Monthly Subscription Membership Services are Red Hot Right Now!
While subscription membership services have been around for years, they’ve really morphed over the last decade transforming into the HOTTEST consumer must-have. Columbia House Music Club and Netflix were early pioneers, but now the landscape is limited only by your imagination and attracting the right customer niche. Time-starved consumers are trending toward convenient and hassle-free shopping that’s tailored to their needs and preferences. What’s easier than personalized deliveries straight to your door with flat-rate auto-billing? Many players in the subscription space have been wildly successful and profitable. Consider the Dollar Shave Club, launched in 2011, who reported $60 million in revenue in just four short years. Now that’s a lot of razors! All the big guns have joined the party including Walmart, Target, Macy’s, Sephora, and celebrities such as Martha Stewart and Jamie Oliver.
So what is a subscription membership program? Offering members the opportunity to receive a specific product(s) for a flat-rate monthly fee; delivered in-home on a set schedule. Most of the time the package arrives in a box of some sort, but it’s not a requirement. Anything that’s not a typical #10 envelope or flat counts; the more exciting the presentation the better. This new trend basically delivers anticipation and excitement. The options are incredibly diverse, but center around receipt of products, samples, products with samples, or items to try and return when finished. Memberships exist for every genre, hobby, food, cause, or demographic. This is an extremely niche-oriented business where the members expect the company to know and understand what’s important to them and provide surprise, delight, and value with each delivery.
From a revenue perspective, this business model can be summed up in one word – predictable. While attracting members may take time, once you get into the groove cash flow and expense management should be fixed and predictable. This is music to many entrepreneurs ears. The auto-billing each month offers a steady revenue stream to plan around; in some cases, memberships offer discounts to pay for the full year at once. Imagine collecting all the cash prior to any fulfillment. For an existing business, launching a monthly subscription program can deliver an added revenue stream directly to the bottom line. Consider just 2,000 members per year at $10/month will net $240,000 in revenue per year!
Before pulling the trigger, consult with a firm experienced with USPS programs to control campaign cost and determine delivery guidelines. They can make packaging recommendations like size, weight, thickness, materials, and coating to keep cost low and guarantee your package won’t be rejected by automation equipment. Three Dog manages countless parcel campaigns every month and has developed consulting expertise that’s included with every project.
Subscription Membership Program Ideas and Considerations
Offerings and Your Target Audience
Who is your audience, what are they interested in, and how will your membership delivery exceed their expectations monthly? Just search the internet for monthly subscription services and check out the endless possibilities!
Deliveries most typically are monthly, but a growing segment only delivers on a bi-monthly or quarterly basis. This decision depends on your strategy, small offerings more often or large offerings less frequently. From a pricing perspective the quarterly billing fees may not be as noticeable to a member as a monthly charge; even if the overall price is higher.
What will members pay per delivery? Does it seem reasonable enough for the value provided? Obviously, the cost of the product and fulfillment factors heavily into this decision; the range is pretty wide depending on the products and exclusivity of the club. In the beauty genre, for example, the price fluctuates from $5/month at Target up to $40/month at Wantable.com for very different deliveries. It’s very important to share with members what the promised retail value of each delivery will be.
Is the Delivery a Surprise or Member-Selected?
The majority of membership services go the surprise route with a positive spin that members can try new products without risk. This is why the members have to have faith that the service really knows them and what they like. Some of the higher-priced memberships offer members the option to select products desired each month; for very discriminating consumers this approach can be extremely desirable if done well.
User-Friendly Web Site
Remember that the website is your main salesperson in this business model. It attracts new members, engages existing members, and can offer a community space for like-minded people to share ideas and give feedback. It must be easy-to-navigate, visually clean, and ideally, give members an opportunity to resolve any issues on their own so as to not require a huge customer service staff.
Ready to launch a monthly subscription membership program? At Three Dog Logistics, our consultants will help develop a plan that delivers your parcel at the lowest cost and fastest delivery speed possible. Remember, we take the bite out of postage and freight. Visit www.threedoglogistics.com or call 410-284-5494 extension 220 to schedule a complimentary consultation today.