Subscription-based businesses are all about convenience. They send curated products and services directly to your door or email inbox, charging a monthly fee and providing you with enhanced products on a regular basis. It can be financially lucrative for a business to adopt one.
According to Shopify, “The subscription e-commerce market is projected to reach $473 billion by 2025, up from $15 billion in 2019.” If you’re looking to launch a subscription business, here are six steps to get started.
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Choose and research your niche
When developing a subscription offering, finding a niche market need can help you develop and deliver a successful service. Conduct market research and ask consumers what products they get on subscription services and what they would like to see from a subscription service. Additionally, look at the existing subscription service market to see what other companies are offering to see where you may be able to fill a gap.
One way to determine what type of subscription you’d like to offer is to get feedback from loyal and potential customers. Conduct a series of surveys with your target market to discover what they would like to get from your company on a regular basis.
Define your customer base and brand identity
Once you've decided what your product is, you’ll need to define your customer base and branding. Think about the consumers you want to reach and how you can tailor your messaging and aesthetics to appeal to them. Consider both demographics (age, gender, geographic region, household income) and psychographics (attitudes, beliefs, aspirations) as you build your ideal customer profile.
With a defined target audience, you can design a visual brand, message and brand “voice” that will appeal to them. This branding should be reflected in your website, social media presence, packaging and all other marketing assets you develop for your subscription service. As the needs of your target market evolve or the industry changes, continually tailor your brand to your customer base.
While there’s plenty of work to do when starting a service, keep brainstorming ways to retain customers in the future.
Develop your offerings
After you've established your overall branding, start to think about how you'll make your subscription service a reality. If your subscription is going to include physical products, develop a plan for sourcing materials and/or inventory for your products. Will you be creating new products exclusively for these boxes, or will you be relying on vendor relationships with existing product manufacturers? Assess this issue early on so that you have the ability to meet demand without running into any avoidable supply issues.
Sourcing your products will help you determine the pricing for your subscription service. Most pricing models are based on either the length of the subscription or a tier system. Some subscription services have a scaling model in which the services increase in price as more is offered to them. Another model is based on the length of the service, with businesses offering discounts if you commit for a longer period of time or pay for the service annually as opposed to monthly. Regardless of which pricing model you choose, make sure the offer is both attractive to your target market and profitable.
Finally, plan a fulfillment schedule of when you create and ship your product out. This should be on a regular schedule, so that is easy to maintain, rather than doing it as orders or supply come in.
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Market your product
Now that you have a solid idea of your product and pricing, decide where to sell your subscription service in order to reach your target audience. Set customer expectations for shipping so they know when they can expect to receive their product and what is included with it.
While there’s plenty of work to do when starting a service, keep brainstorming ways to retain customers in the future. They may love the idea of your subscription and enjoy the first few batches, but if they are not getting anything they perceive to be useful or new, they’ll cancel after a while. Develop new and innovative products that will keep your customers enthusiastic and therefore subscribed.
Launch your subscription service
Once you finish developing your subscription and your marketing tools, you can finally launch your service. Launching a subscription service can be tricky, especially if you're doing it independently and not through a dropshipping provider. Some services start with a smaller beta launch for their service in order to work out all the details and/or issues before releasing to the public.
Analyze metrics
Finally, one of the most integral parts of having a successful service-based business is analyzing your metrics and the marketplace to ensure your services are still relevant, useful and wanted. Ask for customer feedback to see how they enjoy the service, if they find its regular schedule useful, and what they'd like added in the future. Monitor cancellations by paying close attention to why a customer may have canceled their subscription. It could be a variety of reasons in which you can improve upon, including quality, pricing or product offers.
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