Imelda Marcos would love this. For $39.95 a month, your Shoe Dazzle VIP Elite Membership Account entitles you to 10-25% off your shoe order, plus free shipping and exclusive promotions. Your $39.95 subscription fee is deposited in your account to use toward your next purchase.
What you don’t spend -- even if you don’t spend anything -- rolls over in the account to apply to a future purchase. If for one month you don’t order any shoes and you don’t want to add to your balance, you can skip the payment.
According to Shoe Dazzle founder Brian Lee, selling footwear using this subscription model “allows you to establish long-term relationships with customers as opposed to selling them one pair of shoes and hoping they come back.” He says the idea came to him once he realized how regularly his wife bought shoes. Subscription selling also increases sales.
Birchbox delivers a monthly box of personalized beauty, grooming, and lifestyle samples to some 400,000 subscribers. The selections are based on a customer’s profile. According to Entrepreneur writer Matt Villano, Birchbox’s e-commerce sales are expected to triple this year. The conversion rate of customers who buy full-size products after receiving samples in their monthly box in some cases is more than 10 times the industry standard.
Beyond Book and Music Clubs
The subscription model is nothing new. Book and music clubs are classic examples of subscription models. The ease of Internet ordering has made a subscription service even more attractive.
And it’s not just hard goods stocked by big players like Amazon and Target. It’s snacks from NatureBox, meals from Blue Apron, razor blades from the Dollar Shave Club, and thank-you notes from Gramr Gratitude.
9 Benefits of Subscription Selling
- Just why are so many online businesses keen on subscription selling?
- Predictable future revenue.
- Eliminates guesswork to predict future demand.
- Improved inventory management.
- Promotes customer loyalty and long-term relationships.
- Regular opportunities to cross-sell and upsell.
- Greater ability to collect customer data and build more accurate profiles to predict buying patterns.
- Customer acquisition costs can be amortized over months or years.
- Automatic renewals tend to retain customers.
- Investors tend to like subscription models.
The Bottom Line
It’s easier to sell to a committed and established customer base than to attract new customers. That’s why the subscription model has become so popular among online retailers.
If you are starting a business, or have an established business, a subscription service offers so many advantages that unless you are selling products with relatively long lifespans, such as automobiles or air conditioning units, there’s really no downside to offering it.