How to pick the right subscription model for your business (in 2020)
From Netflix to meal boxes, almost everyone is subscribed to something, and with subscriptions growing up to 100% every year, there's probably an opportunity for you to launch one of your own.
This is where you start: picking what model you want to run. After examining dozens of top performing services from our base of Bold Subscriptions users, we discovered that almost every subscription can follows at least one of seven models. And we broke them all down for you.
Whether you already have a subscription up and running or you want to launch your first offering, you can learn something new by studying how other businesses use various models to serve their subscribers. If you want a deeper understanding of each model, including dozens of real-life examples, download our free ebook 7 Subscription Models to Master.
One of the most valuable thing we discovered is this: the most sucessful services offer more than one type of subscription.
Or, if you have almost any kind of subscription, you can take from the exclusive model and layer in added benefits that go beyond products, like subscriber-only discounts and content.
While subscriptions are more popular than ever, they’re also more competitive than ever. Subscribers are spoiled for choice, which means they'll probably go for subscriptions that:
- Provide both flexibility and control
- Offer good value for their money
- Create an excellent unboxing experience
- Make them feel like a valued or VIP customer
- Fits their lifestyle, needs, and budgets
It’s that last point we’re diving into today.
Many of the most successful subscription businesses out there offer more than one type of subscription model because they understand that one-size-fits-all rarely works.
This could be as simple as offering different sizes, frequencies, or price points for your subscription. But it could also be as complex as offering different types of subscriptions too.
Take Tubby Todd Bath Co. for example. They have an entire page on their site dedicated to subscriptions and right off the bat, you can see they’ve got a few different options to choose from. Love surprises? Sign up for their Bath Bomb Subscription, which sends three natural bath bombs to your front door as part of a mystery box-style subscription.
But you can also get a recurring delivery of bath and body care essentials, whether as part of a bundle (for bonus savings) or as standalone products.
And if you really want to give people a reason to stay subscribed, give them added benefits that they won't want to give up even if they lose interest in another part of your subscription.
A great example of this is Amazon Prime. Not only does the subscription offer free shipping, subscribers get an exclusive video streaming service, cloud photo storage, savings at Whole Foods, and even 20% off baby products. So if somebody stops using one part of this membership, they'll probably stick around for the other benefits.
Subscribers to Amazon Prime get a lot more than free shipping.
So what are the different types of subscription models you could be offering? Keep reading to find out — or level up your expertise by downloading our free ebook: 7 Subscription Models to Master.
Three core subscription business categories
While we’ve identified seven types of subscription models, they all fall within three core categories:
- Recurring replenishment
Provide customers with effortless, automatic refills — the simplest form of a subscription.
Surprise and delight customers by providing new items or highly personalized experiences.
Provide lower prices or other members-only perks for a recurring fee.
Under each of these categories, you’ll find at least two different models to get inspired by, but keep in mind that these are just guidelines. We’ve seen fantastic subscriptions that borrow elements across models and categories to create their own unique offering.
We put this model under our Recurring Replenishment category. About a third of of all subscriptions follow this simple recurring product model: A customer chooses to have your product delivered to them on a recurring basis, whether weekly, monthly, or any other interval you offer. Most recurring product subscriptions are for consumable items, such as food and beverages, personal care items, household cleaning, or beauty products.
- It’s a simple way to start offering your products as subscriptions.
- When customers subscribe, they end up spending more in the long run compared to one-time purchases.
- It can help you determine which products are performing well to guide expansion of your subscription offering.
- You offer any kind of consumable products.
The biggest challenge with this model is to get customers to make the leap from one-time purchases to recurring orders — and to stay there.
One of the easiest ways to get people on board is to offer savings on a recurring subscription that refills a minimum number of times — like Amazon’s Subscribe & Save option.
Another simple strategy is to default your product quantity to ‘Subscribe’ (which you can do in your Bold Subscriptions app) so customers are aware that you have a subscription offering, and of the savings it can bring them, while still being easy for them to just buy it once.
Of course, there are a lot of other smart ways to upgrade your recurring subscription model to keep customers locked in for the long-term. Check out our free ebook for nine more ideas to take your subscription to the next level.
This type of recurring replenishment model hooks subscribers up with an amazing introductory offer to ease them into a full-priced or standardized recurring order.
There are two different ways a convertible subscription can work.
- High to low: People can sign up for a starter kit, like the teeth whitening kit glowup offers, that converts to refills for the main product. With this strategy, the introductory offer might be more expensive, but has more value, like a discount off getting the product as one-time purchase. You'd also want to price the products in that first order lower than they'd be if shoppers bought it à la carte, giving another incentive for them to subscribe.
- Low-to-high: Subscriber sign up for discounted or free introductory offer, like a trial size or promotional price on a first purchase, that then upgrades to a full-size product or regular pricing on all recurring purchases. A simple example of this in Netflix's first month free.
You can use Bold Subscriptions to create any type of convertible offering imaginable, and it can be an easy way to recruit subscribers right away, particularly if you offer a steep discount on refills at the same time of your initial purchase, and fully-priced refills on all orders after.
- It gives customers the chance to ‘try before they buy’ while feeling like they’re getting huge value upfront.
- It eases the transition from one-off customer to subscriber with a strong first impression or a low commitment first order, both with the comfort that people can easily cancel.
- You can test different products as subscriptions with sample sizes to measure conversions and better forecast inventory.
