Next time you’re watching T.V. keep your eyes open for the hilarious commercials promoting popular subscription services like Dollar Shave Club. If these types of subscription services seem to be more and more prevalent, that’s because they are! Competition has taken to subscriptions, such as the fight between Gillette’s new Gillette Shave Club and the Dollar Shave Club. Why? Because they work. Amazon has proved this over 40 million times, which is the amount of times people have subscribed for their yearly $99 Amazon Prime account. Amazon also offers a program known as “Subscribe & Save” offering savings when you decide to have a product delivered to your door once a month. You don’t have to be Amazon or Procter & Gamble to start a subscription service though. This type of service works for any size business, so give it a try.
Will this help of hurt my business?
Before starting a subscription service for your business, it’s important to understand the pros and cons of doing so.
- Predictable revenue. When a customer subscribes to your business for a year, month-to-month projections become steady and easy to predict. Rather than dealing with the many variables that affect your business each day, create a subscription service to keep your business stable.
- Developing customer relationships. When a customer subscribes to your business, you now have months to create a lasting customer relationship. The customer is also more likely to engage with a business when receiving their products month after month, rather than just one time. Open the door to create lasting relationships with your customers and start a subscription service today!
- Customers may be unwilling to commit. Asking a customer to jump on board with your business for a year is no joking matter. The thought of this commitment alone can scare customers off. If needed, create a free trial period for those who still aren’t sure and lose less potential business.
How do I create a subscription service for my business?
Creating a business model can be a daunting task for a subscription service, especially after working so hard to create your existing small business. Prepare for things to change and follow these simple tips to help get you started:
- Idealize your target customer. Although every business has their loyal customers that might be purchasing something from your business a couple times a week, for a subscription service it’s important to keep in mind your average customer. After figuring out who your average customer is, consider the items they typically buy and how often, ranging from larger purchases to smaller accessories.
- Put yourself in their shoes. Consider the questions people will have after signing up for your subscription or if any additional tools or services will be necessary. Be prepared to provide them with frequently answered questions or options for additional help beforehand.
- Draft a subscription model. This is the point where, based on your previous research of your average customer, you will create a subscription model for your business. This includes bundling many of your available items or services into packages that customers can choose to subscribe to. To capture a wider range of customers, try creating different levels of bundles with differing products or subscription periods.
- Find a price. When determining a price for your subscription service, some factors are obvious. First of all, know that your price for the subscription must be lower than the total price of all items if they were bought individually. It’s also important to factor in the money saved from not having to market to customers the second they walk out the door. A subscription service already guarantees the return of a customer month after month and can save your business money in the long run.
- See how your customers react. Release your subscription service to your customers, but track to see whether your average customers are signing up, not just your perfectly loyal ones. From those who don’t, you can learn a lot from asking for feedback on what’s holding them back.
- Abandon your old methods. After getting your customers’ reactions, it’s time to take the leap. Given the choice to buy items individually or to subscribe, those borderline customers will often choose to buy individually. Removing the choice to do so is another way to get customers to commit and out of their comfort zones, but you too must be willing to commit to this type of business.
Subscription services are a great way to get loyal customers and predictable revenue. Finding customers can be quite tricky, but ones willing to commit will be with your business for the long haul. Enhance your business into a subscription service and get started today!
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