Getting people round a table to talk about subscriptions, the challenges and opportunities, seemed like a great idea. Thanks to speaker Joseph Munns, founder of Baked In, and our guests, it turned out it was. With a backdrop of post-Covid recovery (touch wood), inflation on the increase, and recession becoming a word we’re hearing every day, subscription model businesses may start to feel nervous. But it isn’t all doom and gloom. By baking in solid strategy and being creative with planning, businesses can get into a great position when the financial corner turns.
Thomas Panton, founder and CEO of Canopey, Chris Russell, CEO and co-founder of Zellebrate. Chris Starkey, previously the COO for THG, and now a consultant for a change consultancy business, Maxim Gelmann, founder of Stroodles, and Craig Crawford, previously the digital transformation at Burberry who, post-Covid, started a fashion label called Differently Enabled, along with Radek Stejskal from ADAMAPP, and Rob Morley, co-founder of Fountain Partnership, got together to talk it through.
Who are you?
For any organisation, knowing who you are, what you do and who you should be talking to is key. Having a brand essence that runs loudly through all activity, and a genuine community of fans means advocacy and endorsement comes from a far wider and more authentic source. Baking, for instance, makes you feel proud when someone says it’s delicious – base your messaging around that. And when things go wrong, be honest, put your hands up and say sorry – people are receptive to that.
What sort of subscription are you?
Subscriptions can be segmented into different types, so it’s really important to know and understand where you fit on the buying scale. Razor blades and dog food, as long as the product is good enough, can roll along. More luxury items could be seen as dispensable – unless you position yourselves correctly. For instance, brands like Disney don’t send an email invoice reminder, but a ‘here’s what’s next on the platform’ email. Keeping your audience engaged and excited about what next month has to offer can help prevent cancellations.
Find your niche
Everyone has a USP right? Wrong. But it is essential to really stand out in a subscription model. Baked In’s success has come from seeing a genuine gap in the market. Cake mixes are a common occurrence, but a kit that allows the person at home to really engage with the ingredients and process, making a cake from scratch with zero waste, hadn’t been done. Separate yourself from the masses by offering a genuine USP, with a strong brand essence behind what you’re doing.
Getting new customers as one-off purchasers, as we all know, is easy (ish). Retaining them and converting them to a subscription model is a lot harder. Here are three things to think about:
- Optimise the top of your funnel, so you can hit the highest quality audiences
- Conversion rate optimisation – the better this is done, the more can be spent on top of funnel activity
- Lower the churn rate in retention, so you can invest more in getting new customers engaged with the brand
The best Direct to Consumer customers are the ones who have a mindset where they want to experience more from your brand. They’re the ones that buy the most and openly rave about your products. Look at the data to see who those people are. Encourage them towards a subscription model investing where you need to – on the basis that they will be the easiest to sell into as time goes by.
Pricing structures can attract people who are pre-paying. For instance, you can either pay monthly at £14, £36 every three months, or £99 for a year. Monitor the different retention rate for the different models. For some, the long-term saving over a year is key, but for others, especially in more uncertain times, a one off £99 could be unsettling. Could you also look at enticing offers, such as a free month, just paying for postage, or value adds such as free samples or giveaway codes?
Widen your offering
Think about how you can enhance your customer experience on site. What other products can you sell to engage your audience, without detracting from the core range. If you are seen as a one stop shop, converting those loyal customers who already know and trust your brand becomes far simpler.
Or, of course, keep the range as it is, but think about who you’re targeting with your marketing messages. If your focus has historically been parents, maybe try grandparents. If you’ve been targeting one sector, but your product works in another, give it a try and be agile.
Perhaps consider introducing gift subscriptions, especially when such a high number of gift certificates never get used. For lots of brands offering a three, six or 12-month gift subscription is a natural choice, however there are pitfalls. In July, all the six-month Christmas gift purchases run out – remember that in your forecasting and strategy, as converting those gifted customer, to a regular repeat customer is difficult.
Know your market
Any successful business should have a CRM stacked with data. Use that data to establish who is driving the revenue, what the retention rate is showing and, even more importantly, who your clients are and what they do.
It is easier to establish a business in your own territory – you know the language and understand regulations amongst a myriad of other things. But once the model is established, can you go global? Do you have a product range that could naturally appeal to other countries? If, for example, it’s something that may be seen as quintessentially British, countries that find that interesting could be your next step. If the Great British Bake Off is in the top ten most streamed shows on American TV, and you make cakes, the USA could just work…
Test and learn
Does your business have a culture of test and learn? Continually trying and then evaluating success (and failure) is vital to growth. Sometimes, it’s worth trying something new to find an audience. For example, TikTok may not be your target demographic on paper, but running a promotion through their platform targeted at the audience’s price point or ethos could just work. And the great news is, if it’s a product that you can share, or benefits the family, the parents may well sign up to the subscription!
Brands are facing yet another set of challenges in the current market, and subscription services are clearly not immune. By having a business model with clear audience insight and segmentation, along with the vision and ethos to back it up, and strategic investment throughout the funnel, brands can retain their client base. And, when green shoots of recovery show, those brands will be front of mind for consumers.