Recurring revenue via subscriptions and text message alerts have benefitted Italian coffee brand Illy.

Subscriptions are keeping sales hot for coffee retailer Illy caffe SpA.

Illy has had a subscription program since 1999, when the premium Italian coffee brand first launched online. And over the past few years, Illy has added a text message reorder program and better integrated its subscription program into its ecommerce site.

The majority of Illy’s online business is from subscriptions, Andrea Vitale, Illy’s senior director of ecommerce, told Internet Retailer at the National Retail Federation 2019 conference in January.

“Coffee is a natural fit for subscription because you consume it on a normal basis, it’s everyone’s morning ritual,” said Vitale, who declined to reveal sales specifics.

After Illy replatformed to using the Salesforce Inc. ecommerce cloud in June 2017, the retailer knew that it needed to choose whether to build or buy technology to let shoppers order subscription services. It decided to use recurring revenue vendor Ordergroove Inc. not only for its technology, but also because of the ease of use of the technology on the customer end, and the data analytics Illy received. Prior to using Ordergroove, Illy built in house the subscription capabilities into its previous platform. It took about 90-120 days to get up and running with the Ordergroove platform, Vitale said.

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One of the major updates to its subscription program is allowing shoppers to sign up for a subscription as they shop on Illy.com, instead of funneling shoppers through specific landing pages. For example, Illy added a button at the bottom of a product detail page to make an order recurring.

“It allows people to be in the moment,” Vitale said.

Illy also lets shoppers manage their subscription orders throughout the website. This is a large improvement because that wasn’t possible on the retailer’s previous, custom built system. Shoppers who wanted to make a change had to call a customer service agent, she said. Allowing shoppers to do it themselves has greatly freed up agent time.

“People don’t want to talk to humans anymore, they want to be self-serve oriented, and this allows them to do this,” Vitale said.

Because of the new tool, the number of calls from shoppers changing their subscriptions decreased, freeing up customer service agents’ time to spend on other activities, Vitale says. The retailer did not let any agents go, but it has not needed to add more agents as sales continue to increase, she said.

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The retailer also has an “Illy a Casa” program, in which the retailer gives away or significantly reduces the price of one of its espresso machines, if shoppers sign up for an 18-month coffee subscription. Now when shoppers browse machines, the retailer promotes its free-machine subscription program.

Since the Ordergroove technology launched on Illy.com in June 2017, 44% of U.S. Illy subscribers chose the Illy a Casa program, and shoppers in the Illy a Casa program spent 88% more than just normal subscribers. Plus, Illy.com’s net promoter score increased 10%.

Overall, Illy has a few thousand shoppers in its subscription program, and its sales increases are “holding static” since adding Ordergroove, Vitale said. Plus, over the holiday season, Vitale said Illy was “very successful” with double-digit growth.

Building on its subscription program, Illy launched an SMS program last December. The program sends reminders to subscribers when it is time for shoppers to reorder. The reminder will let the shopper know that she is likely low on her coffee and ask her if she would like to reorder her previous order. Shoppers can reply “Yes,” and Illy.com will immediately process the order and send the shopper a confirmation text.

 

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Early results from the program have been successful. Of the shoppers who receive text messages, 6% convert to a sale when they receive the message, Vitale said.

Illy is now in the process of getting shoppers to sign up for text messages, such as clicking a box to enroll when the customer is on the checkout page.

“We’ve had several thousand customers sign up already with minimal promotion on our part,” Vitale said. “We are rolling out a marketing program this quarter, which we expect will exponentially increase SMS registration.”

It took a few weeks to deploy the text program, she said.

Recurring revenue helps retailers become more profitable, as retailers don’t have to keep paying the higher expense of acquiring a new customer, said Greg Alvo, CEO of Ordergroove.

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Ordergroove charges an annual fee based on volume of sales, Alvo said.

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