Starting a subscription business often leads to an inevitable process of trial and error. That’s because it can take time and experimentation to fully realize what works and what doesn’t in your particular niche. This can’t be completely avoided, and that’s okay. Every business is different, and finding your unique ebb and flow is part of the journey.

This article is for you if:

  • You are starting a subscription business
  • You want to know five things you can do to help set your business up for success
  • You want to avoid pitfalls that will sabotage your efforts
  • You want to speak to an e-commerce expert about your business idea

Recurring revenue models have picked up a lot of momentum in the past few years. Continual research shows that businesses that incorporate a subscription model are experiencing a higher return on investment.

Fortunately, if you are starting a subscription business right now, there are many others who have paved the way and done some of the work for you. You may even have a few mentors in your life who are helping to guide your steps — and that’s great!

While we are a subscription-based business ourselves, we also work with other subscription entrepreneurs on a daily basis by providing top-of-class subscription management software for Magento and Salesforce. Because of this, we have picked up on some tried-and-true techniques (as well as some “don’t go there” tactics) that can help guide anyone who is embarking on the worthwhile journey of starting a subscription business.

5 ‘Dos’ of Starting a Subscription Business

dos of starting a subscription business

1. Test the market to find an airtight opt-in funnel

Generating leads is a fundamental part of any marketing strategy. An opt-in funnel allows you to gather personal information from prospective customers in exchange for something that offers value to them. For example, you may offer a free quote to someone after they provide their contact information. You may also provide access to an exclusive asset, such as your latest e-book or guide. The key is to find what resonates with your audience.

Keep in mind that you also want to make the opt-in page appealing. Here are five examples to glean inspiration from. You can also schedule a complimentary consultation with a PowerSync developer to brainstorm your opt-in strategy.

Generating leads is a fundamental part of any marketing strategy. By mastering your opt-in technique, you enable your brand to build a solid database of contacts for your email marketing efforts. (Be sure to read our blog post about mastering your welcome email).

2. Create a connected social presence

There are many quantifiable benefits of social media marketing for businesses. To name a few:

76% of consumers have purchased a product they've seen in a social media post.
More than half (54%) of browsers use social media to search for new products.
71% of consumers with a positive interaction with a brand on social media are likely to recommend the brand to family and friends.

Be strategic about which social media platforms you invest your time in. The right answer will vary from business to business, and the key is determining where your target audience is spending its time. For example, if you are selling to millennials, YouTube is a strategic presence because 91% of them frequent the platform, according to Pew Research.

Consistent branding is something you need to prioritize as you launch your social media presence. Consistent fonts, colors and style matter. Develop a branding style guide and adhere to it. You should also invest in a professional graphic designer (even if it is only on a freelance basis) to create your logo, banner images and graphics.

You may hit the bull’s eye when it comes to visual branding on social media, but it means nothing if you are not consistently engaging your followers. Sharing quality content is something you will have to master in order to be successful at social media marketing. In addition to creating your own blog, share useful information from other experts in your industry. You may also consider creating a fun contest, which is something we talk in-depth about in our previous blog post.

3. Emphasize consistency

You need to be consistent when it comes to your communication efforts. Sending regular emails and updates will not only keep you on your customers’ radar, but it will create an expectation from them to hear from you. Give your customers a cadence they can respond to.

Because starting a subscription business is all about recurring revenue, give your customers the courtesy of emailing them when their orders are about to process. This gives them the opportunity to ensure they are not hit with any surprise transactions. Additionally, it is essential to ensure timely shipping every single time if you are selling physical products.

4. Make your customers feel like insiders by truly understanding their needs

In order to accomplish this step, you must be someone your customers know, like, and trust. According to Sprout Social, 90% of consumers are more likely to engage with posts that embrace the company’s personality. What kind of tone do you want to portray? Put thought into this ahead of launching your business.

Beyond that, starting a subscription business boils down to finding what your audience needs (even if they don’t know it yet) and giving it to them. How do you find that out? Look at analytics data, who is buying what, when they are buying it, etc. This information will help you make educated decisions about the most lucrative recurring revenue approach. Adopting a quality Customer Relationship Management (CRM) system is one of the most effective ways to accomplish this (keep reading to the end for more about that).

