We’ve seen incredible growth in business using the subscription based model in the last few years, but why has this been so successful and what does it mean to you and your customers’ bottom line?
Let’s start with the basics (if you’re a little confused about this model and want to learn more, check out this previous article we wrote on the topic): The subscription-based or auto-fill programs promise three highly prized results for your business:
- Operational logistics that simplify planning and staffing
- Predictable, repeatable monthly revenue
- Non-existent or reduced inventory drag
These results make the list of most desired outcomes for a profitable business in any industry. With the rapid-fire growth, subscription commerce businesses need lots of help to meet customer expectations and on-time delivery. This demand opens a giant window of opportunity for those of you in the parcel logistics industry. The ball is now in your court and it’s the prime time to suggest a great idea to build your client’s bottom line and provide the operational expertise needed to make the program a wild success for all parties.
Why Should I Suggest This Model To My Clients?
While there are many reasons that could appear here, we’ve corralled the top 5:
- Additional Revenue Stream Using Existing Products and Customer Base
This model allows them to take what they already sell or produce, package in a different way, and offer it to their existing audience on a regular basis. You already know your audience. You know who they are, what they are interested in. It’s a recipe for success.
Check out the most impressive list of memberships I’ve seen; this should help spark some ideas.
- Build Brand Loyalty and a Deep Connection to Customers
As long as you meet your customer’s expectations and deliver excellent customer service, your subscribers will stay loyal to the membership brand. On average, each individual subscribes to seven boxes and has 12 on their future wish list! The biggest drivers for this audience, according to FastCompany, is consumers getting the most-box-for-their-buck so focus on delivering in a niche with few major competitors and deliver the greatest value for the money.
- Convenience Sells
This universal truth applies to both subscription boxes and auto-fill options in any online business offering: consumers want the buying process to be easy and painless. For that luxury, consumers are willing to pay more. Shipping deadline disappointment is one of the biggest complaints in the subscription world so make sure you partner with a sophisticated shipper to protect your reputation and bottom line. Deliver convenience and keep your promises and they’ll never have a reason to leave.
- Predictable Revenue, Logistics Support, and Inventory Float
The attractive benefits for your business are the same for your customers; everyone wants predictability. Automated monthly billing creates a steady revenue stream which your accounting team and investors will love and an easy process for your customers who can ‘set it and forget it’. On that same topic: Focus logistics support around standard monthly delivery dates to remove surprise volume surges that create chaos. Inventory management is simplified, instead of waiting to see if customers are going to buy an item sitting on the shelf you know far in advance that it’s sold and the ship date. Read what Andy Levitt, CEO and Founder of Purple Carrot – the plant-based meal kit business has to say about how moving to a subscription model transformed his company.
- Immediate Feedback and Low-Risk Test Audience for New Ventures
Subscription audiences are different than transaction-based customers. They signed up for an experience not to simply receive a product, they’re vested in making sure that experience is a good one. Your company has their attention once a month so make good use of that valuable asset. Ask for feedback and make it easy for them to tell you how they feel and offer suggestions. If customers aren’t happy, make it right. Think about it, you have an excellent focus group at your disposal to flush our new ideas to try. It’s time to think of this group less as your financial bread and butter and more as your business partners.
This All Sounds Great, But What Does It Require To Make This A Reality?
The types of services required to support a subscription-based model can vary of course (for example, food programs requiring special health code requirement adherence), but there are a few generally needed services:
- packaging manufacturers
- customer packaging design and solutions
- pick pack/fulfillment services
- co-packers (contract packers)
- parcel shipping expertise.
Urban legend will talk about startups that created labels on their old home computer and packed boxes in their garage, and while this might be true for some, this certainly isn’t a sustainable growth model. Most subscription-based companies turn to outsource partners to automate and streamline the process so they can focus on other business priorities.
It’s estimated that there are more than 2,000 active subscription box offerings right now so it is critical, now more than ever, to stand out in the crowd. This is the perfect opportunity to flex your creative muscles and serve as an expert consultant for your clients. Guide them through the subscription box adventure and you both reap the rewards. Be strategic: make recommendations, and chorale your network of experts to be of service on your client’s behalf. It’s easy to grow stagnant when delivering only the status quo to your clients, but as in every venture, partnering to deliver the unexpected, will pay off handsomely for your business.
If this all sounds too good to be true to you, you’re not alone. As we mentioned, there are many ways for this business model to either shine or fall flat. The success will rely on, in part, the quality of the partners you select to help facilitate your client’s new venture. Help them pick the best partners in the business; if you or your client is interested in learning more about how we can help make this process even more streamlined, reach out to us today!