Attract Investors Using a Subscription Model

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The hardest challenge every entrepreneur faces is convincing investors that your business model is feasible. Stockholders definitely want proof that will tell them that you can deliver on your promise; and the option to prefer to a subscription model will do more than just lessen investors’ worries and concerns. Not only that, it will also give stability and permanence on your revenue stream. 

Revenue streams can be ambiguous. As you create your retail business plans and models, you make assumptions and brief estimates on average order sizes and possible repeat purchases. You are too excited in anticipating your business successful in figures which can sometimes be uneducated. 

That is the reason why there is subscriptions work – they remove the uncertainty.  Once you create a subscribers scheme every month, you simply estimate retention rates before you present revenue figures that both you and your investors can expect. We know that investors prefer business with long-term customers, and the best way to attract the sustainability of your business is by giving them a long list of valued subscribers. 

Opportunity Thrives. 

The subscription spaces are filled with opportunities and flush with models. By providing a cheap yet high-caliber product is the promise Dollar Shave Club made to its customers, which then give them a rapid success. Yes, this simple approach worked for them. The Club has been so effective on this strategy that Gillette has also began a subscription service. 

Graze, a lunchbox and snacking services have few players on its consumer, product and lifestyle categories. However, most of them are in still in the early stages which haven’t established themselves as the premier option. 

Everyone needs something and loves convenience. If you can make their lives simpler though a superior quality product then your idea is doable. 

How to Get Right Subscriptions and Relationships

A weak relationship with your subscribers can be detrimental in your subscription service. Getting people in the door and signed up might be as easy as pie, but convincing them to upgrade their subscription levels will be very hard. 

Building clients and brand ambassadors can be demanding. You need to create a relationship-centric content marketing and devise potential upsell strategies. This will show the fine line between a disrupting subscription services that succeed and the ones that fail.  

Birchbox is one of the most successful subscription companies. They focus on their customers and adopt the rewarding engagement system. For them, having customers to click on that “Subscribe!” button is not enough. They believe that in order to establish a continued success, you must excite your customers with upgrades and treat them as your trusted partner, not just as your customers.  

The subscription space is consistently giving many opportunities for entrepreneurs like you. Should you wish to try on this strategy, here are some advices you can consider: 

  • Don’t run after investments.

It sounds unreasonable to run after investments that may prevent you from creating a solid foundation. Ask yourself how far you can handle a business growth. From there, decide whether or not you choose a minimal investment with slower growth, or a maximum investment with volatile growth.  

  • Provide authentic consumer data. 

People might love Picasso-themed wristwatches but that doesn’t necessarily mean that people will subscribe to a monthly wristwatch delivery service. So what does this mean then? Well, it means that is relevant for you to smartly identify who your target audience is. You need to be specific what they really want both qualitatively and quantitatively. Asking them questions that are relevant to your brand will definitely help you gather more data about your target market. 

  • Know your enemy. 

Not everyone get into the subscription space, but that doesn’t mean you have to play loose with your competitors. You need to keep an eye on the current players in the market. Investigate and emulate their strengths, and make their weakness to your advantage. Netflix have tried this approach and said that it is really hard to study your competitors for you to be ahead of the game.  

  • Identify what you are best. 

You always have that one thing that you are best at. That is the secret of many subscription businesses. Figure out which part do you excel the most and use that to your advantage. Let’s consider SoulCycle which is a fitness studio. They offer various services like spinning classes, Pilates, yoga and Zumba but since they are best at cycling, they focused on that and positioned themselves as one of the best cycling gyms.   

  • Delight your customers with upsell and reward loyalty.  

Give your customers something to be excited about. You may offer multiple tiers, lengthen their subscriptions for a discount, or create a product community. Birchbox, for example, encourages their customers to post product video reviews in return of a reward.  

The subscription mode is undeniably a lucrative idea. The space is continuously growing and everyone is starting to embrace this approach. Do you think that switching to a subscription model will work for your business? If yes, then go ahead and give it a try.

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Author / Speaker / Career Coach Christian Haack is the author of the forthcoming book "Monetize Me! - How to execute key opportunities!" Christian Haack was one of the TOP 100 recommended trainers of leading European economic magazins in the area of communication and sales strategies. He is also mentioned as a top recommended professional in major US media networks, such as NBC, CBS, ABC and FOX. And for those, that are serious in creating an independend lifestyle to realize ones full potential, you will get access to it in this book. Don´t miss out, it definetely change your life.

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