Marketing

An experience-focused approach to subscriptions

A subscription model isn’t a golden ticket to success as it requires careful strategy and consistent execution. However, when retailers find the right fit and relevant subscription for customers, the model can be a differentiator and build an incredible experience.

Photo: Adobe Stock

August 29, 2024 by Wendy Karlyn — Chief Client Officer and Global CPG/Retail lead, Rightpoint

From BarkBox and Hello Fresh to Amazon Prime, subscription services are everywhere. And for good reason: Subscription models are expected to grow at a compound annual growth rate of more than 18% between now and 2028.

How can your company make the most of a subscription model? Let's dive into different models, how subscriptions connect brands with customers, and what's required for a successful subscription launch.

No one-size-fits-all subscription model

Subscription models come in all shapes and sizes, and different models can match the needs of different companies and their customers. Consider these three common subscription models:

• Regularly delivered boxes and products. Perhaps what consumers typically associate with subscriptions, this model includes brands like Kiwi Co, Blue Apron, and Dollar Shave Club. These products are usually only available through the subscription service, and customers can't engage unless they're subscription members.
• Amplifying the omnichannel retail experience. These retailers often start as brick-and-mortar stores but add subscriptions to expand the retail experience. Customers can still shop at the store without a subscription, but the subscription offers perks, discounts, and exclusive access. Examples include Amazon Prime and Target Circle 360, where customers pay an annual fee for faster delivery and better deals.
• Digital-only services. Apple pioneered this subscription model by offering regular purchases from the app store. Digital subscriptions include memberships, streaming services, and more to provide access to exclusive digital content and new releases.

Connecting with customers through subscriptions

Subscription models offer many benefits for brands. The most obvious — and impactful — is that subscriptions build loyalty and increase a customer's lifetime value. Instead of making a single purchase, subscriptions build a connection between customers and brands, allowing companies to get to know their customers better.

In many ways, it's not just the subscription economy — it's the relationship economy. Customers subscribe to the brand and relationship just as much as they subscribe to a product or service. Think of a subscription model like a contract: customers are promising to automatically purchase in regular intervals, and brands promise to provide value in a new way, either through regular products, services, or connections

A subscription model creates meaningful, two-way communication and invisible channels connecting customers to the brand. It builds in a natural and recurring checkpoint with customers as they update or revise their weekly, monthly, or quarterly subscriptions and gives brands a chance to check in, share updates, and ask for feedback. Instead of a customer coming to your store or website on a whim or whenever they need a new product, the built-in cadence of subscriptions lends itself to relationship-building.

But those connections require work. It isn't enough to simply send a customer their subscription — the most successful brands build loyalty, start conversations, and turn their subscribers into brand ambassadors who are excited to get their next delivery from the company.

Putting all the pieces in place

A subscription model isn't just for the product or customer experience team — it impacts all areas of a business, so every team needs to be prepared, engaged, and working together. When planning for a subscription launch, consider these important factors:

Infrastructure and software

A great product or service subscription requires strong software and infrastructure to back it up. A successful subscription requires a strong platform to manage memberships and provide customers with opportunities to personalize their deliveries, delay subscriptions, or cancel as needed. Before jumping into a subscription model, brands must evaluate and test their software to ensure it can manage subscriptions and then perform any updates as needed. Starting a subscription model is a commitment that requires resources, potentially including space, employees, new products, and shipping supplies.

Marketing and experience

As we discussed, a subscription model can build strong customer relationships. At the center of that are the marketing and experience efforts. Subscriptions require regular communication with customers. Experience doesn't end when customers subscribe, so the CX team has to deliver a consistent experience throughout the lifecycle. This means incentivizing customers to join and renew, securing signups, and keeping customers engaged once they subscribe.

Measurement

The best subscription models regularly measure engagement to monitor success. Subscriptions create many new data points, such as how many customers join and renew or cancel the subscription. Beyond just the numbers, seek to understand the reasons for the changes. Subscription models often require adjustments and flexibility, especially in the early stages.

Change management

For a subscription to be successful, all teams need to communicate and collaborate. Change management is also often needed to get people on board. Explain the potential of a subscription model and each team and employee's role in its success. When people understand the why and see the big picture, they are more likely to be engaged.

A subscription model isn't a golden ticket to success — it requires careful strategy and consistent execution. However, when companies find the right fit and relevant subscription for their customers, the model can be a differentiator and build an incredible experience.

About Wendy Karlyn

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Chief Client Officer and Global CPG/Retail lead at Rightpoint. 27+ years of partnering with clients to solve their most important strategic marketing, digital transformation and commerce challenges to drive revenue growth. Global clients include General Motors, Chrysler, Ralph Lauren, Gucci, Luxottica, Proctor and Gamble, Dunkin' Brands and Best Buy. Successful track record building cross-functional teams and evolving organizations. Deep understanding of organizational design and modeling teams for success both at agencies and with global client organizations.

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