Using a Paid Subscription Model to Create Recurring Revenue
One of the hottest trends right now is the subscription box, made popular by companies such as Blue Apron, Ipsy, and Bark Box. Need grooming products? There’s a box for that. Want to try a new wine every month? You’re covered. Everything from coffee to cosmetics can be delivered to your front door regularly. Subscription box services are a hit because they appeal to human’s desire for convenience and new experiences. The advantages of this model are not only the recurring revenue but also building loyal relationships with your customers and increasing the ability to grow your customer base.
Two types of subscription models include Curation Boxes and Replenishment Boxes, also referred to as “specific item.”
The curated boxes are centered around a specific theme or niche that includes new products or samples. It’s the anticipation and self-indulgence that make these especially fun. For example, Mystery Tackle Box is for the serious fisherman. Experts hand select “high quality” lures, bait and tackles for $15 every month or $165 for a full year with free shipping. About 65% of subscription services use the curation model. This option is more challenging to implement for a variety of reasons, which we’ll describe.
Replenishment boxes, on the other hand, enable consumers to automate the purchase of a recurring need. The replenishment model should be convenient and economical. Dollar Shave Club quickly comes to mind when we think of this model. “Dollar Shave Club made it so a guy would never have to go to a store to buy a razor again.” So, for $3 plus shipping, you’ll receive a new set of cartridges every month. This model is easier to implement in that it may be as simple as creating a recurring shipment option during checkout.