If you've been looking for a way to have recurring income in your business
or in your life a subscription product might be right for you.
And today I'm going to show you how to start a successful subscription business
or product this can either be
as an add-on to your existing business or as a blueprint for starting your new business.
Hi, I'm Mei and I've been running my handmade jewelry business
for 14 years now and a very strong component of my business is a subscription-based model
product about 50% of my sales comes from my subscription product.
I sell handmade polymer clay food scented jewelry.
And I also sell these as a subscription called my necklace of the month club.
So what is a subscription or a club or a membership?
These are all just names for making a sale on An ongoing or recurring basis,
I'll talk about all of the different options coming up.
But the main kernel is that a person makes one commitment to purchase from you
and they will receive a product or a service on an ongoing and regularly scheduled basis.
These are really great things to have as a part of your business because as you know,
the hardest part of making a sale is getting that customer to make the decision
and click the buy button and
so the more you can remove that barrier
and set up a process so that the purchase is happening in an An ongoing way the easier it
is for you to make a sale a subscription stops when the person unsubscribes.
I don't think I need to tell you why you would want to have a subscription product
but it is a lot of extra work.
So that's a downside but making ongoing recurring sales that you
can count on from month to month is amazing.
Right not only does it increase your overall sales,
but it also adds a layer of reliability to your business.
So when your subscription component of your business becomes Wrong,
you can then start to know
and expect that you have X amount of money coming in per month
and it can really revolutionize the way that you look at your balance
sheet because as handmade businesses,
we all have crazy ups and downs.
I call that the roller coaster of being self-employed,
you know holiday time and make loads of sales maybe another month.
We hardly make any and a subscription business is a way to regularize these sales.
How do you know you're ready to start a subscription business or a subscription-based?
Product. Well first your business needs to be consistently creating product.
You would need to create and deliver a product on a schedule a subscription means
you're promising a person that you're shipping their product out
as scheduled and it's going to happen month after month.
So you need to make sure that you're able to consistently create product and meet demand second.
Do you have a customer base that would benefit from this product?
So this can take one of three forms you may have customers that
are constantly reordering from you if there.
Leasing regular orders from you. That's a signal that you have a customer base that
would benefit from some kind of automated recurring service
or automated for them or you may have some customers who are always wanting something new from you.
For example with yarn or DIY wires or with fabric makers third.
And this is primarily where I fall under with my subscription is
if your shot has a ton of different designs
and it's something that people naturally want to collect over time,
but they can't decide what design To buy first so joining.
My club is an easy solution to that.
If you think you have a small segment of your customer base that would
benefit from an ongoing purchasing Arrangement.
Then this could be right for you. The third big pillar I think is important to know
that you're ready to start a subscription-based business
or product is that you're prepared to manage the infrastructure in terms of the technology
and the inventory.
So I'm going to talk a bit more about these details
as we go but you do not want to have a Wix website.
Or like a spreadsheet that you're filling in manually line by line
when a payment comes in and if you're putting stamps on envelopes
for postage that system will work for the first five or ten customers,
but who will quickly drive you nuts.
So you want to be prepared to invest in a little bit of infrastructure.
If you're making a lot of sales already. This is possibly infrastructure you already have
because of the ongoing nature of this kind of model you would like to be able to automate your sales
and Went to some degree and because a subscription product or business is more complex.
I don't really recommend it to people who've never run a business before
or if you're just getting started getting subscribers is also going to be a lot easier for you.
If you've already got a customer base,
but it doesn't have to be a big one. Now.
What does this subscription product look like here?
There are two kinds of subscription products.
The first is what I like to think of as a refill subscription and too.
Novel subscription. So what are we feel subscriptions?
These are things that you would subscribe to
because you're going through them and reusing them on a regular basis.
So this is what Amazon does
when it says would you like to subscribe and save on like cereal or razors?
This is with Dollar Shave Club, right?
Would you like razors deliver it to your door every month
for decades cosmetic companies have been working like this you
use a certain amount of moisturizer you use it
up and you need to reorder it every two months or like with contact lenses or soap or lotion.
So if you have a handmade business that falls into this
category of people using your products in a very
regular way than a refill type of product subscription might be right
for you.
So things like food makeup self-care even clothing you can picture socks
or underwear being under this model right things that get used
and where the purchases are at a predictable schedule that's in contrast to
what I'll call the Volt subscription.
