No-click purchase – the unsteady rise of subscription sales

By Brian Herron | 1 Comment 1 US dollar bill

The Internet is faddish – once a novel company has some degree of success, then come infinite variations; just look at the Bitcoin big bang.

Most of these copycat companies fail. But the rare few, the good ones, will carve out a niche.

A couple of years ago, we saw a minor gold rush towards subscription sales models. An update of the old wine club offers at the back of the Sunday broadsheet. The premise was simple, pay a monthly fee and have products delivered to your door.

Companies love subscription models; sell once, get paid many times.

I’ve always felt that this model could be perfect for users too – who wouldn’t want to have things they need delivered direct to their door, before they even realised that they needed them?

Why is it that so few companies have cracked no click purchasing?

So, why is it that so few companies have cracked no click purchasing?

Maybe it’s the products. Many provide a random selection of precisely what the customer doesn’t need.  Do you really want a dozen cosmetics samplers and Irish gift boxes?

This is why the Dollar Shave Club stands out; it hasn’t just survived the subscription model trend, but has thrived long beyond it.

According to Michael Dubin, the Dollar Shave Club’s founder and CEO, there’s a good reason for this.

“In general, businesses that offer convenience around ‘must-haves’, rather than ‘nice-to-haves,’ are good for subscription [models]. You want to be in a business that alleviates a pain point.”

And that’s just what they do – for a monthly fee you get fresh, good-value razor blades shipped to your door.

“Men need razors, and they need their razors replaced frequently. Eighty five per cent of our members shave three times a week or more; thirty per cent shave everyday – and it feels great to shave with a fresh razor blade. Men like things easy, and what could be easier than having the things you need everyday shipped to you, affordably and without even thinking? Breathing, maybe.”

It’s the difference between random bottles of wine showing up at your door, and something that you really need, but often forget to buy, showing up at the right time.

Dubin’s goals of providing “convenient, reliable deliveries, great prices, quality products” are the ‘hard’ reasons to go subscription. But there are softer reasons too.

How Dollar Shave Club frames its message is arguably as important as its business model.

Dollar Shave Club actually feels like a club. Their marketing is funny, and they feel like a cool company. They achieve this, not only through online messaging, but through serious attempts at online community building, with their ‘It’s Your Thing’ initiative.

And every month you’re getting your ‘membership’ pack in the mail.

A friend of mine, who subscribes, said that he gets this weird feeling of being grateful to them that they’ve remembered to send him his pack.

These efforts are leading to “strong customer acquisition, low churn, and lots of referrals”, says Dubin.

How Dollar Shave Club frames its message is arguably as important as its business model.

Even though we’re looking at physical products here, provision of services are going the same way. Download a song on iTunes for 99c or subscribe to Spotify for €9.99. Buy Adobe Photoshop for a few hundred euro, or subscribe to CC and get access to everything.

Of course, subscription services evolve. Netflix was brilliant a couple of years ago, with a massive range of movies in the US. But it has struggled to maintain a high quality roster of movies as the cost of licensing content from studios increases. So it began to create its own content to justify the subscription fee. The value of their initial proposition – access to a library of movies – is arguably diminishing, but there’s the new value of access to great, exclusive content.

Spotify’s initial differentiation was ‘all music whenever you want’, to which they’re adding exclusive concerts and recorded material, and heaps of social integration.

So, is this model a win-win for the user? Maybe, but there are certain criteria that have to be hit.

Here’s our stab subscription model rules:

  1. It’s a value proposition first – customers have to feel like they’re getting a lot and the payment has to be small enough so that they don’t have to worry about it.
  2. It’s useful – it’s got to actually solve a problem that people are experiencing: music is too expensive to buy, I don’t want to download illegally.
  3. It delivers a series of consistent small rewards – it anticipates customers’ needs; whether that’s new blades arriving before you’ve run out, or finding a song on Spotify that you just Shazaamed. (Have we verbed Shazam yet?)
  4. Give customers reasons to like the company – even if it’s only €10 a month, you never want to get to the point where you resent giving the company money, like, say a mobile phone bill.
  5. Build community – value will draw them in. Community will make them stay.
 

One response to “No-click purchase – the unsteady rise of subscription sales

Comments are closed.