Subscriptions may be the future. But that doesn’t mean they’re perfect for every brand. Some products and services lend themselves to subscriptions more easily than others, period. Other times, it’s simply in the approach. For example, is the delivery cadence appropriate? Is the customer ending up with too much or too little? Is an on-demand option possible? We don’t have all the answers, but we explored those questions and more in this episode.
- The issue of subscription replenishment
- The concept of “just in time” subscriptions
- The advantage of large brands
- Subscriptions as outsourcing
- Digging into the customer experience
- Check out 1-Click Pony
- Explore Grove
- Explore Clockwork Nutrition
- Explore Daily Harvest
- Explore Motion
- Connect with Ben Fisher on LinkedIn or Twitter
- Connect with Joel Van Horn on LinkedIn or Twitter
3:47 - The issue of subscription replenishment
One of the biggest challenges when it comes to subscription is timing. Either too much is forced too soon, or users are frustrated when they’re caught empty-handed.
“One of the major issues around subscriptions is a lot of these brands don't have enough information to anticipate when someone needs the product. Today a lot of the subscription cycles or intervals are every 30 days, every 60, 90, whatever. I think one area where there will inevitably need to be a lot of improvement, and one thing you and I have talked about, I like to think that we coined it. I don't know if we did. But it's ‘just-in-time’ subscriptions...The truth is though it really is not appealing to brands because it's not a subscription. But I think the hypothesis is that it's definitely a better, more customer-centric way to offer subscriptions. And so the assumption here is that, if that is true, if it's more customer-centric, it's a better customer experience, then you're more likely to reduce churn by offering that. And so you'll increase LTV and it'll just be a better brand experience.”
5:16 - The concept of “just in time” subscriptions
This is our term to describe a “soft” subscription model that nudges you to replenish without commitment. The problem is that this model is unattractive to merchants and investors interested in guaranteed revenue.
“I think with the ‘just in time subscriptions,’ it's the other end of the spectrum. You've got the automated, actual subscription product someone decides to subscribe to. And you don't really know when they've finished using it so that they replenish it at the right time. I mean, there are some products where you can have a better guess at it, but ‘just in time subscriptions’ is the opposite. Where you're trying to gauge when you think they might want it, but it's not even just the commitment, that you're not imposing on that customer. But you're seemingly more thoughtful, right? Like it seems okay, they're emailing me right around the right time. It doesn't mean I have to buy it right now. Maybe I'll buy it next week. So that the timing piece of it where people don't feel like they just got ripped off by either having to buy another when they don't need it, or they feel disappointed because they ran out and didn't get the next one yet.”
6:42 - Not all customers are created equal
Some customers want to “set it and forget it.” Others want the ultimate ability to customize timing. Regardless, it seems logical that more control over a subscription is beneficial.
“My guess is that there's a best of both worlds, where there’s a segment of your customers who want to just buy when they want it. They will buy more frequently by having a soft reminder to buy the product, as well as that's a great opportunity to say, ‘Hey, these are the things you might want to buy too.’ There's a segment of your customers who will just be like, I don't want to think about it at all, just send me the product. But even then you still need and should expose the ability for the consumer to have more controls over the subscription experience. I think it's easier to do with digital products in some ways.”
11:45 - Certain items are more suited to subscriptions
When it comes to physical items, things like food are much easier to get into a logical delivery cadence for than non-perishables like cleaning supplies and cosmetics.
“I think with bathroom supplies, like toilet paper and so forth, it's really hard to know how much you're going to go through, and how soon, and when you want the next order to come in. But with food for instance, depending on the type of food - and maybe it's more predictable if you get protein bars or something and you get a 24 pack. Then maybe that lasts you 24 days or something like that. If you got a meal plan, Freshly or something where they're literally sending you lunch and dinner for the exact week, assuming you eat it every single day they know exactly when it'll run out. You could still go on vacation and things like that, where you end up having a little extra food, or have people over who eat some of your meals, then you run out of food. But by and large, I think that those are the types of things that maybe the replenishment schedule is a little more obvious.”
