Rick Watson, ecommerce influencer and strategy consultant at RMW Commerce Consulting, has helped many growing DTC brands navigate subscription strategies. It’s a challenging market because not all subscriptions are created equal. So, how do you create a subscription worth sticking around for? Give your customers access to something they can’t get anywhere else. The best subscriptions rely on variety to maintain their audience’s interest. On this episode of Subscription Radio, Ben and Rick discuss what products work best in a subscription model, why most brands can’t be subscription-only, and what questions to ask before moving your business toward a subscription model.

Show Topics

  • When are subscriptions more hassle than they're worth?
  • Should your brand be subscription-only?
  • Don’t trick people into commitments
  • Not all subscriptions are created equal
  • Do you need a subscription model?
  • Find out what people excel at
  • What does it take to fulfill a product?
  • Value consistency and focus

Show Links

Key Takeaways

01:43 – When are subscriptions more hassle than they're worth?

Shipping is fast enough that sometimes it’s more hassle than it’s worth to maintain subscriptions. It’s easier to reorder manually when you need a product than end up with an oversupply.

“I tend not to have a bunch of subscriptions. The only subscription I maintain is cascade pods for my dishwasher. The value of a typical subscription is not the challenge. Number one is the shipping is so fast anyway. Whenever I need it, I don't feel I'm gonna be out of it anymore. I'm in New York City, I'll get next day shipping. The second problem is a lot of subscription brands don't understand usage patterns. Why do I want product that I don't need? Vacation pauses becomes a new task for me. I'd rather reorder when I get back after I check the closet. If I use the last of something, I'll order the next one rather than subscribe to it.”

04:23 – Should your brand be subscription-only?

Being a subscription-only service is challenging. Successful companies need a mix of new and returning customers.

“It's hard to be a subscription-only product. Logically, it doesn't make sense in the world. Everyone needs new customers and repeat customers. To be a subscription-only brand, either you don't have a lot of competition or your customers are trusting. Folger's Coffee sent a sample of coffee to every doorstep in America decades ago. They did it to introduce their product to the consumer. They know that someone would go back to the store and buy it, not necessarily because they wanted a lifetime relationship with someone. That's an area brands can get tripped up on. If LTV is my most important metric then maybe I should only do subscriptions. That's saying I want to build a team but I don't only want to meet people who are willing to commit to me in the first meeting. Someone might want to meet you a few times and get to know you before making a longer-term commitment. That experience, either the pre-purchase research, trials and samples, multiple usage is before they decide this is part of my lifestyle. It's the pinnacle of the relationship and not necessarily the introduction.”

07:07 – Don’t trick people into commitments

If you offer a deal to entice people to start a subscription and hope they forget to cancel, don’t be surprised if they don’t stick around. You shouldn’t try to trick people into buying your product.

“It's no different than that 20% off. If you put in your email address or your SMS number, that's what it is. And why wouldn't you try it and then cancel it? And you're betting on that breakage, but is that how you want to run your business? Tricking someone to not canceling and then getting the second one? So you're creating your funnel in the wrong way is how I would put it. And your funnel should be based on progressive discovery of, ‘Yes.’ You might be vaguely interested, ‘Yes. I'm a little bit more interested. Yes. I'm extremely interested and I want to make a bigger commitment here, and I'm pretty sure I want to I want to stop using my old brand and I want to start using this coffee brand or whatever it is for a longer period of time.’ As you become more assured of your decision, not, ‘I've been drinking the same coffee for two years. I want to drink a new coffee tomorrow, but I want to immediately switch for a year without trying it.’”

08:34 – Not all subscriptions are created equal

The best subscriptions rely on variety to maintain their audience’s interest. Netflix and Rent the Runway are two great examples of providing variety to your audience to keep them around.

“Rent The Runway. It's a subscription business. It's a monthly model and the subscription is about the variety. You're not buying the same dress, the same outfit, the same handbag or whatever every month. You're buying access to a library. That's much like Netflix or Spotify; I'm not only subscribing to Netflix for Stranger Things. I'm subscribing because I know that next month I'm gonna wanna see something on there, too. Rent The Runway does a good job of filling that need in a closet for an important work meeting, an upcoming event, that night out where you want variety in your wardrobe you can't afford to spend all your money on the latest brand. You're willing to subscribe for that because at least three or four times a month, I get tired of what I do now. There's some freshness there and it's not about one brand. There's a bigger catalog behind it.”

24:48 – Do you need a subscription model?

Before you jump into a subscription model, ask yourself how long it will take to recoup the costs of that decision. Make sure your company is ready for that kind of investment.

“If we're going to go direct to consumer, how much is it going to cost? That's a big question. When are we gonna recoup our investment? If we build the team, get this technology, get the agency to do it, do digital marketing, and then we add these apps, when do we get our money back? If it's a marketplace customer, it's a lot more about how do I maximize my potential? If you're a company that sells baby formula and you don't have a subscription project product, that's a problem. That's a replenishable product in high demand. It's a big opportunity you're leaving on the table. It depends on the category of product and what their peers are doing. Sometimes, it's not about comparing them to their peers. It's imagining what should be possible, even if their peers aren't doing it yet, which gives them opportunities to take market share if their competitors are not paying attention.”

28:26 – Find out what people excel at

If you’re trying to build a world-class team of employees and contractors, the most important thing is getting to know what people are great at and what they love to do.

“It’s a hundred percent the A team. I'm a little bit of a casting director at times. One of the things I love to do when I meet someone is trying to understand what they're great at and what they love to do. I have a CRM database with hundreds of people and what they do. And I have a little check mark and so, ‘Could I work with this person in the future?’ Maybe not. Sometimes I'll meet a person, and then the next week I'll meet a client that needs that skill. And so you never know who you're going to meet, if you're going to work with them again. And that's another thing I another reason I love e-commerce so much is it seems a big thing but it's also a very small community such that you can work with the same people for many years. And if you have a good reputation then they'll want to keep working with you. You have to pretend that the person you meet is you're going to need them somehow in in five years from now and enjoy working with them. So I find that to be true much more often than it's not true.”

31:18 – What does it take to fulfill a product?

As your company gets bigger, your fulfillment needs will change. Keep up with how your company is scaling by making sure your manufacturing needs are taken care of.

“As my business grows, if I manufacture a product, what does it take for me to fulfill it? I need to interview carriers. I need to figure out packaging. I need to figure out labor. I need to understand any customs information. How am I going to print labels? Does my staff show up on time? How do I organize my warehouse? How do I make sure my inventory? The questions are endless in the back what happens after an order is placed essentially. In ecommerce, and particularly as you scale, the questions change as you get more volume. And so Shopify is interested in that category of merchant that starts small and keeps growing. And so if you view Shopify as the company that tries to apply the easy button to a new section of it, that's how they think of supply chain.”

42:07 – Value consistency and focus

Don’t hyper-focus on what the people around you are or aren’t doing. Have a plan and prioritize how you're spending your time every day.

“One of the things that I believe in my life is the value of consistency. It’s the value of waking up every day and keeping your head down and focusing on what you're doing, whether it's content or prospecting or marketing or improving your product, improving your customer's experience. Have a plan and prioritize how you're spending your time every day. And making sure that you yourself and the people you're working with, unless you're the boss you can't control that. So don't focus so much on what someone else is not doing that's next to you. Focus more on what you're doing and how you're working to improve the experience because your behavior rubs off on other people. We're a tribal species that way. And people can create the culture in their own company. So that's something I wanted to pass along.”