A 5K race and a marathon require different skills and different focuses. As do the retail marketing model and the subscription model: Retail relies on sporadic surges in customer activity; subscription depends on developing long-term customer relationships.

The subscription model is taking off in popularity, with Starbucks joining the trend and Dollar Shave Club striking fear in the heart of Gillette.

A firm understanding of how the subscription model differs from retail can be the difference between success and failure for marketers.

Subscription is different

Retail relies on impulse buys. Therefore, the size of the initial purchase determines whether the sale is successful. Subscription models revolve around lifetime value (LTV) and the chances of upselling customers in the future.

For a subscription model to pay up to 100% of the initial sale in acquisition costs wouldn't be absurd (assuming the customer sticks around for six or nine months). But retailers would run themselves out of business if their costs of acquiring new customers were so high.

For that reason, subscription marketers have more to consider than retailers. Subscription models must...

  1. Attract the right people (not simply as many people as possible, like retails can)
  2. Retain those people and develop marketing efforts around defeating churn
  3. Grow the relationships with those people by convincing them to rate, review, and ultimately continue purchasing from them (Birchbox is particularly good at it.)

Doing those things right requires almost exponentially more work than what retailers have on their plates. And it doesn't stop there. Each of those considerations manifest in even bigger tasks.

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ABOUT THE AUTHOR
image of Peter Figueredo

Peter Figueredo is the head of client services at end-to-end digital performance marketing agency House of Kaizen. He and his New York City-based team are responsible for client happiness.

LinkedIn: Peter Figueredo