How To Get Online Subscriptions Right

Consumers around the world love online subscriptions. In fact we are increasingly living in a subscription economy: organisations and consumers included. Businesses are subscribing to a range of services and products for the workplace, such as SaaS solutions, and consumers are subscribing to a host of goods and entertainment services delivered by post or digitally.

subscription services

Lovefilm*, founded in 2002, was one of the first to encourage UK consumers to subscribe instead renting or buying DVDs individually. Lovefilm muscled in on the traditional territory of Blockbuster, an international film and games rental company, which started to collapse as Lovefilm and newer competitors, such as Netflix, turned the rental market upside down.

Blockbuster started to crumble in 2004, filing for bankruptcy in 2010. Only ten franchise stores remain in America, through Dish Networks.

Lovefilm was bought by Amazon in 2011 for £200 million, with over 2 million subscribers.

Netflix has grown even faster, with online streaming available in 190 countries and over 100 million subscribers. It has over $8.8 billion revenue, produces dozens of TV series, movies and   documentaries and employs 3,500 employees around the world.

A Subscription Service for Everything

The Netflix model is what many other subscription companies aim for. With so much choice for consumers, it’s estimated that four in five people (80%) in the UK have at least one subscription. However, subscription companies didn’t appear overnight: instead we are experiencing the result of over the last 15 years of innovation, risk taking and investment into this sector.

Over the last few years, subscription services have appeared everywhere. In the US there are now over 2,000 subscription companies, supplying consumers with everything from beauty products to Starbucks, Adidas trainers to healthy snacks, pet treats, wine, beer, whisky and bourbon, athletic clothes and hundreds of other products and services.

In the UK and Europe, there may not be as many subscription services (investor appetite for risk is different in Europe, and it takes a lot of money to scale a subscription brand to profitability), but they are proving just as popular with consumers.

As well as digital entertainments such as film and music streaming, food and drink subscriptions are booming. Vegetable boxes were an early example of this, allowing food producers to reach   customers directly. Gift subscriptions are also popular with companies like Not Another Bill sending monthly gifts to their recipients based on a questionnaire exploring their interests.  If you want to send someone fresh socks every month, ‘sockscriptions’ exist from a number of different retailers.

Can Established Retailers Break Into This Market?

The subscription economy is not exclusively for venture-backed startups. Established brands, such as Starbucks, Gillette and Adidas are already on the bandwagon. Depending on the products and services you offer, this market is still open to considerable disruption, and an innovative retailer could soon find a steady stream of sustainable revenue from customer subscriptions.

Here are a few things you need to consider for winning and keeping subscribers.

#1: Do we offer something people want every month?

Subscription services are all about providing a convenient monthly or weekly alternative to going out and buying something. It is a natural extension of the ecommerce boom. Merchants are packaging convenience. Customers are happy to pay more for something if they don’t need to go somewhere and buy it themselves: With a subscription, it just arrives in the post.

#2: Will our product or service fit in the post?

Generally speaking, the subscription services that succeeded can either fit through a letterbox or can be downloaded/streamed. Again, the aim is to provide convenience. The customers to attract are time-poor but not cash-poor. They work hard; they want to treat themselves.

Subscribers don’t have much time to go shopping, but if you can give them luxury or equally something essential (such as healthy, organic or vegan food and groceries: another popular sub-sector in this market), then you’ve won their hearts and wallets.

#3: Design and seamless sales funnel and subscribe/unsubscribe option

Customers are more likely to subscribe when they don’t feel like they are making a financial commitment.

This doesn’t mean attempt the Amazon Prime approach; making it too easy for people to subscribe accidentally, only to find themselves billed 30 days later. Make it clear for customers to know what they are subscribing to and they give full consent.. Ensure your ecommerce website provides a smooth ecommerce experience, on any device, and then encourage people to subscribe.

At the same time, it should be easy and convenient for them to unsubscribe, which should also come with money back guarantees and other reassuring features. By taking this approach your customers won’t feel trapped; in turn this engenders loyalty and recommendations.

Payment options should be equally as simple, with direct debit, recurring credit or debit charge options, and other solutions as needed; such as PayPal, Apple, Android and Samsung Pay. Subscribing should only take a few clicks. And finally, ensure you are providing great customer service and support throughout so that anyone with questions can quickly get an answer.

Is it time you considered getting into the ecommerce subscription market? If you would like to speak to a payment expert about offering a subscription service and how to optimise your payment journey for this, please get in touch by calling +44 (0)808 301 8129 or email [email protected]

* Lovefilm by Post is closing on 31st October 2017, as customers have moved away from DVD and Blue-Ray rental to online streaming.