes. Don’t overdo it, but a message or two that supplements those  emails will ensure you get a response in a hurry. 

One other area of improvement for Ancient Nutrition is its credit card update form. It doesn’t make me log in, which is great, but I’m directed to this generic Shopify form which just looks super scammy and ends up confusing customers. This page shouldn’t be so generic. It should be branded and look like it’s actually from Ancient Nutrition. We see time and time again that while the no login form works well, it can actually hurt customer trust if not branded properly. 

The one other aspect that’s powerful here is making sure you’re retrying the card not just randomly, but in an intelligent way. There are 130 different reasons a credit card fails. Most of them are outside of the customers’ control, so an easy way to get these customers back is just having a system to strategically recharge cards. 

Based on what we’re seeing here, I think Ancient Nutrition could actually increase its recovery rate by 50%. 

Overall:

So overall, Ancient Nutrition’s doing above average compared to what we see from other subscription ecommerce brands. There are some highlights there, but also some lowlights. If it wants  to take on this multibillion dollar industry and win though, there are some key changes that need to be made.

Retention Revamp

Let's revamp. First though, why do we feel we have any authority to even talk about this? Roughly 20% of the entire subscription market is using ProfitWell, so we're sitting on more data than anyone else. Simply put, we have the data to know what works and what doesn't, and we care more about this problem than anyone else out there.

Let's walk through what we'd steal and what we'd change immediately about Ancient Nutrition's retention strategy, so we can all learn for our own brands. 

Steal it:

Solid add-on strategy

I really think Ancient Nutrition’s add-on strategy is something worthy to note as a brand. Not enough brands implement upgrade paths for add-ons in the checkout flow. This is a simple and smart way to get people buying and upgrading more. Ancient Nutrition didn’t reinvent the wheel here, but it did incorporate some  fundamentals phenomenally well.

I think it’s a great example of not needing to go overboard when it comes to expansion revenue.

Change it:

Include smooth offboarding and salvage offers

A big piece we’d change is that cancellation flow. Right now, Ancient Nutrition is headed in the right direction to make this experience great, but it needs to improve its execution. It is definitely losing a lot of revenue by not having  salvage offers or a minimum amount of friction. 

Not all customers who cancel are lost. Sometimes it’s timing or a vacation or a whole list of things that have nothing to do with you. Instead, offer up a smooth offboarding with a 1-2 question survey on why they’re leaving that leads to a salvage offer or pause plan. It’s not a ton of friction, but it’ll reduce some churn and not hurt the long term possibility of reactivation. 

We’ve found that those companies that properly offer up salvage offers and a clear off-boarding experience tend to save 15%-30% of cancellations - this based on a study we completed studying just over one-thousand subscription ecommerce companies. 

Upscale credit card failure process 

Ancient Nutrition needs to upscale its credit-card failure process. It isn’t a small brand anymore and should stop acting like one with its current process because it’s losing a lot of money by doing the bare minimum. It needs 4 to 5 plain-text emails that go out in an intelligent drip sequence based on the customer’s behavior. 

It also needs to add in  SMS messages to this flow, and it needs to liven up its credit card from a bit more to  properly capture the user back in a more secure and pleasing way.

Who's up next?

Next week, we're capping off the season in the world of coffee with Atlas Coffee. Atlas Coffee has become incredibly popular recently by bringing a huge selection of unique blends straight to your door, and next week, we’re going to see if its retention rate is as hot as its coffee product.