Have you noticed that every other business today is a subscription business?
You’re not imagining things!
We’re already living in a subscription-based world, but we’re still not aware.
That is if you believe Tien Tzuo, CEO of Zoura – one of the biggest subscription management tools in the world.
And he’s not alone in these claims.
The subscription economy is booming, meaning more and more brands will look to jump on the bandwagon.
What does that mean for brand owners and marketers?
First of all, they’ll have to understand the way subscription marketing works.
What Is Subscription Marketing?
Subscription marketing is applying marketing strategies to promote a subscription-based business.
This can often be quite different than your traditional marketing. Especially because your main goal is not just new customer acquisition, but rather customer retention and recurring payments.
Wait, isn’t retention important in any business?
It is. You can still have loyal and returning customers from time to time when you sell a one-off product or service.
But with a subscription model, you get more consistent, predictable, and continuous cash flow. Also, a passive form of revenue and increased LTV.
Meaning that a customer you acquire, will commit to paying you a recurring amount (weekly, monthly, quarterly, etc.) for your goods or services.
People are willing to pay a fee if the benefits outweigh the price.
Savings, delivery, convenience, perks/access are all reasons a customer can become a lifetime subscriber.
It’s also easier to sell your product or service once as a subscription instead of a continuous upsell.
When do Buyers Decide to Become Subscribers?
The subscription business brings a lot of upsides for you as the seller. But what’s in it for the buyer?
Put yourself in their shoes.
Instead of a single purchase, you’re committing to an ongoing weekly/monthly/quarterly payment for a particular product or a service.
Commitment is always scary, yet somehow subscribers continue to subscribe.
A product/service that regularly eats away a part of your budget needs to be both dispensable and even more importantly -necessary (or at least marketed as such).
That’s why subscription marketers will address the same pain points to attract subscribers.
Your product needs to have a clear purpose in order for someone to want to repeatedly purchase it. That’s the major selling proposition you can target.
It can be an everyday necessity like nutrition ( e.g. subscription food boxes), or education (courses), entertainment (eg. Netflix), disposable accessories (razors, scented candles), and plenty more.
There is also the thrill of trying new items.
Snack boxes introduce new snacks, meal prep teaches fancy new recipes, and yoga wear brings you the newest outfit of the season.
People like change.
Well… consistent change.
Today’s consumer wants comfort over anything.
Yes, there are still people who find joy in strolling around the supermarket, but most prefer the convenience of having their essentials delivered right to their door.
That’s where subscriptions come in.
There’s no need to go grocery shopping and think of what to make for dinner while wasting food.
No need to choose your new favorite pair of sunglasses.
And who needs to think of updating their newest software every year?
Just subscribe to a service/product and someone else will take care of it for you!
And there’s that reassurance – a subscription that says you can cancel anytime. Easy and done.
Subscribing/becoming a member can also grant you access to various perks.
Free trials of new products, exclusive first look, testing new styles, savings, and discounts, 1-on-1 access to a service, etc.
Dollar Shave Club does a tremendous job with its value proposition.
They say – everything’s in your hands. The product, the delivery, the churn decision.
Customers love when a brand says “we’re in control.”
But it’s not only that. You’ll also get to meet “club pros” (who offer valuable advice), free shipping on razor subscriptions, discounts, birthday gifts, and much more.
Our client Per’la Coffee Roasters even offers a FREE bag of coffee when you sign up! Heck yeah, sign me up!
Perks come with a huge perceived value.
It’s a small additional perk for a massive increase in the investment of a subscriber.
It can become hard to keep up with all the products you need to replenish from time to time.
Imagine waking up and your heart set on a cup of nice coffee just to find out you’ve used it all up?
If you turn to a subscription model to replenish your coffee stocks each month you won’t have this problem.
You can even choose the roaster’s choice and you’ll get to try different roasts. Not bad!
Groceries, toiletries, cosmetics, and a bunch of other products require a repeat purchase which can prove frustrating and time-consuming.
But not if you “automate” it with subscriptions.
Subscription services almost always come with savings which can be a huge appeal for customers.
Yes, you have to pay a subscription, but the price offsets the savings per box.
For a lower price and additional benefits, you’d get a product or a service that you’re bound to purchase anyway (as it’s replenishable), for a less price and convenience.
So if you’d restock on your capsule coffee (e.g.) every two weeks, wouldn’t it make perfect sense to commit to a subscription if you’ll save 10% every time?
Essentially, you save more by subscribing than you would buying one-offs.
Now, let’s take another look at Dollar Shave Club’s marketing tactics:
See those savings?
It’s not only a discount.
Throw in free shipping and occasional loyalty boosters (gifts and such) and both customers and subscription companies are happy.
The Upside of Subscription Business Model
Recently more and more brands are turning to a subscription business model.
Pandemic was only a catalyst for people changing up their business model to limit public interaction.
But what makes it so much better than traditional selling?
Here are some things that will most likely tempt you:
If all your customers are repeat customers you can rely on a stable and predictable income stream.
So instead of making educated guesses about your profits over a period of time, you can rely on a highly accurate financial forecast.
Subscribe once, pay multiple times. It’s consistent.
Besides keeping your finances stable, it allows you to plan your long-term business strategy with more certainty.
Increased Customer Retention
Retaining existing customers is crucial for the survival of your business.
Subscription-based businesses usually maintain a stable customer base as their models rely on repeat buyers.
But when we say repeat, it really becomes purchasing on auto-pilot.
This leaves subscription businesses with a stable customer base that will contribute to your business’ stability.
And if they are happy with the service, they’ll also act as ambassadors for your brand in the future (through word-of-mouth recommendations, testimonials, social validation, etc).
