People love convenience. From connecting with loved ones over the internet to shopping online, technology is evolving rapidly to make our lives more convenient.
So it’s no surprise that many businesses that advocate conveniences such as subscriptions can start online today. If you’re an ambitious entrepreneur looking to start something new, a subscription business is definitely for you.
What is a subscription business?
A subscription business model allows customers to pay for products and services weekly, monthly, or annually. This saves time and resources instead of purchasing products and services individually.
For the past 15 years, our team has helped hundreds of entrepreneurs and small businesses in the US and around the world build and grow their subscription businesses. This guide shares actionable insights, tips, best practices, and expertise from our experience supporting over 100,000 brands.
How to start a successful subscription business:
Popular subscription businesses such as e-commerce subscriptions, streaming services have grown significantly over the years as they are more convenient and affordable.
Benefits of a subscription business
Subscription businesses may be affordable and convenient for customers, but they also offer great benefits for business owners. Here are four benefits of starting your own subscription business.
- more cash flow. Subscription businesses often require full payment when signing up for a discounted subscription. This allows companies, especially start-ups, to take advantage of more cash flow.
- Increase brand loyalty. Consistency helps build brand loyalty in your subscription business. When a brand stays in touch with customers and delivers quality products and services on time, it increases customer trust.
- Easier communication for future brand promotion. A subscription business model makes it easier to market and promote new products and services because you are already in touch with your customers. It is more convenient and effective to use this to promote new businesses.
- Reduce customer acquisition spend. With a steady stream of revenue, you don’t have to spend a lot of money to acquire new customers for your subscription business. A pay-per-product business model requires companies to invest more in marketing and promotion to acquire new customers.
- stable earnings. Consistent earnings help you know what to expect in your monthly earnings. This allows you to track cash flow, expenses, and more, so you can budget and invest in growing your business.
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5 subscription business models to choose from
To understand how to fully grow your subscription business, it’s important to know which model fits your needs before you start your subscription business. Here are five popular subscription models to choose from:
- E-commerce subscription. This allows you to purchase products repeatedly or supply your customers with the same products on a regular basis. For example, people often sign up for a subscription to receive regular essentials such as coffee products, weekly groceries, and so on.
- Premium access model. This model often starts with a base feature that can later be upgraded to access premium features such as streaming services and video games.
- usage base. A pay-as-you-go model allows users to use a product or service and charge for what they use. For example, email marketing tools often charge users based on the number of contacts they have.
- product and service base. In this model, customers can use your product or service and be billed monthly or annually.
- Software-as-a-Service (Saas) subscriptions.SaaS subscriptions allow users to use licensed software for business or personal use, such as CRM tools, in exchange for a monthly or annual subscription fee. Fees are often per user.
6 steps to start a subscription business
Starting a subscription business requires good planning and an understanding of the business model. Follow these 6 easy steps to a successful subscription business.
1. Set clear business goals
No matter what kind of business you start, always set clear business goals and plan your business direction properly. This allows you to prioritize your important goals.
Start by defining your overall business goals. Ask yourself the following questions.
- What do you want to achieve with your subscription business?
- How can my business help people?
- What makes your business different from the competition?
Once you’ve defined your overall business goals, create a checklist of what you need to accomplish to start your subscription business. These include:
2. Develop a pricing strategy
Use the data you gather from your market research to create the right pricing strategy for your business. You can choose from different types of pricing strategies.
Common examples are:
- freemium priceIt’s a portmanteau of “free” and “premium,” meaning that a product or service with basic functionality can be used for free for a period of time in the hope that users will pay to upgrade. increase.
- skimming fee. SaaS companies use this pricing strategy more commonly. Businesses charge the highest possible price for new products and services, and lower prices in the future when they become less relevant or popular.
- bundle price. Bundle pricing is the sale of two complementary products or services together for one price. This is commonly seen in holiday season essentials such as cosmetics and food.
- Competitive Pricing. This pricing is also called competitive pricing or competitive pricing. Focus on pricing products and services according to existing market rates, or use business competitors as pricing benchmarks.
Note that you don’t have to stick to one type of pricing for the rest of your business journey. It’s important to experiment responsibly and choose the best pricing strategy that fits the customer’s needs and her ROI goals as a business.
3. Create and optimize your website
Nothing is more important to your subscription business than having a functional, hassle-free website.
If you don’t have a website for your business, start by creating one that matches your brand and is optimized for your target audience. Make sure to include effective CTAs that drive conversions and useful content that helps your website reach more people.
For example, don’t create a blog just for the sake of creating a blog. Make sure you publish content your audience will appreciate and add value to your customers’ lives. A blog is a great way to fill this gap while increasing your website’s ranking on Google and other search engines.
4. Inventory and Logistics Development
For a subscription business that sells physical products, proper shipping and logistics are essential to keeping customers happy.
For example, one common reason customers unsubscribe is late delivery or damaged products. So, if you plan to send a physical product or subscription box, be sure to complete the following checklist.
- Find reliable suppliers that produce quality products
- Apply a reasonable shipping fee to the customer
- Guaranteed safe and timely delivery
- Customize the brand label on your subscription box
- Allow customers to seamlessly track their orders on your website
- Respond to customer needs from pre-sale to post-sale
To avoid inconvenience to you and your customers, you must ensure that your shipping and logistics arrangements are set up and properly maintained.
5. Drive your subscription business
Marketing is one of the essential ingredients for a successful subscription business. Strategize and plan your marketing campaigns to reach your target audience.
Common marketing strategies like influencer marketing, social media marketing, and content marketing can help you gain traction and reach new audiences. Experiment with different tactics to see which combination of marketing efforts will help you reach your target audience.
For example, subscription boxes are generally popular among influencers with a more active, niche audience. As you work with influencers to promote your subscription business and make it easily accessible, don’t forget to create and actively use your social media profiles.
6. Track customer churn
Track customer churn regularly to understand why customers are opting out of their subscriptions. This will give you insight into their pain points and how you can improve your business.
For example, credit card issues, delayed or damaged product deliveries, and economic changes are common reasons customers opt out of subscriptions. Knowing these, you can optimize your trading process, ensure the safety of your products during delivery, and correct unsatisfied customers.
Don’t let your customer churn rate rise unnecessarily, as it can hurt your business in the long run. We will do our best to address issues as quickly as possible, provide consistently excellent customer service, and settle with dissatisfied customers.
The core of the subscription business is to provide convenient and high-quality services and products to domestic and foreign customers. It’s all about showing up whenever they need you. As such, your subscription business should be based on great customer service, a trustworthy website, and a trusted brand that offers quality products and services.
