Subscriptions models are hot: high lifetime value with a low customer acquisition cost adds up to strong investor interest. So why would anyone move away from a subscription model? We did. Here’s why.
Sharon, I am looking at starting a subscription box company. Can you tell me which software solution you used as I am looking to launch in early February.
Thanks again. Can you also tell me who you went with for your boxes. And whether you bought the samples from each supplier or did they provide them for free with the hope of gaining potential customers for their full products
I'm pretty sure we used Chargify (it's been a while now!) but I have also heard of Member.ly which is specifically for subscriptions. Hope this is helpful!
Thanks again. Can you also tell me who you went with for your boxes. And whether you bought the samples from each supplier or did they provide them for free with the hope of gaining potential customers for their full products
Hi Sharon - Well done! Listening to customers and really *hearing* them are often two different things. Humans love to say we'll do things and then NOT do them. Actions and behaviors tell you far more about customer reactions than what they say. Really love how you were able to pivot. Thanks for sharing. Continued success! - Jeannie
Many thanks, Jeannie. Pivots make all kinds of rational sense in retrospect but the need to change is not always easy to recognize or respond to in real life. So far, so good. We're excited about the progress of the new Moxie Jean.
Hi Sharon,
Congrats on recognizing that a possible transition needed to be made and actually doing it. A brave and smart move! By the way, love the new name.
I just had a discussion with another entrepreneur about being burnt out on the subscription model. It seems that so many people are following the subscription model that it has molded our thinking as if that is the only way to guarantee revenue each month. I will be very interested to see how it works out. Best of luck!
Thanks, James. I think you are right that some (not all) entrepreneurs may have gotten lazy about sticky customers. We're looking at other ways to make customers sticky, and have retained a natural return cycle built into the model. We'll keep you all updated.
As a founder of a recently launched subscription company, KLUTCHclub, I feel the need to comment on this and largely agree with you on many points. Congratulations to you for figuring out what the customer wants and adapting accordingly. While there are many subscription companies popping up, fewer than a handful have received institutional funding. I believe the problem is not with the subscription model per se it is with some of the subscription startups lacking 3 things: 1. a concrete consumer problem to solve beyond "people like to be surprised with some fun random stuff in the mail"; 2. a way to capture the subscriber's attention or add value to the consumer beyond the box subscription and 3. a business model or revenue stream beyond the subscription.
While KLUTCHclub has acquired more subscribers in 3 months than many subscription companies have in over a year, we do not see KLUTCHclub as just as a subscription service company and would urge other subscription companies to have a better vision and a more nuanced identity. We see KLUTCHclub as the online authority on what types of products are healthy. While we faced similar challenges to yours, our response was solving a concrete consumer problem of not being able to make sense of the clutter in the fragmented market full of niche players and take an editorial like position on the credibility of products and giving the consumer reason to subscribe besides getting products in the box (e.g., other members benefits, content, etc). At the same time we have found alternative B2B and B2C revenue streams that solve problems for other companies.
The other issues you mentioned- erroneously seeing subscriptions as a recurring revenue stream- are ones that all entrepreneurs who do not have structured strategies and performance measurement metrics face. As with any business it is important to measure industry specific metrics and benchmark against similar concepts while evaluating analytics of other business model options (e.g., cost to scale, etc). Aside from having customers who want to subscribe, many subscription startups forget the other very important metrics- cost of customer acquisition and churn. It is fairly easy to make people try something once. But scaling fast and retaining those people is a bit harder. That may not mean abandoning the subscription model is the answer for everyone but it does mean everyone should be constantly innovating and evolving beyond just the subscription.
I personally would not walk away from the model as I do think if executed well, it works for some startups. But I also would not advocate it as the only model that works and agree with you that it needs to first and foremost adapt to what customers want.
Sounds like great advice. Is it possible for you to tell me where/who makes your boxes as i am looking to launch a subscription service next week and whether you've received funding yet.
Fantastic comments and observations, Julie. You point out great considerations for any entrepreneur, subscription or not. Congratulations on the growth and success of KLUTCHclub.
It's amazing how a simple change can make so much since! I don't have kids, but it sounds like you'e making Mom's job even easier! Keep up the good work!
Sharon, congrats and a smart transition indeed. I actually went to your site thinking you were following the above business model and when I realized it was subscription based I did not register. The new model makes perfect sense based on how I was hoping to use the site (recycle awesome clothes that my daughters outgrow after one wear) and will definitely use the service moving forward. With two toddlers at home, this might be the answer I've been looking for...good luck, look forward to seeing you at Demo Day.
That's awesome, Maria, thank you for the feedback. I have to say, once we moved away from the subscription model, we heard a lot more about the drawbacks of our old model. :)
This week, hear from Alicia DiRago, founder and CEO of Whimseybox. Alicia harnessed her passion for DIY craft projects to start a subscription box service helping others build cool projects.
