Subscription-based services models are attractive for the consumer because they offer a budget-friendly way to purchase the goods of their preference. They are also popular with business owners because they give them a larger client base to pull from, and they provide a recurring revenue or client stream. Moreover, they are the most popular of all e-commerce trends right now. For example, the site Birchbox has over 400,000 members subscribed to its monthly beauty sample box. Although these facts may be true, not all subscription services are created equal. Read on to learn more about the different types of subscription services and how to make yours more successful.
You might want to choose your subscription feature based on your content, product and service type. You can also choose a billing or delivery cycle that works best for you from weekly to bi-monthly to monthly and bi-annually. Not to mention, there are free subscriptions used to drive business and paid subscriptions used to sustain your business. Here are the varying models:
It goes without saying that if you offer a subscription, you should have a mode of product or service that can be enjoyed throughout the year as opposed to something suited only for specific times quarters or seasons.
You want your prospect to have a clear understanding of what they stand to gain on top of how your subscription works. Decisively lay out the terms about usage rights, limits, delivery time frames, features and rates. Entice your customers by providing savings for a subscription sign up over a one-time purchase. Of equal importance, make the renewal process free of complications. Similarly, you may also want to offer lifetime memberships. On the positive end, you can use the revenue stream for a larger investment in R&D.
Measure Your Key Performance Indicators
To make sure your subscription model is profitable, you must track your key performance indicators (KPIs). Always be aware of your current member or subscriber count. Having this number on display for yourself and/or your office helps you to figure out ways to increase the figure. Additionally, keep a tally of how many members are added and how many drops each month. You want the additions to outnumber the drops; otherwise you might be providing a service consumers don’t find valuable. Furthermore, to get new members, money and time needs to be spent on marketing and advertising. In a like manner, know your average subscription length, this will help you keep your members. In other words, if your members normally cancel after six months, you can set up a program where they get a surprise gift if they stay for seven months. Lastly, understand the lifetime value of your members. That is to say, if a members’ lifetime value is $400, then you can decide how much you are willing to spend on advertising to attain new members. That number can range from $50 to $350, depending on how much profit you want to make.
In order to attract new customers, you have to give them the option to cancel at any time. However, if they do decide to cancel, then you might end up losing money. So, going back to measuring KPIs, you want to encourage loyalty. One of the ways to do this is to monitor unsubscribes. You can then offer a feedback page to find out their reasons for canceling. Other measures you can implement include a reward system and review system. This makes current members feel valuable and gives insights to new members.
Keep Shipping and Handling Affordable
If you ship a monthly product, clients don’t want to spend an arm and a leg for it. Some shipping services are more costly than others. Do some research around how much your competitors charge for S&H. Also, find out where you can get the most cost-effective rates. Compare prices for as many different situations as possible. Next, call different carriers to see if they offer discounts for bulk shipments and their price point break down. Doing this groundwork in the beginning will help to keep your costs manageable moving forward.
You don’t need to have an extraordinary marketing budget if you have an in-demand product. You can use social media to talk to your customers and attract attention. You can feature giveaways that may increase your Twitter and Pinterest following in addition to your Facebook likes. Not to mention, your followers might quickly become an extension of your marketing.
Enhance Your Clients’ Lives
Outside of necessities, many times consumers will sign up for memberships because they want something to improve their quality of life. They are making a commitment to you by becoming a subscriber, so you want to make certain to give them the value they want. This can range from providing information about each product you send, where it came from and its history to teaching them something new and providing inspiration. Suppose you have a monthly candy service. Each month you might want to have a theme such as “Disney Movie Inspired Candies” or “Popular Japanese Candies.” As a result, you provide an experience your customers cannot get from any other provider.
Sometimes, one of the simplest ways to grow is by making a few phone calls. Find bloggers, or similar retailers who might want to work with you. If you offer food delivery, there are plenty of foodies who might be willing to write an article covering your company. Similarly, specialty food retailers might be willing to stock some of your items in their stores. These are just a few inexpensive methods for promoting your brand beyond the traditional routes.
Subscription services are tempting for the many benefits it provides to the business owner and the consumer. Both parties stand to gain an advantage each month. By the same token, it is convenient, and when done well, can be extremely profitable. Is your subscription service everything you want it to be?