How to Build A Subscription Service For Your Marketplace
These days, subscription services seem to be everywhere — often in the places where you would least expect them. Popular peer-to-peer ecommerce site Etsy allows its users to create monthly subscription packages for their customers, offering bundles of items for deep discounts. Even the online marketplace and hospitality service Airbnb is getting in on the action, using subscription services to offset some of the costs of service fees for their homeowners.
In many ways, it’s a brilliant marketing tactic — you get a predictable monthly income generated by subscribers and your customers often get to try new products or services that may have otherwise passed them by, all while getting what they were initially interested in. However, the most important thing for you to understand is that not all subscription services are created equally. There is no “one size fits all” model — so much of the architecture will be dictated by the marketplace you’re trying to service, the strength of the value proposition you’re offering and more.
Subscription Fees: How Much is Too Much?
Perhaps the most important factor to determine while building a subscription service for a marketplace has to do with the amount that marketplace is actually willing to pay. This is tricky, as you can only make one first impression — price too high and you might send away a sizeable chunk of your audience forever, but price too low and you could invite fury when you need to raise prices to cover costs later.
If similar subscription services already exist in the niche you’re trying to fill, fantastic — learn as much as you can from them. What are people saying about their prices? Are they too high or too low? What mistakes have they made from conception to launch? How can you learn from those mistakes so you don’t end up making them yourself?
If you’re essentially entering into uncharted waters, don’t be afraid to reach out to real members of your target audience and solicit their opinion. Poll as many people as possible: “based on the value proposition of X, what are you willing to pay?”
Be sure to consider your own costs. Remember that subscribing to your service should offer something more than what users would get ala carte, and that “more” is usually “savings.” Realistically, how low can you go before a subscription service stops making sense in the first place?
Next, you must determine how often to charge someone — weekly, monthly, yearly, lifetime, etc. This will usually correspond to how often a user gets the product or service they’re paying for. If the customer is receiving a tangible product on a monthly basis, weekly pricing doesn’t really make sense. If they get something new every day (as would be the case with certain subscription podcasts, for example), however, that’s another story.
Many services offer a few different options for added benefit to their users. Birchbox, for just one example, offers both monthly and yearly subscriptions at $10 per month and $110 per year, respectively. Monthly users pay smaller amounts of money for their monthly box, whereas yearly users essentially get one month free. Both has a clear advantage that the other one doesn’t from the perspective of the marketplace, allowing you to attract different types of people in different ways.
Marketing Tips: Perfecting a Message
Once you’ve settled on the architecture of your subscription service, the most important thing you need to do is present that to the client in just the right way. Remember, you can only make one first impression so you’d better pull out all the stops to guarantee that it’s a good one.
- Start with your existing users — starting a subscription service is a big change, so it’s one that you need to let them know is coming as soon as possible.
- Build anticipation — use the few months before you launch to let people know what is happening, why you’re doing it, when it goes into effect and what they’re going to be getting.
- This type of lead time can help slowly take people off of the fence and prime them for a purchase on launch day.
Craft marketing collateral for all of your usual outlets — social media, digital, AdWords, etc. — that is specifically focused on what your CUSTOMERS will be getting out of the deal. Frame it from the perspective of “We are starting a subscription service and here are the details, through which you will get X, Y and Z benefits that you do not already have.” Put a lot of effort into making your audience understand not only why subscription services make sense, but why they make sense for them. If you’re able to successfully take this message and present it to your audience, launch day will be a rewarding one indeed.
Originally published at blog.near-me.com.