What is a subscription business?
A subscription business is any business where customers pay a regular fee in order to gain access to a product or service.
A subscription business model presents a great opportunity with the potential for multiple sales once a customer signs up. On the other hand, this can mean a lot of extra work convincing a potential customer that your product is good quality and ensuring that they want to pay for it over and over again.
To help, here are 5 great tips for how to get those recurring sales. Start Up Loan recipient Oliver Bridge, founder of men’s razor subscription service Cornerstone, also talks about his experience of setting up a successful subscription business.
1) Make your subscription process easy
We all like a website that’s easy to navigate. No-one likes to move through lots of pages and enter their details multiple times before they can purchase a product.
“We have spent (and continue to spend) untold hours on our website – making it as easy as possible to use for both new and existing members.”
Make sure your customers know how your service works, from end to end, and try to streamline it; customers want ease and speed! The Cornerstone example below shows the strength in this approach.
2) An effective subscription business marketing strategy
When you mention subscription businesses, many customers can be scared off by the thought of being tied into paying for a product or service for a long time. You need to sell your story and show them why you are different. Subscription businesses can have a reputation for being over-priced and making it hard for customers to opt-out. If a customer pays for the first box and is unsatisfied with the product and the amount they have paid, and therefore cancels their subscription, that could be months of cash coming in that you have lost out on.
Subscription businesses often have one thing in common; they make customers lives easier, allowing items to be delivered straight to the door instead of taking time to find them in a store. Think about what process you can make easier and get your Unique Selling Point (USP) across in that first delivery.
3) It’s all about quality
As Oliver says, “Putting together our product range and supply chain was a huge challenge – not only did we need to make something that looked good and was high quality, but we wanted to do it at a reasonable cost and also try to keep [production] to the UK where possible!”.
At Cornerstone, quality is a way for the company to stand out from competitors.
“We have spent thousands and thousands of pounds developing our own aluminium razor handle, bespoke skincare formulations and designing good-looking, robust, packaging to send it all stylishly through the post.”
4) Make it transparent
A common perception of a subscription business is being locked in to purchasing over and over again. This can scare potential customers off and having your terms and conditions clearly stated should be a priority. At Cornerstone, you can cancel your subscription at any time. The word ‘subscription’ can’t be found anywhere on their website and Cornerstone opt for a more simple description of the service:
5) The importance of feedback
As the old saying goes, it costs five to ten times more to attract a new customer than to retain an existing one. Remember, retaining customers is essential for a subscription business to succeed. Ideally, you want them to set up a direct debit and continue purchasing from you for months, even years! Be honest with your customers and don’t be afraid to ask them what you can do better; users will appreciate a business that listens and responds.
Oliver’s advice for anyone thinking of starting a subscription business is to “really focus on your product – make something that someone really wants and which they’re willing to pay for. Without this element in place, no matter how clever you are at marketing or web development, you won’t get very far!”
Thinking of starting a business? Check out our free online courses in partnership with the Open University on being an entrepreneur.
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