Lisa Baumgartner, Account Supervisor
Hi, my name is Lisa and I am addicted to subscription services.
Like most subscription addicts, my obsession started with basic video and TV streaming. Once I realized how cheaply I could improve my life through services like Netflix, Hulu and Amazon Prime, my curiosity for subscription-service-everything sort of blew up. It didn’t take me long to graduate from streaming services to subscription boxes.
Fast forward a few years to 2015. I’m living in my one-bedroom apartment with two cats and pretending I’m Carrie Bradshaw. I’ve just subscribed to a big girl box called WINC. WINC is a monthly wine subscription, and wine is like water for a 30-something advertising professional living in the city. I believe that all well-adjusted adults have wine on-hand at all times. WINC is convenient. It eliminates the guesswork of finding wines. It fits within my monthly budget. And it arrives magically at my front door every month, like clockwork.
Once WINC had its claws in me, I start going downhill (or maybe uphill?) fast. I start thinking about other products that I always need in a pinch, and for me, that’s makeup.
I find ipsy, my favorite subscription service yet. It’s lady heaven in a pink foil bubble mailer and it’s called the Glam Bag. For a mere 10 bucks a month, I get to sample the biggest brand names in beauty – from makeup to skincare to hair products. I am an insider. I’m putting stuff on my face that celebrities are using. I am wearing Beyoncé’s eye cream.
I find Care/of, these brilliant little personalized vitamin packs. An interactive quiz on their website pinpoints where I most want to improve my health (Heart or brain? Decisions, decisions…), grabs my email and credit card info, gives me an app, and wham bam – vitamins are on the way. Now I have Beyoncé’s eye cream and feel like Beyoncé, too.
Consumers who use subscription services are at least four times more likely to subscribe to multiple boxes in different classes of product than other consumers. Based on what the average subscription box shopper looks like in the U.S. (there are 5.7+ million of us), it’s no surprise I developed a dependency on monthly inspiration:
- Late Millennial/Gen X
- College degree
- Liberal politics
- Household income exceeding $100 thousand
- Children ages 3-5 in the household
So, what’s the key to keeping consumers like me coming back for more? As diverse as the subscription economy is, all of these crazy services are taking advantage of the same human insight: commitment is hard, sampling is easy. We all want the finer things, and we can scratch that itch without digging ourselves too deep of a financial hole.
First, the best subscription brands make the relationship extremely low risk for the consumer. Usually, subscriptions can be canceled at any time and offer free returns.
They also use customer data whenever and wherever possible, personalizing individual subscribers’ experiences to extend the life of the subscription and keep Customer Acquisition Costs low. As long as the experience stays interesting and rewarding, it’s easy for a customer to roll into the next month’s low payment without thinking of canceling.
There are seven characteristics you need to consider when you start to think about your brand’s subscription service. To be successful, you need to hit on at least three:
- Has an existing community of enthusiasts (e.g., movie buffs)
- Delivers a great price value
- Targets an audience keen on continuous discovery (e.g., DIY)
- Satisfies a recurring need
- Makes someone they love happy
- Makes an emotional connection
- Integrates with a way of life
Of course, our fast-growing subscription economy is still in its early stages, and more subscription-a-holics are born every day. “Try before you buy” consumerism will continue to spread across industries, and competition will increase in those already explored.
For more deep dives on the wonderful world of subscription services, check out “The State of The Subscription Economy, 2018” on Forbes, and “Thinking Inside the Subscription Box: New Research on E-commerce Consumers” from McKinsey.
“Subscription Businesses Are Exploding With Growth.” Forbes.com. August 2017.