Do you offer a product or service that would work well with monthly recurring billing? Subscription boxes and ongoing relationships both can be quite profitable for small businesses. However, there are some things you need to know before you take on this type of client relationship.
What Are the Types of Monthly Subscriptions?
Subscrybe recently reported the subscription economy will hit $274 billion this year, or increase by 23% between 2021 and 2022. If you’ve been thinking about jumping into this business model, now is the perfect time with so much growth.
However, you will need to know a few things to find success and prepare.
1. Know Your Audience
Before you try to create a subscription box or ongoing service fee, you have to really understand your typical customer and what they want.
A great example of a subscription box that works is the Bark Box. The company understands people love their pets and want to keep them entertained, so they send out toys and treats dogs love.
Take the time to survey your customers and find out what needs they have. How can you fill those gaps with a box?
2. Ensure You Have Variety
Around 70% of business leaders indicate subscription models will help them grow in the years ahead. However, you have to really stop and ask whether people have an ongoing need for what you offer.
For example, if you sell a high-end kitchen gadget, people might buy it once every 20 years. Your subscription model is going to move more toward recipes or ways to use the device with various accessories.
3. Perfect Your Logistics
Customers come to rely on subscription boxes to arrive in a timely and safe manner. Take the time to perfect your shipping model. How does the item get packed? Is there enough cushion for breakable items to ensure they arrive in one piece?
What carrier do you use that gets the box there quickly and inexpensively? You have a variety of options to choose from. Your best choice might be something other than what you think. Test each service, ask questions, poll your customers and go with the one that works best for most clients.
4. Improve the Customer Experience (CX)
Experts predict CX technology will become a $641 billion market by the end of 2022. Companies everywhere understand keeping customers happy is the key to retaining them and growing their brands.
Think about the presentation of your subscription. Is it fun and exciting for the person to open the box or the app? How can you reward them with little bonuses? Is the appearance of the product visually appealing?
You can also improve your CX by making the signup process as easy as possible. Don’t try to make unsubscribing difficult. For example, if someone is dealing with an ill family member in another state and chooses to end their subscription for a while, they shouldn’t have to jump through hoops.
People will remember if you make it difficult to leave and will be much less likely to return at a later time. They’ll choose a competitor that lets them unsubscribe online with a single click. You can also offer skip or pause options to prevent subscribers from leaving during their life-changing moments.
5. Watch the Economy
While a subscription model can work really well for both software as a service businesses and those selling physical products, the economy can impact how many subscribers you have. As costs rise, people are less likely to go for convenience such as meal deliveries that cost more than cooking.
Make adjustments to help people still subscribe but at lower rates. For example, allow them to go to a quarterly delivery model or offer a budget option with less items.
Monthly subscriptions help bring in a set income every month. However, you must keep those subscribers happy and engaged. Look for ways to ramp up the value of your monthly offers. The idea is to consistently add more subscribers over time. Even if you lose a few, your numbers should rise steadily month after month.