A great place to offer a referral program.
High Lifetime Value
Lifetime customer value predicts your business’ profits from a single customer.
Normally, subscription businesses have long-term customers with much higher lifetime value than usual.
You are no longer searching on how to sell and upsell a few more times. Oof, that can be exhausting. 😩
This metric is particularly important in subscription marketing when calculating your ad spends.
For example, if you spend $1 per customer whose lifetime value is $10, you have 10x returns on your ad spends (roas).
Usually, this means that you can splash a bit more cash when advertising subscriptions as you’re not looking at a one-time purchase but a long-term customer.
New customers tend to be skeptical and take time to shift their loyalties to a different brand.
So if you want to upsell an additional product/service it’s much easier to do so to repeat customers.
Nowadays, most subscription products or services offer “upsells”. It’s easy to give additional add ons to a subscriber because, at this point, you have their trust.
For example, if you’re selling a plant subscription service, you can upsell to a membership where you’d offer premium content, plant nurturing courses, etc.
Don’t believe us that a thing like plant subscriptions exists? Google it!
Hello Fresh also does an excellent job.
You pick your three meals and as you are ready to checkout, they ask if you would like to purchase cookies, cheesecakes, and even gumbo on top of your meal. And yes, we’ll take two. 😃
Lasting Brand Presence
Maintaining your brand presence is much easier when you have a subscription business.
Simply because your product or service will repeatedly end up with your existing customers (who at this point, must really like you).
Even if you opt against aggressive marketing, you can still expect other people to see your brand or talk about it. Just because it’s always “out there.”
However, actively working on maintaining your brand presence combined with subscription marketing can do wonders for your brand’s growth.
That’s why in the following section we’ll focus on a subscription marketing strategy that can make it possible.
Ever heard of the term “cult following”? If people are willing to subscribe to your product and service, they most likely will be part of that cult following.
Subscription Marketing With Facebook Ads – How to Implement It?
Subscription marketing comes in many shapes and forms – from content marketing to working with influencers.
However, if you want to put your brand out there quickly & effectively, it’s best to turn to paid advertising.
Facebook ads and other social platforms provide a huge customer base and numerous options to target just the right people.
They also allow you to attract new customers but also remind existing customers about new offers or upsells.
So if you’re thinking about subscription marketing with Facebook ads, here are some tips:
Make A Compelling Offer
You need to include benefits talked about earlier in the article if you want your ads to frequently convert.
Focus on the benefits. The why. How does your subscription make your customer’s life easier? What pain points are they solving?
Here’s a good example of a compelling offer:
A simple & effective value proposition – make your dog happy (there’s probably nothing a dog owner wants more than seeing their furry friend happy).
Even better, it solves this issue for you every month with a new toy! So there’s your convenience.
And in the end, there’s free shipping on all plans – mega savings.
Offer Discounts & Gifts
The path to a successful subscription starts with the first purchase.
So make sure you do everything in your power to make those buyers sign up. It’s harder to acquire than to retain.
Discounts, free shipping, and additional gifts on the first purchase are a good way to get the subscription ball rolling.
According to reports, small discounts helped subscription brands achieve 50% month-over-month growth
💡 Here’s a subscription ad from our client, YogaClub:
An extra pair of leggings on a seasonal subscription seems like an offer too good to pass by. Plus, it’s a HUGE perceived value.
This was tested between Free leggings and $20 off your first order.
And guess which performed best?
That’s right. Free leggings.
The best part? When we counted the profit margins it turned out it was more profitable for the company as well.
Additionally, some brands offer a free trial for their subscription service or a money-back guarantee to ease the purchasing decision.
Bank on Holidays
The holiday season is always a great time to attract new long-term customers.
You can create unique offers that will appeal to first-time buyers that may turn into subscribers.
Plenty of businesses use this marketing tactic in their promotion.
Take a look at this ad by Home Chef:
This is an effective way to turn a huge target audience into your repeat customers.
You don’t offer only one discount for a particular prospect pool, but also a future discount.
During the holidays, it’s when you go big. Heck, even offer 3 months free!
Compelling, convenient, and economical – a winning formula.
Target Email Subscribers With Retargeting Ads
Collecting emails is a key piece of subscription marketing tactics. And we’re not talking about email marketing only.
If you have a decent email / SMS list, you can turn it into a Facebook custom audience and target only people from that list.
For example, you may want to target subscribers that never made a purchase with some exclusive offers or just return your brand back on the map.
You can also make different lists like upsell audience (for repeat buyers) or win-back list for customers that decided to unsubscribe.
Maintain Customer Retention With Remarketing
Just because someone subscribed to your product doesn’t mean that they’ll stay a long time.
The churn is real. 😬
Churn rates can be fairly high with subscription brands that don’t nurture healthy and long-term customer relationships.
To maintain a good relationship with your subscribers, you have to occasionally remind them about your brand and reward them for their loyalty.
Advertising loyalty program rewards can go a long way in keeping retention rates high.
Tip: This is also where perks & referral programs play a huge part.
Embrace the Long Term Gains
If done right, subscription marketing can bring hefty revenue to your business.
And since this business model just started flourishing, it’s only logical to start implementing these strategies now.
However, keep in mind that not all is rosy.
Credit card rejections and other issues can prove troublesome to resolve and can seriously hamper your business.
It also requires implementing fluent systems and processes, unlike your traditional businesses.
That’s why you’ll have to prep yourself before you wreck yourself (and your brand).
But if you do it right, you’re in for a dream business model. Really, the dream!
If you need help in setting up your subscription-based business along with a successful marketing strategy, feel free to contact us. We can schedule a meeting and go over your account together!