A world of monthly subscription boxes awaits!
First lets talk about the Subscription Business Model. This is a model that was first used for Newspapers and Magazines. The Consumer subscribes to receiving some product from the business. The consumer will have a recurring payment each term (Month, Bi-Monthly, yearly, etc), in exchange for the product or service offered by the business. The idea here is a mutually beneficial relationship between the business and consumer. The business benefits by decreasing their risk, they know that they will have a constant stream of revenue from the consumer. The consumer benefits because they receive to their doorstep products that they would otherwise have gone and purchased, therefore saving themselves time.
Today’s Business’ are able to utilize this business model and spread it across more segments, beauty products, food, clothing, household needs, arts and crafts and many others. The internet mixed with logistics companies has grown the spectrum of what is possible, that is where Subscription Boxes were born.
Sounds Great right?
“That sounds like a great idea!”
“I can have items that I would otherwise purchase come directly to my house?”
“Why doesn’t everyone sign up for some of these?”
We were thinking the same thing, then we looked into it a bit further. This is what we found:
Not all boxes are created equal!
There are some really great boxes offering the customers value for their subscription. They realize they would like to have the customer for the long term. They realize that by creating value for their customers, by adding useful “gifts” to the box, adding extra personal details (like hand written notes), having consumable items that need refilling, not shipping more of the same thing. These are boxes that consumers look forward to getting! They are not constantly concerned over what else they could be doing with that extra money each month. When customer is happy with their box they will continue in the relationship.
Then there are those boxes where it is obvious the business is in it to turn a quick buck! They will send you a box of their worst selling products, the stuff they can’t get off the shelves at retailers. Continue to send more and more of the same product when clearly you couldn’t have consumed the products from the last box. They just keep throwing things in the box thinking that their customer will say well I’m receiving x dollars more than what I am paying so there is value in it. What the Business is not taking into account is the customer does not perceive useless products as added value, so in their calculation a lot of the garbage in the box is not counted. In these cases where is that mutually beneficial relationship? Well there isn’t one and so the entire relationship will break down, all that will be left is hurt feelings and resentment. And even though not everyone is smart enough to stay away from a bad relationship! When it comes to Business -> Consumer relations, the consumers are smart enough to stay away! And not only that they will tell all their friends about a bad experience!
Newspapers and Magazines are quickly consumable.
There’s a reason why Newspapers and Magazines used this type of model. After reading the paper once or maybe even twice (not sure why you would need to) the consumer then wants more new information, new articles to look through new pictures to take in. The companies sending out the Magazines and Newspapers would have quickly failed if you continued to send the same Newspaper or Magazine again and again. Not to mention those companies that have advertisements would feel like they were getting burned having to pay for new adds in the same form.
If a subscription box does not have something that the consumer (hence the name) is consuming (using, eating, reading, watching, etc.) then what are they getting out of it? A whole lot of junk piling up. Now there are some people that how should I say it… Hoard a lot of stuff! But for the general public junk piling up equals something they don’t need or want.
Consumers can become overburdened.
One blinding mistake that some business do not realize: If a box ever becomes a hassle the business has instantly lost its value proposition to the customer. The whole idea of the subscription business model is to alleviate a consumer from going out and purchasing items that they may purchase anyway. Generally consumers will purchase more of a consumable product when they are very low or empty. If you burden your customer, you will loose your customer.
Creating value for the Consumer.
One of the best ways that subscription boxes create value for their consumers is by having products delivered right to their door. No hassles, don’t have to think about it, just shows up right when you need it. But in most cases that is not enough! Some subscriptions boxes have taken away most of the control from the consumers, so they can send out one size fits all boxes. Much easier for the Business to create and helps their bottom line… Problem is… It does not equal the same for the customer, They have lost their ability to choose, therefore they might not like or want what they are receiving, and in most cases they would then have to pay money to ship it back to the business. Then there is the whole hassle of finding someone to contact from the business, waiting on a phone to find out their return policy, waiting to hear back if its approved, then having to pack up the products, pay for it to be shipped back, and then wait for their bank account to be credited! Sounds exhausting! Would have been much simpler for the business to just send stuff the consumer is going to want.
A box that has instant added value is one that the customer can customize, at least in some way to meet their specific needs. Be it being able to pick a brand of product they receive, the frequency they receive their orders, or in some cases being able to choose their entire shipment.
Simply adding a personalized note saying thank-you can mean wonders to the customer receiving it. Adding to the anticipation of each box they get to receive can go a long way to build the value that the customer perceives.
“Gifts” added to the box that are specifically customized to fit that person can go a long way!
Basically what it all comes down to is building a relationship between the business and customer. If the customer can see the value in the subscription they will continue. If they trust the business, that value will intrinsically exist for them.
The Best Boxes
The best boxes:
Allow for customizable delivery cycles (often with the option to suspend or skip a delivery at little to no charge)
Boxes that have consumables that expire in time for a new shipment, or will ship different products in the place of ones not consumed
Allow the consumer to retain some control of what products they are receiving (some consumers are very brand loyal)
Have free return shipping
Great customer support services available
Ability to withdraw from the service in a timely fashion
Customer perceives box as being valuable