Subscription models: 9 lessons from the good, the bad and the ugly
Subscriptions schemes are turning traditional products into ongoing services in order to meet peoples’ ever-increasing needs. For customers, they offer a seamless experience with added convenience and at discounted prices. For businesses, they provide recurring guaranteed revenue and build deeper customer relationships. From magazines and media-streaming, to the majority of the CPG industry, subscription schemes are proving increasingly popular, but are they always good? Here are 9 examples of these products-as-services in action, with some valuable lessons — what to do, how to do it and what to avoid!
The good
1. Identify the pain points to optimise the experience
Harry’S Shave Plan are a great example of a carefully crafted subscription service. Not only did they find a target market with a clear user problem to solve, they also created an effective experience. They offer a variety of packages and clearly lay out the steps for each, managing expectations with users.
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2. Personalise the service through customisation and flexibility
Ohne are an organic tampon subscription who offer a highly personalised experience. Users can choose the frequency, volume and variation of their order, not just at the point of subscription but at each interval. 3 or 4 subscription plans has been suggested as optimal but with customisable plans you multiply your offering. It may be a logistical nightmare in the back-end but this user-centric approach is a great innovation to suit every lady. Flexible and tailored with a beautiful, intuitive UI. Well done Ohne.
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3. Use it as another opportunity for communication
Barkbox are a great example of the mixed box model with their doggy treat subscription. This is where users select some of the products in their box, but the rest are a surprise. It’s great for customers because they get an easy way to explore new products and it adds an element of mystery. They’re even better for businesses as the subscription model itself becomes another channel for business to interact with customers with upselling and cross-selling. As opposed to traditional email and SMS, this gives a non-intrusive way to promote products and build your brand.
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4. Evolve the service over time to meet users’ evolving needs
Project B are a pregnancy-based service whereby they adapt the products in the box at each installment. Instead of being a blanket subscription with a repeated order, they contextualise the service to meet users’ ever-changing needs. This pro-active, thoughtful approach builds trust and keeps their offering highly relevant. There’s definitely an opportunity for other industries’ subscription boxes to adapt over time, perhaps seasonal products or ones that react to current trends.
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5. Offer more than just convenience
Graze are good at getting customers over the initial hurdle of committing to a subscription scheme. Especially in the fast-moving consumer goods industry, as customers pass supermarkets daily so their experience is already super convenient. Brands need to highlight the added benefits of their service and Graze do a good a job of this advertising their freebies and discount codes.
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The bad
6. Have a plan beyond your free trial
MealPal, much like Graze, enticed customers with the classic “first month half price” offer. It was a monthly subscription that made my lunches in London around £2.50 a go. It was great and everyone in my office used it… for the first month! Offering a freemium is great, only if you have a clear path to then convert users. You can’t determine how valuable your service is until people are actually paying for it. Focusing too much on acquisition of new subscribers can lead to neglecting existing subscribers and, in turn, high attrition.
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7. Identify a clear value proposition for your customers
London Sock Company is an oddball in my opinion. A monthly sock subscription… um what? How many socks do you guys get through? Are your feet burning holes through the cotton? It’s fun and novelty but I question its’ longevity. Is there data supporting this high-frequency demand for socks? A subscription service must be solving a real life user need and delivering clear value against that need. Subscription for the sake of it won’t last.
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8. Your pricing strategy must be flexible
Netflix hit headlines when they fell victim of a rookie mistake of setting the subscription price too low. We all love Netflix’s easy-to-use, convenient service at a delightful £7.99 a month, but our noses were put out when they announced a blanket rise to £8.99 back in May. When you have a a standalone product, experimenting with pricing is fine, however with a product-as-a-service, if you make a pricing mistake, you’re locked in that for one maybe two years and upping the cost is more apparent to users. Although the rise is justified, perhaps Netflix could have avoided this by better estimating the companys’ growth and investment plans further in advance.
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The ugly
9. Do not trick customers into signing up
Amazon may be a surprise for the ugliest spot on my list but I wanted to show how even the best of the best can get it slightly wrong sometimes. Amazon Prime is a service widely used an appreciated now but when it was in its’ infancy in 2015, it made some errors. Upon checkout, users would be enticed to sign up for free next-day delivery, then unbeknownst to them they would be hit with a £79 charge in the following months. It was a confusing experience that left a sour taste in peoples mouths. Amazon has since learned that a subscription scheme can be designed in a way that is clearly beneficial for people, and not so that they have to deceive them into signing up. Transparency is key.
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Overall, subscription schemes drive value to both businesses and customers alike, and have the power to change the way we buy and sell. Stephen Louzi even describes the impact as the end of ownership and the start of usership. They’re not only effecting the way people consume but also the way we market products to be an incremental part of peoples lives as opposed to an as-and-when purchase. When creating a subscription strategy, think carefully about what model best fits your service/product (or if it even needs one at all). Creating a suitable service will not only elevate your customer experience, but it can ultimately drive revenue through smart innovation.
What do you reckon? Are there any I’ve missed off my list? What subscription schemes have caught your eye for the right or wrong reasons? Let me know in the comments below.
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