Putting theory into action

Subscription-first businesses recognize the power of building an offering that prioritizes the creation of an ongoing customer need which only they can satisfy. It’s a concept that can be implemented within all industries, from food and drink to education and self-care — but across all of these, there’s been one business model that’s particularly well-suited to the subscription-first model: eCommerce. In this post, we’ve featured some of our favorite examples of the subscription-first principles in action

What is a subscription-first business?

Before we dive into our examples, we need to ask ourselves one main question first: what is a subscription-first business? We believe the entire subscription-first industry is governed by a set of principles, the most important of which is that:

A subscription-first business is any business that has the primary sales intent of selling subscriptions [or memberships].

While a subscription-first business can be quickly determined by whether or not they primarily sell subscriptions, any business matching more than 3 of the remaining principles is probably also a sub-first business. You can read more about the principles in detail here.

The Subscription-First Principles In Action

Here’s some examples of the subscription-first principles in action, both successfully and in contexts where there’s some room for improvement. With such a variety, you’re bound to finish reading this with some serious food for thought that you can apply to your own business too!

Vinomojo

Vinomojo’s offering is a wine exploration subscription. Every month, they deliver a curated wine box consisting of 3 bottles from a specific country or made of a specific grape, with an expert video and a guided tasting, as well as an additional bottle to explore another type of wine and accelerate learning.

One of the most impressive things about Vinomojo is how they make the existence of their subscription-first box both blaringly obvious and highly appealing from the moment you enter their site. Their sales intent is evident here, from their prominent CTA button labeled ‘join today’ to their crystal-clear FAQ section with all the details of their subscription model. It displays an attention to detail that’s also present in the value-adding educational experience present in their product selection, which sells the interactive nature of learning about the wine alongside the wine itself.

That being said, although their offer is both clearly emphasized and enticing, some aspects of their operational focus could be improved, particularly when it comes to their website’s UX, which doesn’t make it easy for a customer to get back to the checkout with their cart intact once they’ve navigated away, but it’s an easy fix that’s easy to overlook when you consider all the amazing things that they get right.

Freddie’s Flowers

Freddie’s Flowers is a carbon neutral modern-day florist that delivers regular boxes bursting with seasonal fresh flowers — just like the milkman, but with flowers! In such a competitive space it differentiates itself from others by focusing on a subscription first model rooted on what many care about  these days – sustainability.

It’s clear from the minute you see the website that Freddie’s Flowers is serious about their active subscription messaging, showing a clear commitment to sales intent. Both above and below the fold, clear yet subtle calls to action (e.g. “Start sending me flowers”) start to build customer trust from the outset. On top of this, the operational focus feels almost effortless, with even their referral program focused around subscription, rewarding users with £25 each + 50% off the next box by ‘giving’ up to 4 friends a free box (if they sign up).

Customer satisfaction is very important to them, and you can see this reflected in the community Freddie’s Flowers fosters. Being carbon neutral says a whole lot too. They ask customers to leave the used, recyclable and biodegradable packaging outside for collection during the next delivery. Each package is sent with instructions on setup, care etc., and one is notified a few days before delivery on what to expect so they can skip delivery. The subscription journey is almost effortless, helping subscribers feel relaxed and anticipate the next box with joy. On the flip side, even customers who churn get to deal with a human on the other end of the phone, giving the cancellation process a personal touch while providing the business with actionable data they can use to improve.

That being said, while the churn experience is a very human one, there’s definitely something they can do that can stop customers from reaching that point to begin with — improving their cancellation experience. It’s this part of the integrated customer journey that’s easy to forget, but if you only let customers skip deliveries for a month before they have to open an email request or request a call, it’s likely they’ll get frustrated, especially if there’s little to no indicators of what to expect during the cancellation process.

Protein Bar

Protein Bar is a healthy restaurant with 12 locations in the Chicago area. Protein Bar has a number of different products and ways that customers can interact with them. As a physical restaurant, they sell in-store, and you can both dine in and order take out and delivery. However, they also sell subscriptions online for $29.99 per month which includes 4 meals or shakes.