Can work for you if:
- Consumers perceive your subscription as a high commitment (try before you buy)
- You sell a product that has a refillable element (aromatherapy, coffee, make up)
Serving up multiple products? Try the last recurring replenishment model: build-a-box. Let customers curate their own subscription collection from order to order. Most people associate build-a-box subscriptions with meal kit services like Hello Fresh, where you’re given a set number of items to add to your ‘box’ from a selection of products — but it can go beyond food.
We’ve seen plenty of creative applications of build-a-box, from designing your own soap collection, to shipping a crate of wine, to creating a custom order of smoothie cubes like evive does. With Bold Subscriptions’ Build-a-Box feature (available on the Advanced plan only), you can come up with your own version.
- It provides a fun, interactive experience and the customization many shoppers want.
- It gives subscribers full control over perceived quality and quantity.
- Ensures your service remains fresh and interactive, particularly if you continue to add new products for selection.
Can work for you if:
- You offer a wide array of consumables that complement each other.
- You offer different flavors or varieties.
- You add new products to your inventory often.
One creative idea for this style of subscription? Let customers add on more than your set ‘box price’. This could be a discounted rate on every additional item they add on from the same collection, or allow them to add on another product from your store entirely.
For example, a build-your-own soap box could provide discounts on lotions or hair products they also offer. You can find more hidden ways to increase order value and customer loyalty in our free ebook.
This is the first model under our curation category. When people hear ‘subscription boxes," this is probably what they envision: a collection of items that are curated on a specific interest or subject that could be as broad as something like FabFitFun’s ‘lifestyle’ boxes to as niche as Henny+Roo’s chicken keeping box to MoonBox’s celestial wellness box.
Curated boxes are appealing to customers because of the mystery factor and experience of discovering new products. But this can create a few potential stumbling blocks for merchants, including what to do with leftover month-to-month inventory, and potentially losing subscribers due to a lack of choice or control.
- They can create viral buzz for your brand, especially if you have a good unboxing experience and a product selection that resonates with your audience.
- You can potentially make money from suppliers for the promotional value your box provides.
- It streamlines revenue and inventory forecasting by offering a single product while giving you complete control over the contents and costs.
Curated boxes and monthly ‘mystery’ clubs are pretty similar, with one key difference. A curated box is usually an entire business model on its own — like industry-leaders Birchbox or Causebox. Monthly clubs offer a similar experience of discovering new products, but from a single retailer (whether multi-brand or a single brand).
John’s Crazy Socks is a great example of this, with their ‘Sock of the Month’ club. This social cause-driven business sells hundreds of socks à la carte, but those who believe in the company’s mission can also just subscribe to receive a fun pair of socks every month (check out our case study on John's Crazy Sock to learn about their recipe for success).
- Gives your core business another revenue stream.
- You can test drive new products or lines for market feedback.
- They’re very giftable.
Can work for you if:
- You offer different flavors, colors, or other varieties.
- You have a loyal customer base.
- You release new products regularly and want to test them out.
If you don’t already have an ‘of the month club’ model for your business, now might be a great time to start. It’s a fun way to engage with your most loyal customers while also generating predictable revenue for your business.
The first subscription model under our access category makes people feel, well, exclusive.
We mentioned above that some subscribers expect to have a virtual red carpet rolled out for them, and it’s true — you can apply an ‘exclusive’ model to just about any other subscription model. The main thing you’re providing with an exclusive subscription model is more than just products, similar to how Costco or Amazon Prime provide other benefits to their subscribers beyond physical goods.
This could be anything from unlimited free shipping to a library of virtual products to pre-sale opportunities. Or take a page out of Kilikanoon’s exclusive VIP club and invite your subscribers to premium wine tastings and other special events throughout the year.
- It allows you to layer additional benefits into an existing subscription model.
- It creates added (and somewhat incalculable) perceived value by not just focusing on commodity acquisition of a product.
- Can help build a community of advocates, not just customers.
If you have any other benefits you can offer subscribers, from special discounts to meal plan templates to members-only content, it might be worth trying. Learn more about exclusive subscriptions in our free ebook.
Brick & Mortar
On a similar note to exclusive subscriptions, a brick & mortar subscription involves providing your subscribers with exclusive benefits, but offline as well. A classic example of this is a membership-style model to something like a museum or theme park, where members not only pay a flat rate to access the facility, but also usually receive other perks like discounts on concessions, the gift shop, or parking.
Frank And Oak started online, but after opening up over fifteen brick & mortar locations, they started offering a style box subscription. If they wanted to make this plan extra appealing, they could layer in other exclusive in-store benefits to subscribers — like members only access to new products, real life events, or a free style consultation.
To use an ecommerce example, an ice cream shop could recruit subscribers to pick up (or have delivered) a pint of ice cream each month in an exclusive flavor, as well as offer discounts on any additional pints they purchase.
- Can create another revenue stream for a businesses that have physical retail store or other spaces.
- It can provide a complete ‘membership-style’ program.
- Drives brand loyalty and reduces churn by providing a range of online and offline benefits.
If you’re not already doing a subscription model for your brick & mortar business, why not start? Many consumers like to pledge their support for local business, and a subscription model is a perfect way to do it.
There you have it! Seven subscription models to consider — and remember! Multiple subscription models are not only totally okay, they’re a great way to give subscribers more choice, and more reasons to stay on board.
Get inspired on all things subscriptions with our ebook: 7 Subscription Models to Master. Let us know what you think of it in the comments below.