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4 Lessons I Learned From Over 30 Years in the Subscription Business

ByGeorg Richter,
business.com writer
|
Aug 24, 2017
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> Marketing
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A subscription program's success lives or dies by the customer experience it delivers.

Subscriptions are trendy these days. To some extent, we're all subscribers with monthly bills for phone, internet or insurance services. And it's difficult to find anyone who doesn't have a membership to Amazon Prime, Netflix or Spotify, or hasn't tried a subscription box from Dollar Shave Club, Blue Apron or Birchbox.

Given the current popularity of subscriptions – websites that had more than 21 million views in 2016 – it might seem easy to claim that subscriptions are a new trend or that the retail industry is experiencing a "subscription bubble." However, the concept of a subscription, membership or club program isn't new.

I've worked in the subscription industry for more than 30 years – a phrase that looks crazy when I write it out. It's always been an interesting part of the overall retail environment, but we are experiencing the biggest wave of subscriptions I've ever seen. Much of my experience has been with physical subscriptions, in which individuals pay to have goods delivered directly to their homes on a set schedule. Whether a subscription is digital or physical, the contractual nature and pay-to-participate model are common elements of each program.

I've learned many valuable lessons that are important in today's subscription industry, but one stands out as a critical key to success. When I was younger, I would have downplayed the importance of the experience being meaningful. Now, after spending years in the industry adapting to changes in technology, subscriber habits and more, I realize a subscription program's success is rooted in the customer experience.

About 41 percent of revenue in the retail sector comes from returning customers, a key element of subscriptions. You inevitably live or die by the customer experience across every touch point; no amount of marketing will lead a customer who had a bad experience to remain a subscriber.

Want to ensure your customers have smooth, successful experiences with your company at every touch point, from device to doorstep? Consider these four tips:

1. Make it personal.

My very first job was at a then-famous book club, Donauland, in Austria. The book club focused on three core principles that heightened the customer experience around reading: curation, value and personal delivery. Books were selected by specialists and delivered by local agents. My mother was a Donauland subscriber when I was a child, and she was truly proud to provide me with quality books. She told her friends about the service – not on Facebook but face to face. Belonging to that book club was important to her because it provided joy to her and her family.

That feeling of wanting to belong to something has always been a strong component of our society, but I believe our fast and rather disconnected digital world is enhancing that deep need. When managed properly, subscriptions can help generate that feeling of belonging that my mother, and other book-of-the-month club members, experienced.

Ensure that your brand's message really resonates with your consumers by including personal touches, such as using your subscribers' names when you communicate with them in emails, in the notes included in their deliveries or even on the boxes themselves. Take a page from Donauland's book and offer products and customer service experiences that make your customers proud to be members. Perhaps make it feel like they are part of something exclusive, but more than anything, make sure they feel they are part of something unique and personal to them.

2. Curate valuable experiences.

Our global connected retail environment has led to an explosion of products and brands. We have almost endless choices when we walk into a Target or shop on Amazon. But I've learned that having too many options is overwhelming; it's called the paradox of choice.

Having many products to choose from makes us uncomfortable, because we're never sure whether we've chosen correctly. Plus, we rarely get the professional advice we need when we shop online, despite the fact that there might be thousands of customer reviews about the product we're considering purchasing.

That's where curation comes in. Offer a small number of high-quality products that provide a valuable solution to your customers, and they will be more likely to stick with your subscription program. And if your brand has built trust with your audience, your customers won't have to suffer through the paradox of choice because they know you will send them the best products.

3. Emphasize transparency.

It's critical to understand that being transparent gives you a leg up and helps customers trust you. Thirty-four years ago, just two acquisition channels existed: door-to-door sales and print. Today, there are more than 20 channels – and a lot of channel conflict. Intelligent shoppers will take the time to determine whether an offer on your website is the same as one advertised elsewhere. They'll also research price differences between online and in-store offers.

Social media and complete transparency make companies more honest on different channels as well. Use your social media platforms to promote your company's values and messages as well as to respond to questions and criticism.

Build on that transparency by delivering great experiences without forcing members into anything they don't want. In addition, make cancellations easy, and avoid overcharging customers and charging late fees. Transparency and a painless cancellation experience are key to gaining new consumers. Many shoppers are now considering the cancellation experience when choosing new subscriptions.

4. Embrace technological advances.

Every industry's pace of expansion is driven by technology. I recently worked with a company that was dealing with the rapid shift from televised media and phone sales to digital media and online sales. Many elements were changing, including the subscription program for one of its brands. It needed built-in technology for rapid assessment and analytics of media spend, product offering and price. We needed to build the tools to know which influencer or TV spot made the most impact and how that impacted lifetime value and other key financials.

Technology has been the real driver of my career's evolution. I started in sales, then moved to marketing, then shifted to general management and financials. Out of necessity – and personal affinity for the tasks – my development and training included quite a bit of technical responsibility in systems, supply chain, distribution and customer service.

After so much work on the back-end operations and technologies of subscription businesses, I've come to believe back-end operations and technology is as important as front-end marketing, messaging and experience.

Your company must avoid the pitfall of focusing on solely creating demand, then on product and finally on back-end support. If a customer doesn't have a smooth interaction with your subscription program's infrastructure, it won't matter how great your product is. Only frictionless execution allows for profitability, and technology certainly plays the biggest role.

Ensure your website and delivery systems run smoothly. Keep your customer service team current on your products and services so they can be helpful when customers call with questions. Update the frequently asked questions section of your website regularly.

Brands in the new membership economy need to deliver overwhelmingly positive customer experiences to survive. If you keep up with technological advances, focus on personalization and curation and stay transparent, you'll find success in the new membership economy.

Georg Richter
Georg Richter
See Georg Richter's Profile
Georg Richter is founder and CEO of OceanX, which is reinventing the membership economy by transforming customer-brand interactions and providing a powerful engine for subscriptions. Georg specializes in implementing next-generation technologies and innovative software solutions that transform industries.
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