A hot trend in business is the subscription model. If you’re reading this, you’ve probably come across many opportunities for subscriptions as a consumer already, whether it be for a magazine, dog food, or even razors, supplements, and beauty products.
Because of the pandemic, deliveries have skyrocketed. And this isn’t merely a matter of consumerism; it’s about filling a need when people are shopping in-person less and looking for easy and convenient ways to get what they want.
Including a subscription model in your business is an excellent way to create a consistent and predictable revenue flow while providing more value to your customers.
The value of a subscription model for your customer comes in many forms, including:
For your business, the key benefits of a subscription model include:
- Recurring revenue
- Better customer relationships, opportunities for feedback, and referrals
- Higher profit margins
There’s a unique subscription model solution for every business, no matter what you sell.
In this post, I’ll break down how to think about creating your subscription model solution and share some real-life examples. That way, you can think outside the traditional way of doing business that relies on the one-off, transactional exchange of goods and services for money.
The Membership Program
Offering your customers a membership program can be an excellent option for your business, whether you provide a product, service, or experience. With a membership program, you can offer special perks and promotions, exclusive deals, and unique benefits that aren’t otherwise available to the general public.
A membership program can be implemented in ANY business, whether you sell car washes, smoothies, or culinary experiences.
Take Quince & Co, for example. Like every other restaurant in the world, Quince had to pivot quickly due to the pandemic restrictions. To make matters more challenging, they are located in California, currently one of the most restricted states in the country.
Quince & Co is a membership program that includes Quince and its sister restaurants and boasts a dining budget, a quarterly provisions box of produce and specialty products, exclusive events, and priority reservations.
Faced with shutdowns, dining restrictions, and an uncertain future, creating this membership program allows the restaurant to thrive and serve its most loyal customers, whether they dine-in, cook from home, or seek social foodie events.
With a $5,000 a year price tag, the membership isn’t cheap. However, the customers that frequent this three Michelin starred restaurant see the value, which is proven by the fact that the membership program sold out in just a few short weeks.
If you have a powerful brand with loyal customers, they’ll want to be a part of your deeper ecosystem — if you offer a way for them to do so. Memberships create members, which gives people a sense of belonging and inclusion. And by rewarding your members with special offers, you connect more deeply by serving them even better.
The Product/Service Subscription
If you offer a product or service that consumers need to purchase regularly — like dog food, razors, or even carpet cleaning — a subscription model works perfectly to retain your customers and provide them with an easy, stress-free experience.
For products, Shopify is an excellent way to get your products online, so the process of fulfilling these ongoing orders is easy and automated for both you and your customer. For services, automated billing occurs to help your customers save money and help you keep track of fulfillment down the road.
For example, a client of mine has a carpet cleaning business.
Instead of waiting for the one-off client to find his business and purchase a one-time carpet cleaning, he created a subscription model where the customer could sign up for a customized number of deep cleanings and spot cleanings in a year but pay for them in monthly installments.
This allowed for a recurring, dependable revenue stream (and advanced scheduling!) for his company. Customers appreciated the smaller, spread-out payments instead of the large, one-time fee.
The Question of Customization
A common misconception about subscription models is that they’re generic and only for companies whose offering is strictly one-size-fits-all. However, this is untrue. Customization fits quite nicely within subscription models.
Function of Beauty is a subscription-based company that allows its customers to personalize their shampoo, conditioner, and a variety of other hair and skincare products. They have embraced technology to offer custom products in a streamlined and efficient way. Billie is a subscription razor company that allows its customers to customize the amount and frequency of their razor deliveries depending on how often they shave.
Whether your product is customized for each customer by the customer, like Function of Beauty and Billie, or your product or service evolves entirely based on feedback, different customer avatars, or later additions, customization is a necessary component of your business. The customization process can help you create the framework for your successful subscription model because you’re observing customer behaviors and meeting them where they are.
For any business model to be successful, you need to know who your customers are. Your subscription model is no different.
When you know your customer, you can offer precisely what they need while also streamlining your backend processes to account for customization according to what that specific customer would want.
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