Subscriptions are hotter right now than a high school football player during two-a-days in Mississippi. That’s not to say that all types of subscriptions are thriving. Magazine subscriptions are plummeting and cable TV subscribers are also in a state of rapid decline.
No, the hot ticket in 2018 is the subscription model for businesses. There are more than 35 million monthly visitors to subscription company websites, up 800% from 2014.
So what exactly is a subscription business? It’s somewhat like a magazine subscription, with the products you sign up for arriving monthly. And like your favorite magazine, the package is filled with things that appeal to you.
The important thing to note is that these services aren’t offering products that are particularly innovative. We’re all familiar with shaving products. Most people have probably purchased simplified meals before at the store. And everyone has a quirky aunt who’s been into the healing power of crystals for decades. What’s new is how these companies are serving their customers through the subscription model.
The bottom line is that well over 5 million Americans are signed up for subscription businesses. Which may have you wondering if perhaps your business should get in on the action.
First off, the barrier to entry for running a subscription-based business is quite low. That’s good news from an operational standpoint, but it also means that you’ll probably have to deal with stiff competition.
Whether your product is shaving cream or fashion accessories, you should make the barrier to entry similarly low for your potential customers. Offer free returns and make sure the subscription commitment isn’t too daunting by allowing customers to cancel at any time.
If you’re not sure if the subscription model is right for you, consider that 41% of revenue for American retail businesses comes from repeat customers. So you’re already serving customers on a recurring basis. In many cases, establishing a subscription service merely formalizes it in a way that can be convenient for customers and provides more consistent revenue for the business.