Whether it’s the convenience of having pet food delivered on a regular basis, a curated monthly self-care box, or access to software that keeps businesses running, subscriptions are becoming more and more popular. They’re less hassle for customers, and provide recurring income for businesses making it easier to predict revenue and can reduce the costs of acquiring repeat customers.
With so many subscriptions already available is it possible to offer something new and make a living from it? We take a look at how to launch a successful subscription-based business.
Choose your subscription model
There are many types of subscription-based businesses to choose from, which all have different benefits and challenges when it comes to building a successful business.
- Curated subscriptions: You can send out a different product or curate a selection of products in a certain niche to send out to subscribers on a regular basis.
- Replenishment: Automatically send out something that your customers are going to use regularly, offering them a discount if they sign up to receive the product on a monthly basis for a set amount of time.
- Access: Allow customers access to a membership, software, or product and charge them on a monthly or annual basis.
The most suitable subscription model for your business will depend on the products you want to sell, but it’s possible to run all of these subscriptions through a WooCommerce site.
The starting point for launching a successful subscription-based business is thorough market research. You need to check your ideas are viable, and whether there’s a demand for the products you’re going to be offering.
Ideally, you want to find a gap in the market where there isn’t currently a subscription service available. Or you need to identify how you can offer something different or better than your competitors.
Many subscription businesses, particularly curated ones, will struggle to provide something unique to their customers. And if you join a competitive niche it will be difficult to find loyal customers — they’re likely to switch between subscriptions to take advantage of offers and discounts.
It’s also important to time your subscriptions right. Research how often people need or want the products you’re offering, how much or how many they want to receive each time, and what they’re willing to pay. Thorough market research is going to put you in the best place to launch a successful business and will help you put together an effective business plan.
Create a business plan and marketing strategy
Even if you have a clear idea of what subscription business you’re going to launch and you’ve done all the market research, you still need a business plan. Your business plan is going to outline the goals and aims of your business and the exact strategies you need to follow in order to achieve them. It’s where you can bring all your research and planning together to make a road map for your business.
Your business plan also needs to cover your finances — how much money you have to invest, what your setup and ongoing costs are going to be, and how much revenue you need to be making to break even and to grow.
The other important part of your business plan is going to be your marketing strategy, which will outline how you’re going to connect with your target audience and convert them into customers. You need to cover your branding, marketing messages, and the channels you’ll be using, as well as the metrics you’re going to be tracking to monitor progress.
Setting up your subscriptions
To launch a subscription-based business using WooCommerce you’ll need to add a plug-in to your site. This will allow you to take recurring payments for subscriptions for physical or virtual products, or services — you can take payments at a range of intervals and for different lengths of time.
One of the best plug-in options is WebToffee’s Subscriptions for WooCommerce, it offers a number of features including:
- Simple and variable subscriptions
- Offer a free trial
- Add on sign up fees
- Recurring discounts
- Email notifications for subscribers
- Manage renewals and cancellations
Keep customers engaged
Customers have high expectations when it comes to subscriptions and will quickly cancel or switch to a competitor if you don’t meet those expectations. You need to focus on providing a unique, tailored experience, particularly if you’re curating products to send — people will quickly lose interest if they’re irrelevant or repetitive.
A good example of a subscription that keeps customers engaged is the Sago Mini Box. It’s a kids subscription box that contains everything young kids need for a make-and-play activity, and each month the box focuses on a different theme and new games and activities. Kids look forward to discovering the theme and what they can do with the box each month, which encourages the parents to continue the subscription.
It’s important to remember that acquiring new customers costs more than retaining existing customers. Keep your customers engaged, and provide the best possible service in order to build a successful business.
Choose your pricing strategy carefully
Many subscription businesses use an introductory offer to entice people to sign up, but when you’re launching your business it’s important to choose a pricing strategy that you can really afford long term.
If you offer someone a free trial for a month and they cancel after the first month then you won’t make any money from them. This might be viable if you’re offering a software subscription and giving them access for a month doesn’t cost too much. Many software businesses such as MailChimp work on a freemium model, where they offer a free account with limited features so that customers pay to access the additional features.
However, if you’re sending out products you need to cover the cost of them, plus packaging and shipping, which can add up to a big loss if someone signs up to a free trial and doesn’t convert into a paying customer. Alternatively, you could offer a discount on the first three months if they sign up for a six-month subscription, or offer a discount for paying for an annual subscription.
You could also offer a range of subscription options that offer more flexible pricing like Blue Apron. This meal kit subscription offers several different plans based on the two or four people and dietary requirements. This means that their subscription is affordable for a wider range of people.
It’s important to balance your pricing carefully with what people are willing to pay and what you can actually afford so that you’re making a sustainable profit.
Track your progress
It’s also essential to keep a close eye on how your business is doing and whether you’re on track to meet your goals and targets.
As discussed above, churn is one of the biggest problems for subscription businesses, so when customers do cancel their subscription you need to identify why. Either ask them about their reasons for canceling during the cancellation process or ask for feedback via email at a later date. Make improvements and adjustments to your subscription-based on this feedback.
Many customers will stop their subscription without intending to, for example, if they change their credit card or move addresses. So it’s worth putting in place a process for checking in with your customers that have canceled without warning.
Launching a successful subscription-based business is going to require a unique idea and a lot of planning to ensure you’re able to build a loyal customer base. You need to find the balance between attracting new customers and retaining your existing customers to ensure your subscription business can become profitable.