One of the first things you notice on their home page is the clearly marked subscription option on their menu bar, which takes you directly to their subscription microsite. The microsite makes the benefits of subscribing clear — up to 40% savings compared to the original price. Both of these are clear indicators of Protein Bar’s sales intent, but it gets even more interesting once you consider that Protein Bar is actually a physical retail store too. Not only can customers subscribe to a delivery option, but they can also go into the store themselves to pick up their order. Of course, customers who don’t have a subscription aren’t required to get one to shop in-store, demonstrating a clear commitment to having an integrated customer journey, one in which their various offerings (physical and digital) are all working together to support their customers in a unified way.

One thing that could be a little smoother, however, is the extent to which they maintain an integrated business model. They use one platform for their subscriptions, one for online ordering, and a different one for their rewards program. The domain names aren’t consistent throughout all of them either, which could also lead to some confusion behind the scenes and a convoluted tech stack and management process.

House Plant Box 

House Plant Box is an excellent example of how a brick and mortar retail store can follow the industry trend and naturally grow their business by discovering new territories and sales channels which will help them connect with their buyers and reach them wherever they are. Founded back in 2014, San Diego-based House Plant Box grew from greenhouse retail store to an online shop and now to a subscription service delivering plants on an ongoing basis to thousands of active subscribers. In essence, the story of House Plant Box tells a wonderful story of 2 college graduates that made a (profitable) business venture from what they are passionate about, all along following a very noble mission of reconnecting people with nature.

A major part of what makes House Plant Box stand out from the crowd is their social media presence, which creates an impressive integrated customer journey. House Plant Box is very active across social media which helps them connect with their customers on a higher level. While their tactic of encouraging people to post pictures of their house plants including and tagging the House Plant Box handle is not a new tactic, it works really well for them. Coupons, giveaways and discounts are also very frequent. It’s also impressive to note that House Plant Box was actually created by House Plant Shop, a major online retailer of house plants. Noting the shift in consumer preference over time, House Plant Box recognised a new customer type, and expanded and dipped their toes into the subscription market as well, even pre-Covid (unlike plenty of other brick and mortar stores).

While it’s impressive that House Plant Box was able to become so successful as a part of its parent company, there’s also some room for improvement. Although Subscription Service is featured on both the main navigation and on the gallery on the hero section of the store, it’s clear that the main revenue-driver for them is still their transactional business. They did slowly transition to a more subscription-first oriented company by adding emphasis for their subscription offering, however, there is plenty of room for them to demonstrate a clear sales intent. For example, why not sell the subscription as the lead offering, and make the transactional store the secondary option instead of the other way around? It’s a subtle and simple switch that could net them more long term subscribers.

Itch

Want to read more about Itch? Check out Subbly Expert Jonny Sadler’s full analysis here! 

Itch is a monthly flea and worming subscription for pets, created as a partnership between an experienced D2C founder/investor and two brothers who had a previous pet care business. They are a superb example of a subscription-first business with an exceptionally distinctive brand, enjoyable customer experience and sleek marketing.

From the basic website, their sales intent is clear, it’s clear that their intent is to push subscription sales harder than transactional sales, with a big ‘First Month Free’ banner at the top, as well as front and center as a CTA. The benefits of the subscription model are also highlighted on the home page, such as tailored treatment, and access to a 24/7 ‘Video Vet’ service for members. On the product pages, the focus is yet again on the subscription option, which is automatically selected and features eye-catching colors, as opposed to the slightly greyer one-time purchase option below.  On top of this, while promoting your subscription offering as the core of your business model is important, you’ve got to balance it with a product selection that can satisfy a long-term customer need or desire. In this context, it makes perfect sense that they’ve put lots of thought into their product selection, offering consumable needs-based products with long-term usage schedules — namely, flea and worming treatments. And as a subscription, rather than one-off sales, the business can offer better pricing and experience, and remain confident they’ll generate profit over many months and years.

