Subscription-based products or services are certainly not new. We have had a cell phone with a subscription for years, just as you get TV and Internet in combination with a subscription. Even well before this time, subscriptions were in existence. Almost everyone used to subscribe to a morning newspaper. Nowadays we find it quite normal to take out a subscription to watch a soccer game or Formula 1 race. When we are on the road we do want to listen to nice music so we also take online subscriptions to Spotify, Youtube or other media, for example. No desire or time for shopping? Then we choose one of the online subscriptions like Hello Fresh.
So you see, subscriptions are nothing new and we also subscribe to more and more products or services.
Online subscriptions, what do we really mean by them?
If you look at your current subscriptions, they all have something in common. You expect a product or service for which you pay a (fixed) amount. Variables in this agreement include the frequency in which you expect something or the number of products you expect. In many cases, the biggest selling point for online subscriptions is "convenience. You don't feel like buying credit when it runs out (almost) or buying a loose one every soccer game.
The convenience in these examples is that for a certain amount of money, you are buying off the convenience of being able to do what you do when it is convenient without being disappointed. Another common benefit of taking out online subscriptions is that they are more economical than single purchases.
The answer to the question, what do we really mean by it? Is buying out then part convenience. Since we have increasingly busy (social) lives these days around work, friends, hobbies, etc., we don't want to think about certain products/services but "be assured" that they will be there when we benefit from them. Another argument is the creation of happiness. Being surprised every month creates goodwill which makes you wish to receive your online subscriptions every time. With this, it doesn't even have to provide convenience. The positive side effect is worth more than the amount of money in return.
Is my business suitable for online subscriptions
The key question here is, are you offering an additional service with your online subscriptions? Think convenience, happiness, savings or a gap in the market. Do you have a product or service that a consumer likes to receive on a regular basis. It is often about a product with a limited lifespan which also makes it purchased in high frequency. Limited life is a broad term in this case because it always means that something can only provide limited service before it is replaced.
Hello Fresh products have a limited lifespan because the products have a short shelf life and then have to be thrown away. If you look at socks then you cannot say they have a limited lifespan. However, you put on a pair of clean socks every day with which 1 pair of socks only last for 1 day and then get washed, so there is a high rotation rate.
To illustrate the contrast in exaggerated form, you can think for yourself that nobody wants a new car on a monthly basis, but boxer shorts are no problem. When you offer a product or service with a low purchase threshold, people are more likely to buy. We used to buy a CD that we could enjoy for a reasonably long time. Nowadays we all pay at least a tenner a month to listen to unlimited music.
So ask yourself whether you are providing an additional service with your product or service and whether the purchase threshold is not too high. Then ask the question whether people are using it on a regular basis. Are the answers all yes? Then it is worth considering an online subscription structure.
What deters and what convinces?
As mentioned briefly above, there are some pillars that can help determine whether online subscriptions deter or convince in your case. Price is obviously a strong pillar in this. If you sell razor blades every month in the form of online subscriptions but charge €50 for them, you will be put off. You provide convenience but this does not outweigh the price to be paid. Therefore, find the right balance between the price and what the added value is. Having your groceries delivered to your home at a small additional cost is not a big deal because the convenience outweighs the small additional cost.
What works even more convincingly is savings in the wallet. Everyone has an ear for savings and especially when it comes in the form of online subscriptions.
Apart from the financial picture, more is required to convince people. Consider the quality, it must last (enough) to keep customers satisfied. In addition, goodwill is also an important pillar. In many cases, the award is decisive in the decision. Even if the price is right, it meets the quality requirements but there is no right feeling then the purchase can still be abandoned. How do I create goodwill?
Sell good story with it. For example, donate a portion to charity, create an experience that customers can relate to and avoid getting tired of subscriptions. Do not include too many peripheral issues in the process because people want to be unburdened and do not feel like an abundance of information or actions to be carried out. To convince people, we recommend the following three points. The subscription should be easy to take out, easy to stop and easy to change.
How do I get started?
You have a great business model and you believe in the possibility of success. First, make sure your systems are set up correctly. There is nothing more annoying than finding out that you have overlooked something and having to do a lot of manual work to deliver your online subscriptions correctly and on time. Besides the stress, this can also cause (unnecessary) errors which is why we advise you to involve a specialist party.
Also think carefully about how you want to offer the product or service. For example, you can offer a limited free version with your online subscriptions. For additional extensions, other online subscriptions should be taken out for a fee. You can also choose to offer only subscription options, and there are different strategies for that as well.
In combination with a limited range and similar products, you usually choose one subscription type with one type of product for one price. Variant can be to apply quantity discounts when a multiple of the product is purchased. Another variant is to apply the good, better, best principle. Decide on the basis of your product or service which strategy resonates best with the customer.
How to proceed?
Learn from your customers. See what is going well and what needs extra attention. If you notice that many subscriptions are being cancelled after a short duration then you need to do something about it. Research why this is and improve this point or these points to then extend the life of the subscription. Even when you have many subscribers and they stay with you for a long time there is room for improvement. You are meeting expectations but perhaps there is more to it. For example, try offering a wider range or different subscription type. It may also work to offer more matching products, keep innovating.
However, make sure you don't go overboard with this. Don't spam your customers with an abundance of information but do wake them up for news. As indicated, the experience is important. Make sure your customers get a smile on their face with both the subscription and the information you provide beyond that. We also like to receive rewards, such as a discount if you bring in a new subscriber.
At this point, you hopefully have a better understanding of this business model. Are there still ambiguities and are you not sure if your product or service is suitable to sell in subscription form? Then contact us to spar about it.
