Discover how to grow your subscription business from the explosive growth of the subscription box industry. Subscription boxes have become the single fastest segment of the subscription industry over the last 12 months, as have the number of offerings. What leads to fast growth within subscription boxes can help you grow your own subscription economy business.
At the center of the subscription box industry is my recent guest on Membership and Subscription Growth podcast, Amir Elaguizy, the co-founder and CEO of Cratejoy. More than 4000 subscription boxes rely on the Cratejoy platform for marketing and fulfillment. Amir has seen what works within the subscription box industry and what leads some subscription companies to fail.
Membership retention comes down to subscription fundamentals, understanding what your customer wants, delivering tangible value and delivering a terrific unboxing experience.
Understanding your customer and knowing what excites them is the first key. Some subscription boxes create their product by discovering products that are available from sponsors or at low wholesale prices. However, successful subscription boxes instead focus on what customers want. Amir said, “True North is whatever consumers want to get. Then over time, as they start to achieve scale, they’re able to cut deals with advertisers and run all sorts of specials and sometimes those products that their advertisers sell actually make sense inside the box.”
When asked if he sees some commonalities among the most successful clients, he responds “it’s really clear that, over the long term, the people that win are the ones that are hyper-fixated on product quality and product value. They’re obsessed with the product quality. So, they are actually into the products that they’re selling, they know what good looks like, they know what bad looks like. They know how to curate them in a way that tells a cohesive story.”
Why are product quality and value the two areas that Amir advises you to focus on? According to Cratejoy’s client statistics for subscription box purchases, Amir shares that “about 70% of people are buying for themselves, and about 30% of people are gifting it to others. The people that are buying it for themselves, it’s mostly, ‘I love this thing and of course I would like to get more of it on a recurring basis.’ So, it’s not a straight discounting or a straight value purchase, it’s an emotional purchase. That said, the value is where membership retention comes in. So, if they look at the products when they show up after the first purchase, and then do the mental math on how much it all costs, and they say this doesn’t look like I got much or any of a discount on this at all …they’re not going to stay subscribed. Whatever it is, the initial purchase is an emotional one, but the subsequent retention is largely tied to perceived value.”
Making that unboxing experience an amazing one is vital to membership retention. To know what that experience is like, Amir suggests that you purchase other subscription boxes for yourself. “You need to have them show up at your house. You need to experience what it’s like to open them, and you need to see the difference between bad and good. You need to understand the content that’s coming along with the products itself. It’s not just about the products. You need to see how they make you feel – the value and the sort of hand-picked and personalized effort that’s gone into each box, or they don’t, and then you cancel, right? You need to actually experience that, so I always urge people to have subscriptions. At any given time, I have 20+ active subscriptions.”
A keen focus on quality and value – These are the things that the best of the best in the subscription box industry do. If you’re finding it hard to prioritize your to-do list, at least place these two things at the top.
My interview with Amir covered this advice in much greater detail. To learn more of the insight he has gained from his work with very successful subscription businesses, listen to the full interview on my Membership and Subscription Growth Podcast. Subscribe here: http://robertskrob.com/subscribe-to-podcast/
About our guest:
Amir Elaguizy is the co-founder and CEO of Cratejoy. Prior to starting Cratejoy, Amir was the co-founder and CTO of a poker software company, Market Zero, which was acquired by Zynga in 2011. Cratejoy provides everything you need to run, promote and scale your subscription box business. They provide a platform for sales, marketing, and fulfillment. To find out more, go to Cratejoy.com and start a trial on their platform. You could also email them at firstname.lastname@example.org. They will discuss your individual needs and show you what a partnership with them can do for you. In addition, visit their free website, www.subscriptionschool.com, where they offer data, interviews, and helpful content for this industry.