The subscription business model is easy to describe, but it is also difficult to get it right. The simplicity of the idea means that everything you can think of that you might purchase regularly has been pitched as a subscription idea — from socks to house plants. However, the difficulty of standing out and building a community of customers paying every month for your service means that many of these ideas fail.
I wrote last year about the types of innovation required to make a subscription business rise above the crowd. The three key ingredients are engaging with the customer, great customer service, and your analytics. Of course, you also need a great product that people want to receive regularly, but a great product alone will not work without the right approach.
I would also advise all subscription startups to think back to before the wave of subscription boxes. We have known about the subscription business model for decades with phone services, cable TV, and more recently streaming content services such as Netflix.
Before launching your fantastic new subscription box, think about how a company like Netflix attracts new customers and holds onto the ones they already have. It’s worth reading Marc Randolph’s book ‘That Will Never Work’ on how he started Netflix. In the beginning, they were trying to use the business model of a Blockbuster Video store but just transferred online. The explosion in popularity of Netflix came when they realized that instead of charging customers for each movie, they should just charge a single flat fee and then allow the customer to consume as much content as they want — this single move changed the game.
I was thinking about Netflix and how they follow all the guidelines I mentioned earlier. They deliver a great customer experience, they have great products, and they really make the data work hard — entire shows can be commissioned based on what the data says that the customers want.
It’s clear that the beauty and wellness subscription service FabFitFun has been thinking along the same lines because they just hired Louisa Wee to be their first-ever chief marketing officer. She will be overseeing all their branding, content, and creative output and designing their marketing strategy. Wee was previously the VP of marketing strategy, analysis, and programmatic media buying at Netflix. FabFitFun is expanding into wellness content on TV, international expansion through a partnership with QVC in the UK, and members-only shopping experiences. They clearly have ideas beyond simply supplying a box of products and I think that as they build out this expanded footprint of services, it makes sense to get a real expert on board. If you wanted to take a great idea for a subscription box and then apply the same kind of rigor to the process of attracting and retaining customers, then hiring someone who did exactly this for Netflix sounds like a great idea to me.