Boxes, services, or resources? One of the biggest trends of the last few years are business that run on a subscription basis.
Of course, such a business model has the potential to make its owners a decent amount of profit. After all, you are guaranteed an income for the month in question. You’ll always know how much of your product you will need to provide too.
Something that makes it a much more predictable way to work. However, running a subscription service does have its challenges that can impact on profits. A topic that you can read all about in the post below.
#1 Have a great idea
Now, you’ll find plenty of business-related posts that strongly remind the reader that having an excellent concept for a business, does not guarantee success.
However, having said that, the concept is a vital aspect of any subscription service if it is to succeed. In fact, if your business is to be profitable, the concept of what you are offering to your customers needs to be an original, desirable, and good value for money.
With that in mind, be sure to carefully think about what products and services you can offer your customers over a subscription basis. Also, do not forget to go through the necessary stage of product development and testing as well. In fact, if you fail to do this latter part, you could end up sinking a lot of time, energy, and money creating and sourcing resources that you get stuck with if no one chooses to buy.
However, you must also realize that the subscription format does provide an opportunity to think ‘outside the box’. Therefore you can create some pretty wild products, as long as there’s a legitimate market for them. Great examples of this being the murder mystery serial killer investigation box Hunt A Killer, and the somewhat off the wall toast by post service. Where you receive a sandwich ready for toasting for lunch that day.
#2 Watch out for scalability
One of the most significant issues that subscription-based business come across is scalability.
This is because they can grow from just a few subscribers to 100s or even 1000s in a very short space of time. Unfortunately, not all businesses adequately predict this and then have great difficulty keeping up with demand.
Something that leads to disgruntled customers and bad PR, which can then hurt their profits.
Happily, there is a tactic that you can use to make scaling your business easier. Its to limit the number of new subscriptions every month. Something that means you will always know how many boxes you need to create, or how many potential visitors to your site that you need to prepare for. It also means that you can plan ahead with accuracy as well.
Additionally, adding an element of scarcity to your service is a fantastic way of drumming up business and also converting potential customers into actual ones. After all, if there are only so many places available, then the desire to sign up will be all the stronger.
#3 Offer different price points
Another smart strategy when creating a subscription business is to offer multiple price points. In fact, we can see this option succeeding in some of the most successful companies in this format, such as Loot Crate. The idea being that by having a basic, standard, and premium level box, you can appeal to a much broader demographic.
Of course, another advantage of having different levels is it’s much easier to upsell a client from a level to the one above. Although offering free trials and special offers for those currently subscribed never hurt either.
If you want your subscription business to be profitable, you will need to address the matter of churn. This is how many people you lose each month to cancellations and non-renewals of their contract. In fact, the success of your subscription business isn’t only based on how many new customers you can recruit each month. It is also dependent on how many of the month’s before you can retain as well.
With that in mind, there are a few tactics you can use to minimise churn. The first is to take a look at resources like this guide to reducing churn in a subscription business which is jam-packed with practical ideas. Ones that you can easily apply and action in your business to significant effect.
Alternatively, some subscription services choose to tie their customers in for a specific amount of time to reduce churn. An excellent example of this being Adobe Creative Cloud. Which requires a year’s membership for the lowest rates, with customers needing to settle the balance if they want out of their contract any sooner.
Although it is important to note that such a model doesn’t work for every type of subscription business. In fact, it can put some customers off, especially in the subscription box field. Therefore it should only ever be used with caution.
#4 Market the heck out of your service
Finally, if you want your subscription business to be as profitable as possible, then marketing really is critical. The good news is that there are some particular marketing tactics you can use to create a buzz around your product.
One is to make use of all the Vloggers that will review items on Youtube if they are sent to them. Of course, the idea here is to find a vlogger that is representative of, and watched by your target market and then supply them with a free subscription, or free months pass.
This will then allow lots of people that are likely to be interested in your service to see exactly what you offer. Excellent examples of this in the field of Harry Potter subscription boxes being Cherri Wallis videos you can see below.
Also, do not forget that there are many online directories and review pages that collate the details and links of subscription services. Something that means they are all in one place for potential customers. Therefore you must get your subscription services display on such sites if you want to maximize acv sales and your profits.