14:04 - The advantage of large brands
Brands with more resources and funds can collect valuable usage data to guide their subscription model.
“It depends on the organization. Like at a really large brand, they've probably invested a lot of time and resources into understanding and anticipating people's usage patterns. But if you're a relatively small brand doing less than, let's call it less than $15 million a year, you don't likely have that team. And maybe you don't even have enough data to be able to anticipate that. And so it's very true. I think I would expect that the larger brands, especially the larger legacy CPG brands, they just have the resources to be able to have a better idea of that.”
15:00 - When subscriptions get creative
Ben’s appreciation for savvy subscriptions knows no bounds. Currently he and his fiancee are using Clockwork Nutrition, a meal delivery that also tracks macros in pursuit of weight loss.
“I'm on a subscription meal plan where they order me food through Door Dash. I believe it's basically a bunch of smart engineers who have somehow figured out how many calories and nutritional content that I need at my height, to be able to get down to the weight that I want. And they order two meals a day for me and it's delivered by Door Dash. I'm able to pick the window of time that each meal arrives, and I'm able to rate whether I like the meal or not. And then I report every single day, my weight. What's interesting and what's frustrating - there's some cool features about it. One of which they call a geo shift. Rebecca went and visited her mom over the weekend...all she had to do is do a geo shift where she gave the address of her mom's home. And her food showed up there over the course of two days. She didn't have to think about it. My meal continued coming to me in New York at our apartment.”
21:40 - Managing subscription overload
Ben’s technique for keeping only subscriptions he uses is to manually renew each year. The reminder offers a chance to assess if he still needs the subscription or not.
“I have a quarterly reminder on my calendar to review all my subscriptions to see if there's anything for me to prune. When I first sign up for something, I'll often disable auto-renew. Because if I'm actually truly using it, I will do the work of re-enabling it when it tells me my payment failed, or I am going to lose service. That's a way that I've found that I don't just quietly have a bunch of subscriptions. Because one of the things about me that I've told you is, I will subscribe to anything if I think it'll save me time.”
23:06 - The fragmented nature of subscriptions
Joel finds that most subscriptions can end up feeling transactional rather than helpful. While subscriptions are valuable, he doubts most consumers want to subscribe to everything in life.
“Going back to what we're talking about initially: should every product be a subscription or not? I don't know. I imagine there's someone that can make a case that any product should be a subscription. I think the vast majority of people might not agree with that, and wouldn't be that customer. So you wouldn't have necessarily a large customer base in terms of subscription. I'm trying to figure out, thinking how you do, in regard to what are the different things I can outsource in my life? Meals, groceries, things like that. I already talked about bathroom supplies and that kind of stuff. It does make sense. But as a user, you end up going to a handful of different websites or apps to manage the schedule for each of those things. And when it's fragmented like that, my initial instinct is to think that everything just feels transactional because of that.”
27:08 - Subscriptions as outsourcing
For Ben, subscriptions are ultimately about time-saving and convenience. Similar to a wealthy family who hires physical help, subscriptions are an attempt to digitize that outsourcing.
“What I've done here is I've eliminated having to think about macros, because the Clockwork people, when the food shows up, have eliminated that. My trainer has eliminated the need for me to have to figure out how I accomplish a lot of my physical goals...The way it was addressed by wealthy families, historically, was they have personal chefs. They have nannies. They have personal assistants, executive assistants. I think a lot of what we're seeing is productizing, or it's the un-bundling of these assistants, whether it's a personal chef or whatever. I mean, it's like trying to convert it into software or services.”
30:24 - Digging into the customer experience
At the end of the day, the more information brands can gather on why users churn and why they stay, the better the subscription world will be.
“I think in my mind, that's where customer experience needs to go, is continuing to digitize that experience. Figure out how to take those other factors of thought process around deciding why someone's pausing, why someone's canceling, or skipping, or adding or removing products to their subscription. Understanding why can lead to more functionality. It feels more personalized and useful, right? All in the vein and the spirit of retention.”