In this piece for FastGrowthBrands, Olivier Schott, CMO, Scalefast, outlines the challenges of cracking the subscription business model. Today’s e-commerce world is riddled with DTC subscription services. From razors to pet supplies, to all the ingredients needed for a full meal, consumers can get almost anything delivered to their doorsteps on a regular basis. When subscription services first popped onto the scene, only a few brands – like Dollar Shave Club and BlueApron – existed and now, there are over 7,000 available. The exclusivity of these brands is almost entirely gone and, because of that, many consumers are wary to jump on the bandwagon, presenting challenges for DTC brands looking to get into the space. However, if done correctly, there is ample opportunity for them to succeed and break through the subscription clutter.
The Main Challenges of Breaking Into the Subscription Mix
While subscription services appeal to the modern consumer’s desire for a convenient – yet also personalised – shopping experience, there are factors that cause hesitation. Expectations are high, attention spans are decreasing and there is a high churn rate. DTC brands looking to break into the space must overcome a variety of barriers and obstacles.
For DTC brands – both large and small – there are two overarching challenges that will face a brand no matter its size: standing out amongst competitors and retaining customers.
Since 2013, the subscription services portion of the e-commerce world has grown by more than 100% each and every year. There are always new brands and offerings available, so a key challenge for DTC brands will be standing out and differentiating themselves from competitors.
To combat this, brands must bring a strong concept to the table, as well as a clear niche and specific audience. However, because subscription models and services are already considered a niche portion of the e-commerce market, brands should tread carefully. It’s important that a DTC brand realises that, at the beginning, the focus should be on providing a value. The product or service offered should not be too broad, making customers think they don’t need it, or too niche, alienating others. Brands should take the beginning stages to learn about their desired customers, so at the right time, scaling to their preferred marketplace is an easy and smooth transition.
Once noticed and present in their desired space, the next major challenge for brands is retaining their customers. This problem is incredibly unique to the subscription model because, even though more than half of online shoppers who consider a subscription service end up subscribing, 40% typically cancel said subscription; a phenomenon that can be attributed to subscription fatigue. With the plethora of services available via subscription, consumers oftentimes jump from brand to brand or revert back to standard models once burnt out.
Overcoming the Challenges and the Clutter
With both attention and retention posing challenges for DTC brands looking to make the subscription model jump, brands must find ways to differentiate themselves across a variety of categories. This differentiation could be something as simple as Instagram-able packaging, or as complex as enhanced security measures around a recurring payments or credit card information.
However, the most important keys to success for brands are simple. In order to see success, these brands and models must provide an exceptional customer experience, commit to full transparency and have outstanding customer relationships.
To ensure retention, customer experience across all aspects of a subscription model must be superb. To reach peak customer experience, a DTC brand’s approach must be two-pronged. First, in order to keep the “warm and fuzzy feelings” alive across the entire line and with each customer, a brand should utilise emotional marketing, as a “surprise and delight” factor. Second, a brand should incorporate tools to preemptively remove friction for customers. For example, leveraging a feature like a card auto-updater to update an expired credit card automatically instead of having to pester the customer, making the process seamless and easy.
Transparency from a DTC brand is also key to its success and longevity. Consumers are understandably wary to commit to a recurring charge or service, so providing as much detail as possible is crucial. Customers should have insight into the price of the subscription, how often they will be charged, cancellation terms, benefits, etc., directly from the brand itself, as well as a clear path to finding this information on their own, if needed.
Similarly, customer relationships also play an important role in the success of subscription models and services. Conversations with a consumer never stop and brands making the jump should take advantage of that. This can be through personal conversations with customers, check-ins or even the option of an open, continuous conversation. With subscriptions services, it’s important that a strong relationship be secured from the start and that it is nurtured and maintained throughout the entire customer journey to keep them connected.
In addition to experience and relationship, DTC brands looking to make the jump should also be focused on the smaller details for each customer. Details like customisation and personalisation, timing the deliveries to the customers’ preferences and establishing a rewarding loyalty programme can go a long way with the commitment and overall lifespan of a customer.
Subscription services may be everywhere, but their growth shows no signs of stopping. As convenience and ease-of-use become more and more important, it’s likely that subscription services will soon provide each and every product a consumer needs. Now more than ever, it’s important that DTC brands looking to break into the space make smart, thoughtful decisions that will not only delight customers, but also create the bond and relationship that is crucial within this space.