Offering exclusive discounts, starting a loyalty program and sending periodic customer satisfaction surveys are all tools you can use to build trust and a positive rapport with your audience.

5. Ensure your tech is in the right place

Ahead of starting a subscription business, you need to develop a checklist of technology needs. Here are some of the most important aspects to consider, which we speak in-depth on in our previous blog post.

Are your site speeds up to par? Research shows bounce rates increase as load times go up. In fact, 9.6% of visitors bounce when the page speed is two seconds. That number jumps to 32.3% when it takes seven seconds for a page to load.

What software will you use to manage your subscription orders? This is one of the most important decisions you will make as you embark on your recurring revenue journey. You should opt for a flexible solution that meets both merchant and customer needs.

What is your Customer Relationship Management (CRM) strategy? Implementing a CRM system (such as Salesforce), helps you know your customers on a deep level so you can give them what they need. It serves as a centralized place for storing customer information, habits and data.

What will your support process be? Will you offer a chatbot or ticketing system? Who will respond to the requests? Will you be able to provide timely assistance?

5 ‘Don’ts’ of Starting a Subscription Business

don'ts of starting a subscription business

1. Don’t make opting out a nightmare

Have you ever subscribed to a product or service that you no longer needed? Perhaps you even recognized the value it added to your life, but you could no longer afford it. Was it a hassle to cancel or postpone your subscription, or did you appreciate how easy it was to opt out?

Put yourself in your customer’s shoes. Nobody likes to endure a cumbersome cancellation process. When your customers unsubscribe, it is also an opportunity to request feedback for why they made the decision. This can help you to make improvements where necessary.

Consider adopting subscription management software that allows your customers to self-service. This is one of the most popular features of PowerSync’s mPower subscription management solution for Magento. If opting out is a nightmare, word will get around in the form of negative online reviews.

2. Don’t only send promotional emails and social posts

Focusing only on promotional communication is a common mistake because many business owners don’t want to miss an opportunity to sell products. However, you must zoom out and look at the big picture.

Aside from gaining customers, you also want to position yourself as a knowledgeable industry expert. Mix your emails and social posts up with human interest content and information that truly benefits your audience. While there may be no financial gain for you, what you will earn is trust and respect (which will in turn make people want to do business with your brand over time). Check out this recommended posting formula for guidance in this area.

Be sure to measure the engagement of everything you send and post. This will help paint a complete picture of what your audience wants to see more of so you can adjust accordingly.

3. Don’t create a confusing model

Keeping your business model simple can serve you well. How can you simplify your catalog? Over-complicating what you offer is not only a pain from a logistics standpoint, but it can also create hesitation with shoppers when there are too many options.

Many subscription box companies get this right because they send the same (or just a few variations) of products to all of their customers. This makes for an easily streamlined process on your end while still adding value to their lives.

4. Don’t jump in half-cocked

When starting a subscription business, go in with a strategy and a compendium of content to support you. The last thing you want is to fly by the seat of your pants. Get your ducks in a row rather than playing catch-up later.

Create a quarterly plan in advance that maps out every aspect of your business. What emails will you send? What will your social media posts be? What blog posts will you write and how often? How will you satisfy order fulfillment? These are all things that must be solidified before starting a subscription business.

You should also create specific goals around key performance indicators that you set ahead of time. How will you scale when certain milestones are met?

5. Don’t set it and forget it

This goes back to the need to consistently engage your customers. While automation tools are a great resource that can help save you valuable time, you will still need to put in a human effort to ensure your messaging does not come off as robotic.


Wrapping up

starting a subscription business strategy session

Starting a subscription business is an endeavor that can be well worth the effort if you have an in-depth strategy and avoid taking shortcuts. Hopefully, the list of dos and don’ts above will help get you off to a successful start.

If you would like individual guidance, we are here to help. Our $997 strategy sessions have helped several companies this year to grow their revenue by more than 20% in most cases. Reference this article, and the first session is on us.