If one-off sales are good for business, repeat sales are several times better. This guide explores the booming subscriptions trend among B2C and B2B brands – and offers actionable tips on how to successfully sell your own products and services as a subscription.
Subscription services are on the rise
There’s nothing new about subscriptions. Publishers started using the model to sell books and publications of other types in the 1600s, and all manner of products and services have been sold in this way ever since – from milk deliveries (starting in Victorian times) to software products in the digital age.
But as of 2022, subscriptions are booming in popularity like seldom before. According to Finextra, 65% of UK households are now signed up to at least one subscription service. The same publication values the UK subscription market at £323 million.
Tip #1: Target your marketing towards subscription users
Subscriptions are highly popular at the moment – but they’re not for everyone. We’ve already seen that according to Finextra, almost two-thirds of UK households currently use a subscription service. That may be an impressive figure, but it also reveals the fact that most Brits are not currently subscription users, bearing in mind that the average household size in the UK is 2.4 people.
So, when marketing a subscription service, it could be beneficial to specifically target subscription users and household decision-makers – the people who are already sold on the idea of subscriptions, and those who are most influential in deciding whether their household will sign up to a subscription. (The latter group is most relevant to subscription services aimed at families, such as ingredients boxes.)
You can target people who belong to these groups, within a broader prospective audience, through approaches such as targeting social media ads towards people with an interest in subscription boxes, or market research tactics such as customer surveys.
Action it!: Use market research and martech to find and target your marketing towards people with an interest in subscription services.
Tip #2: Start the subscription generously
Starting a subscription with a ‘bang’, by including high-value extras or items that bring the customer into a proprietary system, can be an effective technique for securing subscribers who stay loyal beyond the initial purchase.
For instance, a food and drinks subscription service might offer subscribers a wooden storage crate with their first month’s subscription, before switching to cardboard packaging in subsequent months. This gives the subscriber a high-quality, branded item to keep long-term – even though most of the items in the subscription are consumables. We can see the same tactic at work in magazine publishing, too: e.g. new subscribers to The New Yorker magazine get a free tote bag when they sign up.
Magazines are ephemeral, but The New Yorker gives new subscribers something to keep: a tote bag.
Some subscription services go so far as to sell new subscriptions at loss-leader prices. In a loss-leader pricing strategy, the brand takes a loss on the customer’s initial purchase, in the expectation that the same customer will make further, profitable purchases as a result of the initial loss-leader purchase. In a subscription context, this is sometimes done by offering the subscription at a discounted introductory rate, after which the subscriber pays full price. The brand pays a price for acquiring the customer – but this is more than made up for in long-term subscription payments.
Action it!: Devise a tempting initial offer to attract new subscribers. Consider providing a bonus item that takes a permanent place in the subscriber’s physical or digital space, or even which brings them into a system that rewards repeat subscriptions.
Tip #3: Explore the possibilities of partially addressed mail (PAM)
Partially addressed mail – or PAM, for short – is a type of direct mail which is widely used for marketing subscription services.
With PAM, printed marketing materials such as leaflets, brochures or sales letters are delivered to the homes of a targeted audience. The recipients are chosen based on their physical proximity and/or similarities to a brand’s existing customers.
Now, you may be thinking this approach sounds risky, in a post-GDPR world. But PAM is, in fact, compliant with current data privacy regulations. This is because the mail is anonymously targeted, with partial addresses that use an anonymous salutation such as ‘The Householder’, instead of the recipient’s name.
Part of why PAM is useful for marketing subscription services, is that many PAM services provide the capability to send mail to homes in the same postcode – and therefore on the same street – as a brand’s existing customers. This provides a way of reinforcing a subscription service’s messaging to people who are already aware of the product – either through talking to their neighbours who already subscribe, or through seeing deliveries being made in the neighbourhood. So, PAM helps subscription providers contact people who may already be thinking about their service.
Action it!: Research PAM to explore the possibility of marketing to people who live near existing subscribers.
Tip #4: Content is king-maker
A subscription can become a big part of a subscriber’s life – something they use and think about every month, or on an even more frequent basis. It’s a close relationship that calls for deep, meaningful interactions between brand and customer.
One of the best ways to keep in close contact with subscribers is content marketing. This can be delivered in different mediums, to suit the relevant subscription. Many subscription services which deal in physical products – such as Beer52, which bundles in a top-quality magazine with its subscriptions. This plays a crucial role in fleshing out the identity of the brand, and can inform and educate subscribers about other items included with the subscription. Instead of merely consuming, the subscriber gets to enjoy the subscription as an insider. Brand and customer become part of a club, with shared knowledge and mutual values.
In digital subscriptions, privileged access to digital media and communities often plays a similar role to that of printed materials in a physical subscription. For instance, the SEO specialist Moz gives its ‘Pro’ subscribers access to a Q&A forum.
