Let’s talk about what subscription services are.
Subscription services have been around since 1609, when Johann Carolus printed the first weekly newspaper in Strasbourg, Germany. Since then, subscriptions as we know them have drastically changed.
Currently, the subscription business model has seen huge growth. In 2018 15% of online shoppers had at least one online subscription.
That’s 33.6 million people, worldwide.
Think about how many subscription services you subscribe to in your personal life.
Here are some of the most successful subscription models out there: Magazines, Stitch Fix, Dollar Shave Club, Amazon Prime, Audible, Medium (news), Spotify, Peloton, NYT, Inner Circle, Blue Apron and many more. I’ll bet you’re subscribed to at least one of these.
Let’s talk about five benefits of setting a subscription service up for your business and why you need a subscription service.
Benefit #1: Profitable Across Industries
Subscriptions can fit into your business no matter what industry you are in.
If you offer some sort of service, like business coaching, marketing, consulting, financial planning, investment banking, you can provide valuable content for users every month for a fee.
At Brandetize we’ve helped set up Brian Tracy’s Inner Circle and Invictus Fitness subscription products.
If you are a product company, you can offer a customer a discount to have your product shipped every week, month, quarter.
Or you can jump on the ‘subscription box’ train and give a variety of new things to delight your customer (and clear your inventory or get product feedback). Great examples of companies that do this well here are the ‘Bark Box’ or Stitch Fix.
If you are in education or news you can create courses or interactive educational experiences for people who are interested in learning what you teach.
Benefit #2: Increases Brand Loyalty
The second benefit is personalized marketing and increased brand loyalty and customer length.
When a customer subscribes to your product, they are giving you so much information.
Think about how much information a customer is giving a personalized subscription service like StitchFix, or even BarkBox.
How personalized can you get with your marketing knowing someone’s dress size, style, location, and occupation? How about someone who has 3 labs that are all under 1-year old?
Marketing has to be more personalized. This will stick in your customer’s minds, as you are now only showing them things they want to see.
Benefit #3: Fosters Higher Customer Lifetime Value
With subscription services, you pay to acquire a customer once, you keep them longer, and they have a higher lifetime value.
Every business has a Customer Acquisition Cost or CAC. In a traditional business model, you consider your CAC per bringing in a new customer to buy their first product or service with your company.
In a subscription model, however, you pay to acquire the customer once, and as long as you’re providing value, they continue to be customers of your business.
Utilizing really good, personalized marketing (since you have so much information on your subscribers) will continue to offer your subscribers value as well as items that they want and need.
This makes your subscriber perceived value very high.
Benefit #4: Validates Your Business Model
Another benefit of a subscription service is that it helps to prove your business model.
One of the biggest lures of a subscription service for a business is the consistency it provides you with your business.
You can project sales with a higher level of certainty when you offer subscriptions weekly, monthly, and annually.
Subscriptions with products or even services also give you an idea of the number of sales you will be doing each month, which can essentially lower your cost of goods, overhead, or eliminate waste.
Being able to show investors and board members that people want your products and they are willing to subscribe is very attractive for your business if you are looking to raise money, or even sell your company.
Benefit #5: Subscription Services Fuel Your Revenue Growth
The fifth benefit of subscription services is that your business collects money ahead of time.
Every business looking to grow is constantly thinking about how to continue to market to the masses and attract new customers as their industry becomes more saturated.
Subscriptions, especially those that are cash-up-front extended discounts (6 months, 1 year, etc) allow you to have a cash influx that can give your marketing team some room to market into new or larger markets…
And can prove valuable to the long term growth of your business.
So! If you have a product, service, or have knowledge that you can share with others consistently, get your subscription business started now and get to growing.
Now I’d like to hear from you. Have you thought about setting up a subscription service for your customers?