What makes consumers sign up for subscription boxes

By Louise Grimmer, University of Tasmania and Gary Mortimer, Queensland University of Technology

Everyone can relate to that excitement of ripping open a present or the anticipation before discovering what a package in the post contains. In fact, the rush of good feeling is very similar to what gamblers experience and it’s this type of psychological effect that retailers are now banking on.

Subscription box retailing is a recurring delivery of various products, grouped according to a theme or product type, and ordered online through a subscription retailer.

While customers select the type of box, and there are literally hundreds of different genres and retailers to choose from. Prices for boxes vary depending on the type of box, with costs ranging from $10 per month (like beauty retailer Birchbox) to over $100 (like luxury retailer Monthly Express).

Retailers know that most customers want to see, touch and “experience” products before they buy them, so subscription boxes, often filled with smaller sample sizes of new products, give customers a chance to try before they buy.

Although the delivery of subscription boxes is recurring (and that is also part of their appeal) there is a great deal of difference between a subscription box and a recurring subscription.

Recurring subscriptions are the automatic and regular delivery of everyday items such as toilet paper (Who Gives a Crap), men’s grooming products (Man Perfected) and soap and cleaning products (Bondi Wash).

Even large retailers such as Target in the United States are offering recurring subscription services on hundreds of everyday items such as baby formula and printer ink. These services provide discounts for regular subscribers as well as free returns or easy rescheduling of delivery dates.

But it’s subscription box retailing that appeals to consumers on a number of emotional and behavioural levels.

Why we want to know what’s in the box

We go through a number of emotions with subscription boxes. There’s anticipation (eagerly awaiting the delivery of the box), curiosity (what will the box contain?), surprise (upon opening the box) and joy, delight, satisfaction and sometimes disappointment upon discovering the array of products contained within the box.

The cycle then starts all over again with anticipation of the delivery of the next box. There are even dedicated websites, social media sites and youtube channels that allow box subscribers to share the experience of opening their boxes.

Our motivation to subscribe to these boxes can be explained through the powerful rush of dopamine that is secreted, both when there is anticipation of a reward, and when the reward is actually delivered. This is the same rush that is experienced by gamblers and it is based on Burrhus Skinner’s theory of operant conditioning.

Operant conditioning centres around changes in behaviour due to either negative or positive reinforcement. In the case of subscription boxes, the reinforcement is positive.

However, Skinner also found that one of the most powerful forms of positive reinforcement (getting subjects to do what you want them to do) occurs when there is a variable ration of reinforcement or a “reward uncertainty”, and this is where the analogy with gambling comes in.

According to gambling researcher Dr Charles Livingstone:

if you give them (in our case customers) a predictable set of rewards, then they lose interest quite quickly; if it’s unpredictable, they tend to establish behaviour which is very hard to extinguish

Retailers are also relying on another aspect of our psychology – behavioural consistency.

This theory states that our past behaviour is the best predictor of future behaviour. So in this regard once retailers have consumers transact in a certain way (for example by signing up for ongoing subscriptions), consumers are likely to continue this behaviour. Even more so if the behaviour is easy to perform and brings satisfaction or enjoyment.

Some subscription retailers also very cleverly employ the scarcity principle (that there’s only limited offerings of products) with the notion of fear of missing out (FoMO) to encourage customers to commit.

Good for retailers, not always good for customers

Subscription box retailing allows retailers to collect customer data, especially when they require their customers to fill in detailed questionnaires when they sign up. Under the guise of making the box “tailor-made” to suit each individual customer, retailers get valuable information which can be shared with brands that provide the products.

Subscription boxes don’t always delight. Some shoppers have reported disappointment with product selection, difficulty returning products, as well as problems with terminating contracts and getting refunds.

Unless dissatisfied customers take the sometimes convoluted step to cancel their payment and end their contract with the retailer, automatic renewal of subscriptions means that the payment will keep being taken and the boxes will just keep coming. This means consumers have to read the fine print before handing over their payment details, especially the rules around the minimum number of deliveries and the notice required to terminate the subscription.

Consumers should be mindful of the psychology around their own behaviour in signing up for subscriptions. This is especially the case as an increasingly competitive world of online retailing, we can certainly expect to see more subscription box retailers.

Louise Grimmer, Lecturer in Marketing, University of Tasmania and Gary Mortimer, Associate Professor, Queensland University of Technology

This article was originally published on The Conversation. Read the original article.