Does subscribe and save model work for your category?
Celebrating the milestone of reachingĀ 100+ subscribers within a month š„³Ā š„³Ā , this wouldnāt have been possible without your support and messages with inputs onĀ LinkedIn. Feel free to connect and subscribe if you havenāt yet.
I have decided - āone post a weekā routine because I understand that if you are anything like me, you donāt want to be bombarded with lot of information (sometimes unnecessary).
My focus would be that you get the most out of the weekly post since I will get more time to do my research on weekend that otherwise not possible during busy week.
So off to the this week task at hand,
This month, I have subscribed few products on Amazon as I require these products every month and monthly I was getting 5% discount. Thatās the pretty much what subscribe and save model is.
Last time, we have discussed the sales funnel. And as a category manager, the ideal situation would be for you is that you donāt need to put lot of efforts into retaining customers who already like your products. (skipping awareness / consideration stage and directly moving to the purchase - repeat order is the best KPI to evaluate this stage of the funnel).
Subscriber and save program could be a good customer retention strategy but if not implemented properly, it could hurt your customer trust also.
Letās take a case of Amazon.
Ideally speaking, subscription should lock a particular price for you that is offered at the time of subscription but Price changes in Amazon subscribe and save model.
Jared Wiesel, a partner at Revenue Analytics, a pricing and sales consulting firm, said of Amazon, āI think theyāve violated the psychological concept of a subscription with their customers in changing prices like this. When people think of a subscription, they think of locking in a set cadence of receiving a good.ā
You can read the full story here : (keep it in mind that its a 4 yr old story, will update you about my own experience with subscribe and save in a month)
So you know what can go wrong, lets talk about what you can do right by your category.
How to design a subscriber and save program:
Image source - Amazon.com
Step 1 : First step is very much common sense. Not all category / product could come fit into subscription model. Generally beauty products, grocery, baby care products, personal care products can come under āsubscribe and saveā program. Products that people buy frequently or at least require once in a month / 3 months.
Step 2 : Price point : how much discount you can offer given if customers subscribe a particular product in your category. (A model can be build based on frequency, customer rating or feedback, profitability due to saving on customer acquisition, delivery date flexibility, increase in customer loyalty / customer lifetime value).
if you are a supplier / brand partner on these marketplaces, you can calculate how much your profitability is improved in this case.
Profitability in subscribe and save = f(gain in volume, discount)
Gain in volume is a delta change with and without the program. But keep that there are other intangible benefits as well : Improved brand loyalty, Improved customer lifetime value etc.
Step 3 : As these are subscription products that customers want on time, you have to make sure that your inventory and logistics is aligned to delivery timeline. At back-end you need to collect all the customer orders under the program.
There are consumer product companies like Dollar shave club that also run these kind of program. Then we have traditional businesses like newspaper, milk delivery that are running on this model since ages.
In upcoming post, we will build an excel model to see if it make sense for your category.
Till then, keep your comments coming,
Let me know if there is any āsubscribe and saveā program that you run on your category and got a good result in terms of achieving your category goals.