The Essential Foundations of a Subscription-Based Company - Part One

Parfumado Subscription Model

Subscription-based sales of physical products are certainly in vogue in 2018. In the years following the successes of early innovators like Dollar Shave Club and Birchbox, subscription-based services sprang up for just about anything. From ties to toys, spices to stickers, and everything in between, if there’s a buzz around something it’s quite likely there’s a subscription service for it. In this three part series, we will run through the essential foundations of a subscription-based company.

The advantages to the subscription-based model are numerous - most notably that a business has a guaranteed, recurring cash injection every week, every fortnight, every month etc. depending on their specific schedule. Combine this with wonderful simplicity and flexibility, and it is easy to see why subscription-based companies are now more popular than ever. In order to benefit from these advantages, however, each and every subscription must be built around very specific traits and the first of these is the unique selling point. This is the focus for part one of our series.

only those with some unique quality have a chance of standing out in the crowd

Just like any other company, the USP is vital for a subscription-based company to differentiate itself from the competition. As already alluded to, the subscription-based market is becoming more and more saturated and hence only those with some unique quality have a chance of standing out in the crowd.

As we will see, the USP can be either the product itself or the method through which it is sold. In either case though a USP is the answer to some of the specific disadvantages that subscription-based companies face. Here we will go through two of these specific disadvantages:

Any subscription-based service must convince a potential customer not only that they want to buy a particular product, but that they want to buy it on a recurring basis and that doing so via the subscription is more worthwhile than going to the stores. With so many options available to any customer nowadays, it is difficult enough convincing them to buy your product without having to overcome these two added difficulties hence subscription-based selling may appear to be an uphill struggle. But this disadvantage is negated if you have a killer product or a killer method for selling it.

To exemplify this, let’s take a look at two examples of subscription-based companies and their products/methods:

Bloomon Subscription Model

Image taken from Bloomon facebook page

Bloomon is a Dutch company that sells flowers through a subscription service - customers can arrange to have a bouquet of their choosing delivered to their door on a regular basis. Whilst the product may not appear totally unique (they are not the only people to sell flowers, after all) the team at Bloomon have created a unique sales method. They identified a problem within the flower industry - namely, there is too much time between grower and buyer which dramatically affects the quality of the flowers. After being cut, flowers are sold at auction and then lie unused whilst waiting for a customer to buy them.

they can market their flowers as top quality, fresher, longer-lasting and better than those available elsewhere, giving them a very strong USP

By using a subscription service Bloomon can change this process because they know exactly how many flowers they need and exactly when they need them - there is no need for the flowers to be cut until they are needed because Bloomon know in advance precisely when this is. They are able to buy straight from the grower and reduce the time between the flowers being cut and being placed in the vase. Hence they can market their flowers as top quality, fresher, longer-lasting and better than those available elsewhere, giving them a very strong USP. Because of this Bloomon have been incredibly popular and their successes are clear to see as the 2014 start-up based solely in the Netherlands has now expanded to Belgium, Denmark, Germany and the U.K.

Secondly Dollar Shave Club, and subsequently other shaving subscription services such as Harry’s and Boldking, have identified that razor blades are not only something for which there is a continuous demand but are also very expensive. Their USP is therefore twofold - they have made razor blades and other shaving products much cheaper than store price and removed the hassle for the customer to have to think about purchasing them every week, fortnight, month etc. It is these USPs that have convinced customers it is much more worthwhile for them to buy their shaving products through subscription services rather than heading to the stores. The USPs have removed the specific disadvantage that subscription-based services face and made the services very successful.  

Harry's Subscription Model

Image taken from Harry’s facebook page

A second disadvantage that subscription-based companies must face is that some customers feel as though their control is being taken away when signing up to receive a box of pre-picked products. Receiving a box full of the same items as everyone else may feel a touch bland or impersonal and drive people away from a subscription service, in favour of choosing the products themselves in a store. But this disadvantage is again nullified by a unique sales method. The better  subscription services offer customers the opportunity to have the box they receive specially suited to their needs, routines, wishes etc. (usually through filling out some sort of questionnaire) and therefore create a much more personal product that the customer can relate to.

A great example of this is the difference between Ritual and Care/Of, two subscription-based vitamin suppliers. The former supplies an all-in-one vitamin capsule that has been specifically designed and contains all of the vitamins that “90% of women are missing”, and whilst this product is unique in itself and has been very successful it still has to answer some questions over whether it really does provide the necessary vitamins for every individual case. Care/Of, on the other hand, ask customers to answer a list of questions concerning their lifestyle, at the end of which they provide a list of all the vitamins required in this specific case and then organise a recurring delivery of said vitamins to the customer’s doorstep. The company have proved very popular because they have tackled the problem of potential blandness by creating a unique method for selling their vitamin subscriptions.

Care/Of Subscription Model

Image taken from Care/of facebook page

So when deciding to start your own subscription-based company, or whether a subscription service is suitable for your product, ask yourself whether you really have a USP to differentiate yourself from the competition. Remember, it doesn’t matter if your product isn’t completely unique as long as you have a unique way of selling it to the customer, one that will make them want to buy from you on a consistent basis rather than head to the stores themselves.

In the next part of this series, will we be looking at the pre-launch campaign for a subscription-based company. We will discuss why pre-launch campaigns are essential for future success, and look at how to incorporate specific features of a subscription-based company into your pre-launch.

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