Hey, did you hear the news? Meta, the company that owns Instagram, won't be taking any cut from creators' earnings until 2024! This is great news for business owners who want to start their own subscription service on Instagram. So, what are you waiting for? Take advantage of this opportunity and start your own subscription service now!
Have you heard of eCommerce subscription services?
It's a business model where companies provide ongoing services in exchange for regular customer payments. This approach has been around for centuries, even dating back to the days of the printing press. While it used to be mainly for newspapers, magazines, and cable TV, now it's used by companies in fashion, entertainment, and even food industries.
And guess what? It's been wildly successful! According to McKinsey, the largest subscription-based companies generated a whopping $2.6 billion in 2016, compared to just $57 million in 2011. It's no wonder why nearly half of all consumers have jumped on the subscription service bandwagon. So, are you ready to join the fun and start your eCommerce subscription service?
There are actually different types of subscription services offered by various companies depending on their industry and target audience.
Here are the top three most common types:
- Curation-based: This type of service offers a personalized selection of products based on the customer's preferences. It's great for those who want to discover new items and get recommendations tailored to their interests.
- Replenishment-based: This service ensures that customers never run out of essential products by automatically sending them regularly. It's perfect for those who have a busy lifestyle and want to avoid the hassle of constantly restocking.
- Access-based: This type of service provides customers exclusive access to products, services, or events that are unavailable to the general public. It's ideal for those who want to experience something unique and special.
Are you thinking of starting an eCommerce subscription service?
Well, it's definitely worth considering, as it can bring many benefits to your business!
- Keep your customers coming back for more
By providing a valuable subscription service, you'll be able to keep your customers engaged and subscribed over a longer period of time. This means more predictable revenue for your business.
- Better forecasting and planning
Running a subscription service allows you to forecast your future sales and revenue numbers more accurately. You'll have a clearer idea of how many customers you'll have and how much inventory you need to keep on hand.
- More opportunities to engage with your customers
Having subscribers means you have more opportunities to engage with them and build a relationship over time. This is especially important if you offer ongoing services, but even if you provide isolated services throughout the subscription period, you can still engage with them in other ways.
- Streamlined customer relationship management
Once your customers are subscribed, you can focus on delivering value and growing your business. You won't need to worry too much about acquisition and retention, freeing up more resources to invest in your business.
Of course, implementing a subscription service requires a strategic approach to be successful. But if done right, it can significantly benefit your eCommerce business!
Let's talk about how to encourage customers to commit to longer subscriptions and renewals automatically.
- Connect your subscription model and pricing to your business goals.
It's also crucial to ensure that your subscription model selected generates enough revenue for your business.
You don't want to start a subscription-based business just because it seems like a good idea. Instead, you'll need to know precisely how it will help your business grow in the short and long term.
To achieve this, you'll need to consider various factors, such as setting prices that ensure your service is sustainable and profitable or creating different tiers of service that increase customer retention and lifetime value.
- Encourage customers to commit to longer subscriptions and renewals automatically.
Wouldn't it be better if a customer signs up for a six-month subscription of your service rather than just a one-month subscription? Obviously, it would!
However, some customers may be hesitant to commit to a long-term subscription. You can incentivize them by offering discounts, exclusive offers, or special perks. This way, they get to enjoy the benefits of your service while saving money in the long run.
- In order to keep your subscribers loyal, it's important to provide them with value throughout their subscription.
You need to find out where your customers hang out both online and offline, and then create a strong, recognizable presence on these platforms. This way, you can integrate your brand into your subscribers' lives whenever and wherever you have something valuable to offer them.
And here, Instagram subscriptions come in handy! You'll reach your targeted audiece right where they are.
The happier your subscribers are, the more likely they are to stick around. By continuously delivering positive experiences, you increase your chances of retaining them.
- In addition, it's crucial to monitor specific metrics to gauge the health of your subscription business. Some of the key performance indicators (KPIs) to track include:
* MMR - The amount of revenue generated each month
* CAC - The cost of acquiring new customers and how long it takes to recover that cost
* LTV - The lifetime value of each customer
* Churn - The rate at which customers cancel their subscriptions (churn rate)
Examples of top subscription brands
If you are running a successful eCommerce business, consider adding a subscription service to your current offerings. This is possible, and many companies have already done so, like Gillette. However, being honest about why you want to do it before you make the leap is essential. You should aim to add value to your customer experience, not just because it's a trend in the eCommerce world.
Here are a few of the best eCommerce subscription brands.
Coffee Bean & Tea Leaf
Coffee Bean started as a physical coffee house company with hundreds of locations across the US and eventually, they launched an online Shopify store. When the subscription box revolution started happening they launched an online subscription product + a gift card system, and it took off. They were able to triple their online sales and increase AOV by $5.
Have you heard of Oatly?
It's a popular milk alternative made out of oats! You can find it at all the major grocery stores and national food chains, but now they offer even more.
They've launched a subscription box, so you can have your favorite milk alternative delivered straight to your door! It's convenient, affordable, and a game-changer for those who love Oatly. In a short time, they grew their monthly revenue by a whopping 188%!
Loverly is a fantastic toy brand for babies that offers a monthly subscription toy kit. Their mission is to encourage healthy growth and learning in children. By using a Shopify subscription app, they managed to increase their subscribers by 3,000 in just 3 months and by a whopping 2000% in one year.
Fresh Clean Tees
Fresh Clean Tees is a fashion brand that revolutionized the world of men's clothing by providing the most comfortable and stylish t-shirts you've ever experienced. They also offer a monthly subscription service that sends a new tee straight to your door, so you can always "keep it fresh." With their high-quality products and commitment to customer satisfaction, Fresh Clean Tees has quickly grown to almost $1M in revenue.
Bokksu is a subscription box that offers authentic Japanese snacks handpicked by a passionate entrepreneur. Their snacks are carefully curated to provide a unique taste of Japan to snack enthusiasts all over the world. The business has grown tremendously, with over 10 times more subscribers yearly and delivering over 2 million snacks to 70 countries.
The eCommerce subscription business model is the way of the future.
It provides an opportunity for unprecedented growth, increased brand loyalty, and a lot of stability for an eCommerce brand. On the flip side, it does come with some risks. And those risks are mitigated by choosing a hybrid subscription model - one-time products or memberships.
Check out how to introduce subscriptions into your Instagram Business Account!
As always, we're here to help. Book a consultation with our Instagram Expert to learn how we can help your business grow.