Relying solely on cold traffic to grow your business is like trying to fill a leaky bucket—without repeat buyers, you're missing a huge opportunity. A recurring revenue model, like subscriptions, offers a stable, predictable stream of income, helping you reduce your dependency on paid ads and build lasting customer relationships.
I’m going to put things simply, if you're still relying solely on cold traffic to grow your business, you're missing out on a massive opportunity. It’s the equivalent of trying to fill a bucket with a hole in it, and that hole is the lack of repeat buyers.
Most eCommerce brands (even established brands) are operating by the skin of their teeth to acquire new customers at a cost just low enough to generate a meager profit. The slightest change in CPMs or creative fatigue can wreck havoc on even a store, and the problem is made even worse by an overreliance on paid traffic.
If only there were a way to generate additional sales without increased ad spend…
What I am referring to is a way of creating lasting customer relationships that turn each first time order into a perpetual stream of income and goodwill.
It may sound like magic, but that is the very practical reality of implementing a digital membership strategy. I’m not talking about adding a subscription button, but rather a tested method for keeping your customers engaged, driving repeat orders, and lessening your overreliance on cold traffic.
First off, don’t misunderstand me, cold traffic (i.e. paid spend to acquire new customers) has a key role to play in every acquisition funnel. It’s the bread and butter for most growing eCommerce brands and will always be THE primary means of reaching audiences who have never before heard of your brand.
That said, cold traffic shouldn’t be your exclusive source of customers. In fact, you should be able to stop running paid ads for months and still maintain 35% of your monthly revenue.
Most brands would see revenue drop to a shocking 5% in the event they stopped their ads.
Even after pouring endless resources into testing countless advertising channels and creative formats, these brands are still left with no lasting strategy for driving repeat orders / maximizing customer lifetime value.
Any brand owner is familiar with the inherent instability of paid traffic. All paid ad platforms rely on an auction system that forces you to compete with other brands, paying top dollar for every impression, click, and in turn conversion. When you introduce variables like ad platform policy restrictions, seasonal CPM fluctuations, and attribution challenges (notably post iOS 14) even the best brands can struggle to navigate the landscape.
Social media users are bombarded 24/7 with slick ads for new and unique products. In fact, 2685 NEW ECOMMERCE STORES ARE ESTIMATED TO BE STARTED EVERY DAY. It can be challenging to stand out against the crowd no matter how great the product. Yet, without a source of repeat customers, you’re entering the attention arena every day and fighting for your life.
Unlike running paid cold traffic, optimizing a site for recurring revenue turns would-be one time purchases into sources of almost limitless recurring revenue. As time goes on, the recurring revenue component of the business progressively erodes the need to rely on paid traffic for consistent revenue.
Unlike a business built on cold traffic with low repeat orders and no recurring revenue component, there’s no fear over sudden ad performance changes or platform updates – the money will continue to flow in
Recurring revenue provides stability.
It allows you to plan for the future with confidence and is the reason why many successful brands like Fabletics are implementing recurring revenue models via subscriptions.
Subscriptions aren't about simply adding a “subscribe and save” or locking people into a contract; they're about creating lasting value that keeps customers returning month after month. Many big brands have proven that (when done right) a subscription model can skyrocket customer lifetime value (LTV).
Let's break down the core benefits of a subscription model:
Higher lifetime value (LTV): A customer who subscribes for $30/month for a year is worth far more than a one-time $50 sale. The goal isn't just to get someone to buy. It's to maximize the LTV of every customer you acquire.
Now, let's get into the meat of it. As an eCommerce site owner, how do you actually build a successful subscription model?
Once you've got your subscription model off the ground, the next step is scaling it!
This doesn't mean simply increasing ad spend, it's about improving the customer experience, growing your subscriber base, and constantly testing new ways to increase revenue/retention/etc.
Quick Tip: One common value add technique you may want to consider is adding an upsell. An upsell is an additional product or benefit that existing subscribers can pay extra for. For instance, some brands offer free customization (e.g. name or initials) on any order with an additional monthly fee of $3.
Relying solely on cold traffic is a losing game in the long run. Sure, it's essential for acquiring customers, but if you're not thinking beyond that first click, you're leaving money on the table.
Recurring revenue models, like subscriptions, give you stability, predictability, and long-term growth. They turn customers from one-time buyers into lifelong fans, and in today's market, that's invaluable.
This is why we built Phoenix. We help transform one-time buyers into long-term revenue sources with digital customer memberships.
By leveraging our managed technology platform, best-in-class checkout process, and full-suite services, eCommerce businesses can boost customer lifetime value, lower churn, and create steady revenue streams without relying on advertising.
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