What You Need To Know About Subscriptions As An Entrepreneur
Whether including video services like Netflix or HBO Go, product delivery services like Graze, audio services like Spotify, or software services like Adobe’s Creative Suite, you probably have at least a few subscriptions. It’s increasingly difficult to get by without them if you have any presence in the digital sphere.
Now, the modern subscription model is definitely amazing... but it’s also terrible in a way, and dangerous. On the one hand, it gives customers what they want in a very convenient fashion. On the other, it exploits our fundamental laziness and reluctance to consider the consequences of our actions over time.
If you’re an entrepreneur, whether you’re just starting out or already in the grind, it’s worth giving some thought to how subscriptions function. They can be your allies, or your enemies. It depends on how you approach them.
Here’s what you need to know about how subscriptions work, and how you can apply that knowledge to your business.
They Help Us Trick Ourselves
We don’t all lie to ourselves, but we do sneakily attempt to cajole ourselves into doing certain things. It doesn’t help that we often want this to happen, whether we’re aware of it or not.
I’ll give you an example.
I have a horrible, eager, unrelenting appetite for sugary foods. That I’m (seemingly) not yet diabetic is nothing short of a medical marvel. Yet I have a basic understanding of caloric requirements, and a general determination to stick to my daily goal.
When these motivations collide, I can drift into the “have a bit of everything” mindset. After all, while an entire cake would seriously harm my progress, a tiny sliver wouldn’t really count for anything, would it? And if I then had just one chocolate, I’d still be looking at nothing significant overall.
Cravings can convince you that this box contains zero calories.
That formula then morphs into the “just one more bit” fervor that eventually sees me consume everything edible in the vicinity. If every small bite has a negligible impact upon my weight, why, it makes all the sense in the world that a hundred small bites will be fine!
It’s that faulty thinking that can easily see someone sign up for a subscription that will end up costing them far more than they realise. It’s also why they might collect more and more subscriptions each month. More video, more audio, more services, more deliveries. If no single thing is a problem, then surely there’ll be no problem on aggregate, right?
It’s a rough trap to get caught in. As such, whether you’re considering picking up subscriptions to help your business, or offering them to your customers, you should remain keenly aware of how easily they can get out of hand, because...
They’re Customer Service Hazards
If someone has set up a paid subscription, and they’re happy with the service or product, you might think there’s no reason to be concerned about any potential negativity. After all, they knew the terms, and wouldn’t have agreed to them had they not been happy with the model.
Each party need only hold up their end of the deal to ensure a seamless ongoing business experience, you might think. Unfortunately, as we’ve seen, things aren’t quite that simple.
As an entrepreneur, you may find yourself getting caught into a mounting expenses trap, simply through busyness and not cutting off subscriptions quickly enough. Equally, you might get bullied by sales people or paralyzed by choice, and be left with more subscriptions that you really need, without a clear plan or exit strategy.
Now, imagine that you’re the one offering the customer the subscription...
Imagine that they stop needing the subscription but forget to cancel it. Perhaps life gets in the way, or they simply don’t keep track of their finances. Then, months down the line, they realize they’ve been losing money on something they haven’t wanted or haven’t even been using.
All of a sudden, they’re frustrated with the money they’ve lost, and they want to know what they can do about it. Can they get a refund? Why did you not send them reminders? They might end up viewing your business unfavourably, all for an unfair reason.
If you’re offering a subscription, you can’t fully prevent this, but you can make it less likely. You can make sure your cancellation process is simple and easy. You can request feedback on a regular basis. You can establish a great customer service scheme to give current, outgoing and former subscribers alike a positive opinion of you.
After all, perception is everything in the world of business, which is also why...
Their Value Is Often Personal
We’re not innately rational creatures, and we don’t generally judge value by weighing material costs against material gains. Our decisions are based on many factors ranging from the sensible and pragmatic to the whimsical and ridiculous.
For three reasons, subscriptions really play into this.
Firstly, they hit our fear of losing out. If we can see that there’s going to be something new happening every month (a new magazine, or new shows, or new albums, or a new product box), then we’ll inevitably start to envision being left out on a regular basis. And loss aversion is extremely motivating; far more than many people realise.
Secondly, they provide minimal barriers to entry: sign up now, enjoy a free trial, just a few clicks required, done in seconds. The more time we spend setting up a purchase, the more we get to mull it over, and the more opportunities we have to ask ourselves if it’s really the best idea.
“Do I really need a new giant inflatable kangaroo every Tuesday?”
Thirdly, they constitute opportunities for feelgood commitments. We all like having passions and finding ways to express them, and if you like, say, beauty products, then subscribing to a monthly beauty product delivery service will invariably feel better than placing a single order. Not only does it give you something to anticipate, but it also plants a metaphorical flag in the ground to say that you, yes you, are a determined supporter of the beauty product field.
What you need to take away from this as an entrepreneur is that there are various different approaches to subscription services. You can offer the best product, you can hit the lowest price points, or you can provide something that allows people to express their identities.
This gives you a lot of creative scope to come up with something that people will pay for on a regular basis without ever feeling misled or taken advantage of.
Are you considering subscriptions to help your business, or wondering what subscriptions you can offer people? Remember that subscriptions are very tempting, difficult to manage, and often driven by emotion, and you’ll have a better chance of making them work for you.
Victoria Greene is an ecommerce marketing expert and freelance writer with too many subscriptions and a lengthy Netflix queue.
You can read more of her work at her blog Victoria Ecommerce.