Eccomerce subscription model – what is right for your business?


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Subscription models are used by many businesses to grow their customer base and increase sales. Here we discuss the things you need to consider when setting up a subscription model for your business.

Is a subscription model the best thing for your business?

There is no end to the amount of products and services you can apply a subscription model to. The most important first thing to look at if you’re thinking of using a subscription model is to work out the best possible product you can offer on your subscription. 

Whether it’s food ordering for meal planning, shaving products or dog food on amazon, everything can be applied to a subscription! The most important thing is that it is customer-led, it has to be useful to the customer for them to order on a subscription basis and to be tied to an ongoing fee. Try to be unique and different in your offering, this will really make you stand out! There are two main reasons why a customer will sign up:-

Convenience – To make their life easier. It’s delivered to their door every month so they don’t have to think about it. Consumables you need to top up regularly work really well with this model.

For gifting – This works really well for when someone wants to make a gesture to someone special. It offers something as a surprise, maybe sending a box of chocolates every month or a beauty box. These can also be a treat to yourself, it is really popular in this line of luxury.

Is a subscription model going to be profitable for us?

The first thing you need to do is take a good look at your metrics. Look at your customer acquisition values – how much is it going to cost to acquire your customers? What is their lifetime value? Basically, how long will they be likely to be subscribed for. You also need to look at your churn rates – this is the amount of customers that will join and then leave your subscription. Looking at these figures is really important – you need to know that each of these metrics are working in tandem.

Offer an incentive for subscription

Very often a brand will offer a discount on your first order if you subscribe, this is a really good way of enticing your customer to join your subscription. It may make the first month non-profitable, but will ensure subscriptions; your pricing needs to be really carefully looked at to keep the customer engaged. A good way to gain new customers is to use existing customers to get new ones onboard – word of mouth can work really well as you can offer an incentive for your customers to recommend a friend.

Make sure you have a smooth subscription process 

Your process needs to be really slick, from your ordering to your customer information management. Each stage needs to be simple and effective, this will help you keep your subscriber. You need to have scalability on your subscription model – make sure your operations are in place to ensure you can grow and maximise on your return.

Build a subscription community

Think of your subscription as a club, like being part of a community, it’s a great marketing technique to make the customer feel they are part of a group. Make sure you keep on top of sending out incentives, discounts and relatable content to your customers. Break down what your customers want to see, for example, if your product is a mens shaving product, your customers are men, into grooming and taking care of their appearance – so these are all elements you should cover when sending content out to them. 

Remember, understanding your niche and your target customer is one of the most important things and is key to getting your subscription model right. There will always be an element of trial and error in your offerings through subscription, but keeping an eye on your metrics and pricing will give you a good idea of what’s working. 

Want to discuss creating an ecommerce subscription model for your business? Why not book a free discovery session to find out more.

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