Does a “subscription” model work for your business?

As you may have noticed, the subscription business is BOOMING. It seems everywhere you turn there’s a new “box” out with a clever idea for it’s contents. While, you may not be the type of company that would do well with a “box,” you may find some inventive ways to generate monthly recurring revenue the same as a “box” model.

Here are a few things to consider before making the decision you want to add a new channel for driving revenue. Studies show that repeat traffic converts %’s higher than new traffic. So you want to find ways to get people coming back. How often would someone need your product? Would auto-ship work? For example, supplements, skincare items, printer ink, CBD, etc. Would your approach be more of a VIP program, where someone gets charged the monthly amount and builds credit to purchase when needed?

The world of subscription is changing and evolving at an enormous rate during this pandemic. The demand for products to your door, is at an all time high. You don’t have to come up with something new and clever or reinvent the wheel to take advantage of this model. Take a look at some of the other models out there, and see how it relates to your products or services.

I mentioned auto-ship earlier in the article as an example. There are a TON of companies taking advantage of this for several reasons. First, studies show that when used correctly, auto-ship increases the lifetime value of your client. Second, not only does your client appreciate the ease of how they’re getting product, you can easily target them for new products, upsell on adding more products month by month, utilize them for targeted promotions, and build the customer journey to be more than just a one time purchase. You’ll want to continually reward your auto-ship users. Be sure and include extra items every now and again, if you can. For example, samples of new product. If you have a “community” for people who use your product, try and get them engaged in the community. This works well for CBD users, skincare, supplements, and more.

Another option I mentioned was a “VIP” club, or some sort of monthly billing that applies as credit. There are companies that do this, and are seeing the lifetime average for their clients increase by double, or triple, in some cases. The trick to this is to be 100% clear on the terms upfront, so that you will get more people to opt-in to this method. More often than not, you will find that users will agree to the monthly, but often forget about the credit applied to their account. The duration of these clients can be tricky. Some will sign up for the program, but cancel immediately. The good news is, you still have their contact info, and can target them for future offers and promos. There are others that will continue and will place their order every month without missing. If you choose this plan, be sure to come up with the right verbiage to get more opt-in’s, and be sure you have a solid strategy to entice users to stay with the monthly billing. You could try tiered packages, more product the longer you are a member, additional “rewards” once you claim a certain number of credits, etc. This is something you’ll want to really fine tune before you roll it out to your users. Once you do, let your program run for a solid 30 days and measure the data. If you’ve read my previous blog articles, you will know that I am a data nerd! Leverage all of the data you have and make adjustments to your program as needed. Find the barriers that are causing friction in your model, and work to alleviate those friction points. “But what if I don’t have a physical product?” Good question! There are tons of services that are already doing monthly billing and selling their services in a subscription model. In the world of fitness, digital workouts are booming. You have apps that track diets, monitor your workout regimen, manage weight loss or gains, and more. Fitness isn’t the only industry this works in. Evaluate the need of your users and generate the monthly cost. What benefit do you create for the monthly cost? If you look at Saas companies, they have been thriving off of monthly billing for years. The key is to provide a solution to your users, that will require them to invest in more than just a “one-time” purchase. You’ll want to enbed your service into a daily or weekly need for your users. This will increase the length of time they are “subscribed,” due to the fact that your service is now something they need to in their lives.

I have worked with several companies to create a monthly recurring billing program to help generate an increase in the lifetime value of a client. The key to success is finding the right strategy, and then creating the benefits. What solution do you or your product provide. There are more ways to create a subscription like model, than the one’s mentioned here. These are just a few options if you’re needing a starting point. All of this plays back to understanding your audience. I have said this in almost every article. The better you understand your target audience, the easier it will be to create the experience they are looking for. Don’t underestimate the power of good data.

I hope you all are having a wonderful start to the week!

Thanks, Elizabeth