Tom Caporaso, CEO, Clarus Marketing Group
Birchbox, Amazon Prime, and Netflix offer widely disparate services, but one thing they have in common is subscription commerce success. In fact, their subscription services have been so highly regarded that a number of start-ups and even well-established companies have tried to replicate their business models.
Unfortunately, many of them are struggling — not because subscription services don’t work, but because companies are launching services without the research, data, know-how, and commitment required to implement them correctly. The subscription business model isn’t a “set it and forget it” venture; it takes a lot of ongoing optimization.
Advertisement
Subscription services have a lot of moving pieces, and you need to make sure you’re ready, willing, and able to address them all, both short- and long-term. You may be the acknowledged leader in your product category, but if you don’t know how to manage a subscription model, your effort will fail. The following guidelines can help you launch a subscription service successfully.
Know your product’s potential — and limitations. Effective subscription providers have an in-depth understanding of the relationship between their core product and their core audience. A razor company, for instance, might confidently market additional grooming products and services to consumers, but it would be wise to shy away from, say, fruit-of-the-month offers. Concentrating on what you do best and using your expertise to continually improve your product will build a more enduring — and more profitable — bond with your customers.
Leverage your data. Retailers know that data should always drive marketing strategies; the same is true for subscription services. Use your data to determine what is and isn’t working in your service — today, tomorrow, next month, and next year. With thorough data collection and analysis, you can modify and alter your features and benefits based on customer preferences and industry trends, which will help you attract and retain more customers.
Test everything, again and again. What was true yesterday may not be true today. Repeatedly test and retest every element of your customer acquisition and retention efforts to determine what’s generating the most revenue. High click-through rates, for instance, don’t always result in high acquisition rates; use whatever banner provides the biggest payoff — until a new one outperforms it. Pay close attention to what’s working and change when your data calls for it.
Evolve. Don’t be afraid to adapt and adjust your service. Amazon Prime originally offered two-day shipping. After testing and retesting their audience’s response and analyzing the data, they expanded their offer to include streaming movies and book rentals. Now they’re one of the most successful subscription commerce companies out there. Accept what your data and testing tell you, and evolve accordingly.
Done correctly, a subscription service model can be very rewarding. It takes a lot of nurturing and continual optimization, so you need to be able to dedicate time and resources to your effort. Make sure you know your customers by asking the right questions, test and retest your offer, and use data to adapt your service and give your customers what they want. With the right information and mindset, your company will be on the path to success.
Tom Caporaso has nearly two decades of marketing experience, specializing in continuity, subscription, and custom loyalty programs. His background includes senior management roles in e-Commerce, subscription programs, site optimization, SEM and SEO, product, marketing, sales, and client services. Throughout his career, Caporaso has created customized products for top-50 e-Commerce web sites, leading financial institution, and popular content web sites and companies.
