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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 looking to create a subscription business
- You’re curious about implementing a B2B subscription business model
- 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 thinking about how to start a subscription business, there are many others who have already 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!
While we are a subscription-based business ourselves, we also work with other subscription entrepreneurs. We’re all about providing top-class extensions such as Magento 2 subscription and recurring payments and Salesforce subscription management. 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
1. Test the market to find an airtight opt-in funnel
If you want to build a subscription business that stands the test of time, generating plenty of leads is essential. 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
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.
Since the decision to start a subscription business is all about recurring revenue, give your customers the courtesy of emailing them when their orders are about to be processed. This gives them the opportunity to ensure that they are not hit with any surprise transactions. Additionally, it is essential to ensure timely shipping every 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).
5. Ensure your tech is in the right place
5 ‘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.
Consider PowerSync Your Trusted Partner
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’re curious about how to start a subscription company, the professionals at PowerSync love to guide businesses and help craft individual strategies built for endurance. We’ve helped many eCommerce businesses achieve their unique goals through our robust solutions.
Don’t start a subscription service business blindly. 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.
Starting a subscription box business can be a great way to enter the subscription space. Subscription boxes have proven themselves to be lucrative for many recurring revenue merchants. However, the goal is to create a subscription based business that is truly unique. Don’t create a box that’s already flooded with competition (unless you have something special that sets you apart).