When you’re selling a subscription service in a competitive vertical, it can be hard to stand out in terms of product without narrowing your focus to a very specific niche that limits your appeal to new subscribers. Exceptional content can be the king-maker that helps to elevate a subscription above the rest.
Action it!: Create a superb content offering that complements your subscription service, and which educates and informs subscribers to turn them into insiders.
Tip #5: Find your place in the subscriber’s ecosystem
Every person lives within their own ecosystem, made up of physical and digital places, people and things. A good subscription service understands its place in this bigger picture, and works in-tune with the other components that play into a subscriber’s life.
This may all sound a little high-minded – but it’s really just a matter of getting practical details right, from the customer’s point-of-view.
Payments and delivery are key priorities. You need to be able to take the subscriber’s payments and deliver their subscription in the ways they find most convenient. This means you need to find out which payment methods and delivery options are preferred by most of your audience, and then implement support for them (assuming they are feasible for you operationally and financially).
Another key part of the subscriber’s ecosystem is technology. Which devices, applications and other technologies do they use, and how does the subscription interact with these? Even physical product subscriptions should accommodate the subscriber’s tech preferences – e.g. by offering service updates via their preferred digital communication methods. For digital subscriptions, there’s often an even greater need to accommodate other technologies used by the subscriber – e.g., through integrations with third-party applications, or through compatibility with a wide range of digital infrastructure such as operating systems and web browsers.
And then there are the finer details: priorities that may be important quite specifically to the customer, such as values, religion, environmental concerns and recycling, aesthetic taste and socio-political identity.
To sum up this expansive point as briefly as we can: think about all the ways your subscription makes contact with the subscriber’s ecosystem of people, places and things, and how you can make each connection as positive as possible.
There are lots of tools to help us do this in the marketing playbook. These include:
Action it!: Do thorough market research to understand your subscribers’ lifestyles – including their preferred methods of payment, delivery, communication and administration. Design your service to suit.
Tip #6: Work on your subscriber retention tactics
Every subscription service will lose a percentage of its subscribers from month-to-month, no matter how brilliant it may be.
But you can keep that percentage relatively low, by formulating an effective subscriber retention strategy.
Tactics for subscriber retention include:
- Leverage your subscriber content. As we’ve already discussed, content marketing can be a powerful tool for communicating with subscribers. You can also use it specifically to retain subscribers, e.g. by sending updates on how a person’s subscription has benefitted the brand, related causes, or the subscriber themself.
- Auto-renewals. It is common practice to set up a subscription to auto-renew, meaning the subscriber is automatically re-subscribed to the service when their subscription period ends. This can reduce the risk of a subscriber re-considering their subscription when their subscription cycle is close to finishing. Just be sure to define your auto-renewal policy in your subscription terms and conditions – and do give customers the option to opt-out of auto-renewal, whether they do so themselves via a digital subscription management dashboard, or they get help from a customer service agent.
- Customer education. You subscribers may need help to understand how to get the most out of their subscription. Set up targeted communications to inform them about features that will help them enjoy the subscription to the full.
- Surprise and delight! Who doesn’t love to receive an unexpected gift every now and then? Surprise and delight your subscribers with bonus items and add-ons.
Your subscription service should use its own, tailored subscriber retention strategy, including any of the above tactics – or totally different ones.
The key to formulating the right strategy is to observe and investigate the reasons why people unsubscribe from the service. This can uncover insights that will help you devise ways of preventing many unsubscriptions before they happen.
Sometimes you’ll be able to identify unsubscription factors from the information you have on each customer. Were they involved in a customer service case before they unsubscribed? Or, if it’s a digital subscription, did your analytics record a drop in the subscriber’s engagement? Some subscription services seek further detail by including a short survey along with email/online confirmation that a customer has successfully unsubscribed.
Keep in mind that customer retention strategy is an ongoing process. It’s important to keep monitoring and analysing cancellations, so that you can identify new unsubscription factors as they emerge.
Of course, some subscribers will cancel for unavoidable reasons. A person’s financial situation could have changed, or they may have simply moved on to other interests or priorities. Brands should be conscious of this reality, especially when communicating with lapsed or lapsing subscribers.
Action it!: Gather and analyse data on the reasons behind unsubscriptions. Formulate a retention strategy that combats common drivers of cancellation.
In about 2,000 words we’ve covered just six tips on how to sell subscription services. Each tip is a big marketing project in its own right, and will take time and care to implement.
Our advice is that you should pick just a few of the areas we’ve covered – ones that seem highly relevant to your current situation – and put all your efforts into perfecting those aspects of your service.
With proper focus, you’ll nail your targeting, marketing commuications, retention strategy and subscriber experience. The gains you make in each area should drive greater success that will make the other areas easier to tackle.