Itch gets so many things right, but there’s a couple places where they could sharpen things up a bit, too. It’s difficult to see where a business that appears highly successful from the outside can improve, without diving into their data. However, looking at their Trustpilot reviews we can see two areas for improvement – one to do with their integrated customer journey, and one to do with their operational focus. To find out more, check out the full post here!

Peloton

Peloton is an American exercise equipment and media company based in New York City. Peloton’s main products are Internet-connected stationary bicycles and treadmills that enable monthly subscribers to remotely participate in classes via streaming media. This is a company whose revenue reached $4 Billion in 2021 – that’s double 2020’s $1.8 billion marker!

It’s evident at this point that Peloton’s sales intent is focused on subscriptions. While the hybrid business model means the company is selling both hardware (ex: bike and/or treadmill) and software (access to classes), their main intent is to generate the bulk of its revenue (and margin) off subscriptions. For reference, Peloton charges a US$39 monthly membership fee to access classes and additional features on their exercise equipment, or $13 for users only accessing content via the app or website. Peloton’s model caters to a very specific customer type, which Peloton has managed to niche down and impress more and more over time.

Analysis from Subbly Expert Adam Levinter, founder of ScriberBase

It’s an interesting use case for early-stage start-ups looking to learn who their target customer really is. During its initial Kickstarter in 2013, Peloton had a $1200 price tag on its exercise bikes. Surprisingly, hardware sales at that price-point fell way below the company’s projections. Rather than lower prices further, the company raised prices significantly, adjusting the cost of its stationary bikes to ~$2500 at the time. In turn, bike sales soared showcasing Peloton as a premium connected fitness brand for the health-conscious and affluent — with a 12-month retention rate of over 90%.

The interesting thing about Peloton is that they have very few transactional products on offer, outside of the initial equipment purchase price and a small range of apparel and accessories. With such an affluent clientele, there’s definitely a market for them to offer a wider range of one-time purchases — perhaps in partnership with other high-end brands — and have a fully integrated business model that still prioritizes subscriptions.

My Happy Crate

My Happy Crate is a subscription box company located in Canada serving a very specific niche that is a hot trend right now… K-Pop fans! This is an excellent example of the type of entrepreneur that turned their passion into a business. My Happy Crate team is integrated by four people who love and follow K-Pop bands so it was just easy and natural to share their joy with the rest of the world. They literally named their box after the purpose of the company… which is to make K-Pop fans happy.

In terms of sales intent, My Happy Crate makes it very, very clear that they are trying to sell a subscription. From the top of the home page, where the next month that’s available is clearly written with a countdown timer alongside marking the deadline to order, to the clearly laid out FAQ section on their product selection page, which clearly mentions subscriptions, there’s no doubt as to what My Happy Crate does. In addition, one of the best things about their offering is that even though they’re already within a pretty niche category, they’ve managed to further demarcate their offering to cater for subcategories of their already well-defined customer type. This can be seen through the 3 specific categories of box that they: Kawaii, K-Pop, and advent calendar, each with their own curated selection of products certain to delight their future recipients. However, not everything is as simple and easy — one thing that’s clear from looking at the website is that once you’re locked in, you’re locked in, whether you’ve picked a mini box or a full-size one. In terms of operational focus, however, they don’t make it easy to pull the trigger with 100% confidence, providing no information as to whether or not you can pause a subscription. Plus, once you’ve signed up, you’re locked in for at least 2 boxes, which may be off-putting to some customers!

So, what did we learn?

There’s a few things that these 7 businesses all had in common, the main being that almost all of them nailed their sales intent, with customer type bringing up the rear. Paying attention to how these successful businesses have set themselves up for long-term loyalty can be a great source of inspiration for your own businesses too — but make sure not to fall into the same pitfalls that some of them have, especially in the domain of integrated business model/customer journey, though.

 

By Zaki Gulamani
Сontent creator at Subbly