The Subscription Based Model- Popular, Profitable, and Essential for Your Bottom Line With over $5 billion dollars in revenue, 11 million subscribers, and a growth rate of 200% per year since 2011, the subscription box industry is a powerful force to be reckoned with. If you or your customers haven’t jumped into this pool yet, you’re missing an uber-simple way to grow your revenue with minimal effort or risk.

While subscription membership services have been around for years, they’ve transformed over the last decade into a HOT 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.

Consumers are busy. The less time people have, the greater the trend towards convenient and hassle-free shopping 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, reported $160 million in revenue in 2017. Now that’s a lot of razors! All the big guns have joined the party including Amazon, Walmart, Target, and celebrities such as Kate Hudson, Jessica Alba, Martha Stewart, and yes even the President of the United States, Donald J. Trump.

So, what is a subscription membership program? This service offers members the opportunity to receive products, some are pre-specified, some are surprises, for a flat-rate monthly fee, delivered in-home on a set schedule. Typically, the package arrives in a box of some sort, but that’s not a requirement. Anything that’s not a typical #10 envelope or flat counts; the more exciting the presentation the better. Subscription boxes don’t just deliver convenience, equally as important are the emotional rewards of a fun surprise, a quick way to try cool new stuff with no effort, and the excitement of a monthly “gift” to look forward to.

Subscription box themes can be incredibly diverse, but each one is centered around receipt of products, samples, product with samples, or items for the member to try and then return when finished. There’s a membership for everyone; for every genre, hobby, food, cause, or demographic possible. This is an extremely niche-oriented business where members expect the company to know and understand what’s important to them and to dish out delight and value with each delivery. Most business is transactional in nature, a different format from the subscription model which is built on a long-term, steady, monogamous relationship that stays consistent until the needs are no longer met.

From a revenue perspective, the subscription box 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 are fixed and predictable. This predictability is music to any business owner’s ears. Auto-billing each month offers a steady revenue stream and, in some cases, memberships offer discounts to pay for the full year at once.  These folks are collecting all the cash prior to any fulfillment.

Experts have differing opinions of this business model but they all agree on one thing:

Subscription-based businesses connect with customers on an intimate level and build brand loyalty. The most critical factor to success in subscription-based service is meeting member expectations and excellent customer service.


Like the sound of this? Start with the basics and read more about the 7 properties of a great subscription box business here. If you’re ready to get started or are ready for a revamp of your process, reach out to us to learn more about how we can help you make this business model even easier.

Check out the second article in this series here: “Subscription Box Services, A New Business Model For Your Clients.