How can my company run as a subscription business?

Estimated read time: 5 minutes

The subscription business is an interesting topic because in theory it can stabilize the revenue stream for companies and build a long-term relationship with customers. Customers sign up for the subscription and as long as they like the service they may never cancel.

The subscription business model typically comes to my mind in the  software field. You sign up for software and pay a yearly or monthly fee to use their product. For example, I subscribe to Canva, Restream and Buffer on a professional level. On a personal level I subscribe to DIRECTV, Netflix and Ring just to name a few.

What businesses should run a subscription business model?

I asked that question to Chris George, cofounder and chairman of the Subscription Trade Association on a livestream. You can see his answer here.

It’s really hard to come up with any business that couldn’t offer something as a subscription. As long as you have a product that people need you could consider sending them a new one every so often as part of a subscription. Or if the product needs to be serviced every so often you could sell that as a subscription.

How to make the subscription business model human

Subscription business model expert and author Robbie Kellman Baxter joined me on an episode of my podcast to discuss what businesses need to consider when running a business on this model.

You still have to make the experience good and worth subscribing to. Don’t hide the unsubscribe button. Make all parts of the experience worth experiencing.

She discusses the concept of the forever transaction in her book with the same title.

The subscription business is easier for the customer

I get a lot of subscription product sent to me especially through Amazon Subscribe and Safe. And it’s just easier. The stuff arrives at a certain interval which I can also change. I order a variety of products including supplements.
supplements ordered online
Everything arrives unless I cancel one month’s subscriptions, Amazon will send me a package that often includes:

  • Protein bars
  • Protein powder
  • Pre and post workout shakes and supplements

This system works and makes shopping easy. Amazon sends me once a month the items I’m planning on using the following month. When I want to stop a specific piece of the delivery, I simply log in and put a hold on it. Easy breezy.

I prefer buying online because it’s just easier. I don’t have to drive to a store where they’ll talk and talk and upsell and upsell. Constantly.

I don’t necessarily mind being upsold if it’s relevant, but when it’s not it’s just a bit annoying. And it’s way more annoying in person than it is on a website.

I was also reminded how much easier it is to subscribe to products online versus going to the store. Somebody gave me a $25 gift cards to a sports nutrition store. So I went to the store …

“Hello. What brings you in.”

“I got a $25 gift card.”

“What are you looking for today?”

“Maybe some protein bars.” Really, I just came in because of the gift card.

We walked over to the protein bars and of course she asked me if I had the store’s membership or gold or whatever card. You know, the kind that gives me so many percent off.

I found a box that was around $25 and decided to get that. We were heading to the cash register. All done.

“And any multi-vitamins today?”

“Umm. No.”

It just seemed very scripted and not personalized. She could have asked about my workout regime and then make personalized recommendations based on what I actually do at the gym. Offering me multi-vitamins reminded me of my daughter, who takes multi-vitamins.

But had she asked me about my fitness goals (weight loss or at least weight maintenance and I love to lift) she could have made more relevant suggestions, which  could include some of the things I get monthly already anyway.

But it would have offered an opportunity for me to actually be open to buying more.

It’s like the offline version of “Recommended Items” online, but you do have to ask the right questions.

Of course even the brick and mortar stores use some subscription business pieces – especially on their websites.

Keep track of your subscriptions

Whether you are a business or consumer make sure you are keeping track of your subscriptions. I’ve been in several situations where businesses had so many subscriptions that weren’t even being used. That of course also does not leave a good taste for the consumer.

Some companies even send you an email letting you know that your subscription is about to expire just in case you wanted to renew it or cancel it if the product is no longer of use. Certainly that can cost you some revenue as a company if more people than not do cancel the product but it can also earn you goodwill from the customer base. More importantly I would ask myself why people aren’t using the product. From there make product updates

Try video surveys to find out why customers are churning.

How to get started

I’m a big fan of having ongoing relationships with companies that make my life easier and that get me value. I want to have a subscription with them.

And sometimes I’m annoyed when I’m shopping and I can’t order something as a subscription. That happens on Amazon from time to time when it’s a product I would have to re-order down the road but it’s not offered that way.

To get started, look at what products and services you offer that lend themselves to that ongoing relationship.

I mean you can now buy underwear as part of a subscription. I never thought I would need that but people subscribe to new underwear. So even if the subscription model sounds like it’s not for you, take a step back and consider all the options.

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