THE CLARUS Blog

Subscription Service Models are Good, but They Can be Better

Traditional subscription/member services models work well for some brands. Stitch Fix, Dollar Shave Club, Hello Fresh, Sephora, and Blue Apron are some of the brands that have found success.

Although their service offerings are good, could they be better? I believe the answer is a resounding “Yes!”

The key to improving these models is by delivering additional value to members via meaningful rewards, benefits, and experiences

This involves the development of a new revenue stream. Revenue that funds the supplemental benefits, drives incremental purchases, and adds a significant amount of operating income.

How would something like this work?

First, let’s make sure we understand the base value of the initial subscription service that the consumer signed up for.

 

Understanding the Value of the Base Subscription Offer

Consumers have signed up for the subscription service, like a monthly clothing service, weekly food delivery, or even Bourbon of the Month Club. Personally, I lean toward the latter!

So, let’s use that as our base example.

The monthly bourbon I receive as a club member is good. And for the most part, I feel that the product is a fair, if not slightly overpriced, value.

But for me, it isn’t about the price. I enjoy the surprise of a new, previously untried bourbon each month. Once that novelty wears off, I’ll most likely cancel my subscription.

With my membership, I also receive an email with an overview of the selection of the month that highlights its origins and properties, plus a link to a pdf that provides a more in-depth review.

Although I like the novelty of some of the unique bourbons I’ve received, there have been times I’ve been disappointed.

For instance, I love bourbon. I don’t love rye bourbon. I’ve tried many and it doesn’t sit right with me. Therefore, I’d prefer a different selection the month a rye is featured or have the option of skipping that month. In my current club, those options don’t exist.

But a fair value proposition – like the one I currently receive in my bourbon of the month club – can be made better. Just like a  better model can evolve to a status of greatness.

Here’s what I would do.

 

Evolve the Subscription Program with Additional Benefits

My bourbon club could take a page from Stitch Fix by allowing me to complete a member profile. I would eagerly share more about myself, my favorite bourbons, tell them how I like to drink my preferred adult beverage, and provide them with demographic and lifestyle information.

Think about the power that offers the club marketers. They’d be able to tailor a unique, personalized experience that goes beyond shipping me a bottle of bourbon each month.

I’d also like the opportunity to provide feedback on the month’s selection. That doesn’t currently exist.

Perhaps the club can create a contest to drive feedback and member-generated content to elevate excitement and engagement. Wouldn’t that additional member information be valuable to club officials?

As you can tell by this blog post, I have plenty of thoughts to share. And I’m not alone.

Also, they could provide me with options that ensure I receive a positive experience each month. Why only reach out to me once a month?

With increased knowledge from my profile and feedback, the bourbon club could shoot me unique offers from partners (usually at little-to-no cost to the club) or entice me to try another bottle or past bourbon of the month selections (to generate incremental club revenue).

Like most consumers, I welcome personalized and relevant offers. They make me feel appreciated. And I prefer to spend my money with a brand that gets me.

As good as that improved experience would feel to me and other club members, there’s still a higher ground to be reached.

 

Add a Modest Subscription Increase to Fund Enhanced Experiences

Use the incremental fee to introduce an elite level of benefits and rewards. Treat your customer and subscription members to a “Wow!” experience. A premium loyalty and engagement experience. Moments that matter.

Returning once again to my bourbon club example, I’d pay an extra $10-$15 per month to join an elite level of the club. A level that showers me with the status and benefits I “obviously” deserve.

Benefits like a club-branded “Elite Member” whiskey glass, the option to buy an additional bourbon of the month selection at a 10% discount, or a sweepstakes opportunity for a chance to win a guided “Bourbon Trail” tour.

Many whiskey consumers also like cigars, therefore, a special offer from a partner cigar retailer would be appealing, as well as discounts at other online retailers to purchase bourbon or general household goods.

As enticing an offer as the sweepstakes might be, I may be willing to pay for a guided tour through the Bourbon Trail, including some behind-the-scenes access that’s usually difficult, if not impossible, to come by.

For all the above, and more, I’d be willing to pay a premium price above and beyond my normal monthly subscription fee.

 

Taking Traditional Subscription Brands to the Next Level

So, can traditional subscription brands add more appealing benefits to augment the products and services they sell? Can they take it a step further to drive an elite level experience for those who crave status and a deeper connection to the brand?

Yes and yes!

Understand your customers and offer them valuable benefits.

Evolve your subscription offering with a premium loyalty program that targets and engages your best customers.

I certainly wish my bourbon club would provide me with additional benefits and the option for a premium level experience. If it can’t or won’t, perhaps another bourbon club will?

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