Although it might sound a bit strange, the subscription business has been around for a couple of centuries, since subscriptions were first introduced by newspaper and book publishers. Of course, due to globalization and the advent of the internet, the subscription business model has undergone major changes.
Subscriptions provide unbeatable benefits both to businesses and consumers, so no wonder that this business model is thriving today. According to Business Wire, subscription businesses have grown nearly six times faster than the S&P 500 over the last decade.
It’s safe to assume that you won’t go wrong with the subscription business if you approach it wisely. In this guide, we’re covering some key steps to starting a successful subscription business.
1. Decide on WHAT you will offer
First and foremost, you need to decide what model is better for you: offering access to a product or a repeat service. The first model suggests giving your clients access to exclusive products as long as they pay you a recurring subscription fee, for instance, video streaming content (like the world-famous Netflix), written content, or software.
The brightest example of repeat service is monthly subscription boxes – a recurring delivery of products, from pet supplies to jewelry and beyond. You can offer virtually anything to your consumers, so brainstorm subscription box business ideas and choose the one that can best meet your business ambitions.
2. Think of the goals you want to achieve
When you’ve figured out what you will offer, it’s time to establish your goals. These can include reaching specific revenue levels, selling a certain number of subscriptions, or acquiring a certain number of customers. Setting specific goals will significantly assist you with targeting the right audience and setting the right pricing.
3. Carry out extensive research
The next step to take is doing in-depth research into the competition and your target consumer.
Know your competitors
For starters, analyze your competition: do research to find out which companies offer similar products and take note of the following aspects:
- the features that differentiate those companies from you
- the way they communicate with their clients
- customers’ experience of using your competitors’ services, especially what they need but don’t get.
One of the most efficient ways to analyze your competition is social listening. It lets you get a deep understanding of what the customers are talking about, how they feel, and what they need from businesses by analyzing social media mentions, messages, and comments. Taking a closer look at your competition will help you enhance your offerings and establish efficient communication with your audience.
Identify your unique selling point
It’s a no-brainer that if you don’t want to get lost in the crowd, you need to identify your unique selling proposition, especially if you offer a popular product or service. To create a USP that will work, answer the following questions:
- What are the features of your product that make it unique and set you apart from your competitors?
- What features of your product can’t be easily copied by your competitors?
- What your customers’ pain points can your product solve?
Now use your answers to create phrases about your unique product or service. Keep in mind that they need to be clear and concise.
Define your target market
In this intensely-competitive world, it’s critical to have a well-defined target market. Fair enough, as targeting everyone means draining your budget. On the other hand, SMB can effectively compete with large companies with the right targeting.
- Again, use the competition analysis data. Who are your competitors targeting? Who are their current customers? Don’t stop right there: you might spot audiences they overlook.
- Draw up a list of features that characterize your product or service. Next to each feature, list the benefits it can provide. What kind of needs can they meet? What lifestyles does your product or service match? Now, make a list of people who have a need that your benefits fulfill.
- Next, choose specific demographics to target. Your task is not only to identify who needs your product but also who is most likely to buy it. Consider the following factors:
- age
- gender
- location
- education
- income level
- marital status
- occupation
- values
- hobbies
Finally, once you’ve defined your target market, it’s a good idea to consider the following questions:
- Are there enough people who meet my criteria?
- What drives my target audience to make buying decisions?
- Can they afford my product or service?
- Is my audience easily accessible?
4. Set the pricing
With your goals, competitors, and target market in mind, set the pricing for your product or service, and choose the pricing model that can best meet your goals. Your options include the following:
Flat-rate
Flat-rate, or fixed pricing, offers the customers a single price for all features of the offering. All the customers pay the same amount each billing cycle.
Tiered
You offer different sets of features at various price points, most typically designated as basic, standard, and premium. This allows you to segment the prices based on specified target markets.
Usage-based
Customers are charged based on how much of a product or service they consume.
Per-user
A per-user or per-seat pricing model means that customers pay based on the number of people using your product or service.
Freemium
You allow your customers to use your product for a trial period or offer basic or limited features at no cost.
Regardless of what pricing model you choose and what price point you establish, keep in mind that you can always change it as your subscription business develops.
5. Create an attractive and user-friendly website
It goes without saying that today almost any business is doomed to failure if it doesn’t exist online, subscription businesses being not an exception. That’s why it’s imperative to build a compelling website that will be sure to appeal to your audience.
Luckily, there’s no need to code your website from scratch. You can use a subscription platform, for example, Subbly, and create an excellent site with professionally designed, editable templates and pre-configured blocks.
To wrap it up
Launching a subscription business might sound challenging, and your first steps can be tough to handle. Still, with the right approach, you can build a successful business that will secure recurring revenues without continuously investing in finding new customers.