Post a comment
Comments
Sharon, I am looking at starting a subscription box company. Can you tell me which software solution you used as I am looking to launch in early February.
Sharon
Thanks again. Can you also tell me who you went with for your boxes. And whether you bought the samples from each supplier or did they provide them for free with the hope of gaining potential customers for their full products
That wasn't our model at all, Frank. Best of luck to you.
I'm pretty sure we used Chargify (it's been a while now!) but I have also heard of Member.ly which is specifically for subscriptions. Hope this is helpful!
Thanks again. Can you also tell me who you went with for your boxes. And whether you bought the samples from each supplier or did they provide them for free with the hope of gaining potential customers for their full products
Hi Sharon - Well done! Listening to customers and really *hearing* them are often two different things. Humans love to say we'll do things and then NOT do them. Actions and behaviors tell you far more about customer reactions than what they say. Really love how you were able to pivot. Thanks for sharing. Continued success! - Jeannie
Many thanks, Jeannie. Pivots make all kinds of rational sense in retrospect but the need to change is not always easy to recognize or respond to in real life. So far, so good. We're excited about the progress of the new Moxie Jean.
Hi Sharon,
Congrats on recognizing that a possible transition needed to be made and actually doing it. A brave and smart move! By the way, love the new name.
Thanks, Swathi! Coming from a fab woman with moxie herself, I'm so glad you like it.
I just had a discussion with another entrepreneur about being burnt out on the subscription model. It seems that so many people are following the subscription model that it has molded our thinking as if that is the only way to guarantee revenue each month. I will be very interested to see how it works out. Best of luck!
Thanks, James. I think you are right that some (not all) entrepreneurs may have gotten lazy about sticky customers. We're looking at other ways to make customers sticky, and have retained a natural return cycle built into the model. We'll keep you all updated.
As a founder of a recently launched subscription company, KLUTCHclub, I feel the need to comment on this and largely agree with you on many points. Congratulations to you for figuring out what the customer wants and adapting accordingly. While there are many subscription companies popping up, fewer than a handful have received institutional funding. I believe the problem is not with the subscription model per se it is with some of the subscription startups lacking 3 things: 1. a concrete consumer problem to solve beyond "people like to be surprised with some fun random stuff in the mail"; 2. a way to capture the subscriber's attention or add value to the consumer beyond the box subscription and 3. a business model or revenue stream beyond the subscription.
While KLUTCHclub has acquired more subscribers in 3 months than many subscription companies have in over a year, we do not see KLUTCHclub as just as a subscription service company and would urge other subscription companies to have a better vision and a more nuanced identity. We see KLUTCHclub as the online authority on what types of products are healthy. While we faced similar challenges to yours, our response was solving a concrete consumer problem of not being able to make sense of the clutter in the fragmented market full of niche players and take an editorial like position on the credibility of products and giving the consumer reason to subscribe besides getting products in the box (e.g., other members benefits, content, etc). At the same time we have found alternative B2B and B2C revenue streams that solve problems for other companies.
The other issues you mentioned- erroneously seeing subscriptions as a recurring revenue stream- are ones that all entrepreneurs who do not have structured strategies and performance measurement metrics face. As with any business it is important to measure industry specific metrics and benchmark against similar concepts while evaluating analytics of other business model options (e.g., cost to scale, etc). Aside from having customers who want to subscribe, many subscription startups forget the other very important metrics- cost of customer acquisition and churn. It is fairly easy to make people try something once. But scaling fast and retaining those people is a bit harder. That may not mean abandoning the subscription model is the answer for everyone but it does mean everyone should be constantly innovating and evolving beyond just the subscription.
I personally would not walk away from the model as I do think if executed well, it works for some startups. But I also would not advocate it as the only model that works and agree with you that it needs to first and foremost adapt to what customers want.
Julie,
Sounds like great advice. Is it possible for you to tell me where/who makes your boxes as i am looking to launch a subscription service next week and whether you've received funding yet.
Frank
Fantastic comments and observations, Julie. You point out great considerations for any entrepreneur, subscription or not. Congratulations on the growth and success of KLUTCHclub.
It's amazing how a simple change can make so much since! I don't have kids, but it sounds like you'e making Mom's job even easier! Keep up the good work!
Thanks, Scott. Your support and encouragement is much appreciated!
Sharon, congrats and a smart transition indeed. I actually went to your site thinking you were following the above business model and when I realized it was subscription based I did not register. The new model makes perfect sense based on how I was hoping to use the site (recycle awesome clothes that my daughters outgrow after one wear) and will definitely use the service moving forward. With two toddlers at home, this might be the answer I've been looking for...good luck, look forward to seeing you at Demo Day.
That's awesome, Maria, thank you for the feedback. I have to say, once we moved away from the subscription model, we heard a lot more about the drawbacks of our old model. :)