Age of the Automated Service

Subscription services are sweeping the globe. Where subscriptions were once limited to magazines, newspapers, and wine of the month clubs, now the sky is the limit when it comes to what you can have delivered to your door every month. As the leading provider of curated cosmetics boxes, Birchbox has been called the pioneer for recurring revenue in retail sales. Where it once stood alone in the space, it now competes with dozens of businesses with similar offerings.

This ingenious sales strategy is not limited to retail. Beyond consumables such as razors and pet supplies, there are several types of subscription services including buffet content (think Netflix and Hulu), piece of mind models (identity theft monitoring services), front-of-the-line services, and surprise box models (Ipsy, StitchFix).

Subscription services have boomed lately due to the reciprocal relationship it creates between provider and customer. The customer may gain convenience, delight, or cost savings while the provider enjoys repeat business and strong customer relationships.

To protect this relationship, providers must walk a fine line to ensure that the customer feels committed, but not trapped, as this can instil a false sense of loyalty and can ultimately hurt the brand. Thinking of offering a subscription model to your customers? Consider these best practices:

1. Lay the foundation. Make sure you have an established brand with a loyal following, as well as the means to maintain constant output.

2. Be unique. What you are offering must be either limited or cannot be found elsewhere, fills an unmet need, or solves a problem.

3. Communicate the value. If customers feel what you offer is commoditized (they can get that offering anywhere else) they will just move on to a competitor. Focus on what makes you offer stand out.

4. Relationships are a two-way street. The foundation of a successful subscription service is the relationship with the customer. Open communication upfront regarding charges can help avoid a situation like the Netflix pricing debacle of 2011.

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