So a novel kind of subscription is people who are looking
for something new and interesting and they want it delivered to their door.
So with my club, I'll send you a new surprise necklace every month to your doorstep.
It's always a different design
and people love it Stitch fix with the clothing subscription is very similar,
right? They send you a box of clothing every month yarn clubs.
So if you knit or crochet, you'll know that these clubs have been around for a while.
We're a yarn dire. We'll send you a new skein of yarn every month in a completely new
color Quilt Block of the month clubs crafting supplies.
I've even seen artists who send out book chapters
and I guess the oldest example might even be book clubs right where you used to get sent by
mail and you book Netflix was like this with movies in the olden days
when they used to ship you a new DVD,
so there's lots of options for novel type subscriptions.
And this is where I think most of you will be in terms of what you actually be selling.
This is where brainstorming comes in.
You'll have to push yourself to think honestly about
what your customers want on a recurring basis and which products you could offer to make this work.
Now. Let me talk about another decision point you have to make in the structure of your clubs.
So there are two options for how you're going to offer.
The subscriptions one is a sequential subscription and the other is a monthly subscription.
The difference is a sequential subscription is everyone receives
the same thing on the first month that they sign
up so I may sign up in January.
You may sign up in March our first shipment.
Let's call it box one, right? So we're getting it in different timelines.
I'll get my box one in January. I'll get box to in February.
I'll get box 3 in March when you're getting box one because that was your first month.
So this is the sequential subscription system.
You can see how long it took me to explain it and no doubt.
It will also similarly require the same amount of Learning to your customers.
So that's a disadvantage.
But this is how I do it now a monthly subscription system is
what you will see most often out there with other big subscription businesses
how it works is in March everyone receives the mark box
and then in April everyone will receive the April box
so I can sign up in January and you sign up in March.
I will receive the January box and you signing up in March.
We'll never be able to get the January box because you missed it.
I used to do it this way,
but it was a nightmare for me and I'll talk a little bit more about that later.
So let's talk about the pros and cons of these options.
Let's start with the sequential subscription.
This is the option where everyone starts on box one regardless
of when they signed up it is a little complicated to explain to customers
and it also requires careful management of your inventory.
So let's say you're offering a year-long subscription to people there will be months where
you are mailing out 12 different kinds of Boxes to different people
so say for example,
there's the person who signed up in February.
There's the person who signed up in March and they're all on their own different timelines.
So for sure you need more than anything else your systems under control
and your technology and plates to know what to send to whom in terms of inventory.
You also have to make sure that the products
for all of your different months of boxes are in stock
and that has pros and cons the advantage to that is you an order
or make 500 of whatever design you put in box 3 and sort of always have it in stock and available,
but you're also locking up that inventory.
So this will just differ for everyone in their different businesses.
I use this system and it works
for me because the necklaces I'm offering in my club are necklaces that we already sell on our site.
So these aren't exclusive new designs.
We already have the inventory for them.
One thing. I really like about this system
and this is how my necklace subscription Is it allows you to
develop a complete line over the course of the year
or multiple years you get to control the entire experience.
So for example, I've seen a company that has kids
for kids and in the first month everyone gets a backpack,
right and then in the second month they get X and then Y and then Z and so because you know,
everyone gets box one when they sign up you can create in some sense of
better experience over the course of the year
because your first package can be this amazing.
Ying intro kind of thing so everyone starting off on the same foot being able to make that
experience the best it can be prevents people from unsubscribing
so you're getting people to stay on
for longer in your subscription which when you get into this business,
you will learn that it's the most important thing aside from getting new customers to join
and you are also in some sense better able to control your costs and price over the full system.
So say for example months six, you've identified
as being a month where people tend To quit the club
or the subscription you can then strategize
and send everyone this really really cool product to keep them excited throughout the months
and that discourages people from leaving your subscription.
And you know that everyone gets this bonus or really cool product.
No one is going to miss out on it. This is the total opposite
for the monthly subscription system where if you send out a really cool product in April,
some people will miss it if they sign up and me and that can cause a bit of friction.
In with your customers, so that's how the sequential system works.
The advantage is that you don't need to constantly keep developing new product,
which was what I needed because
as you'll see this is a big disadvantage for the monthly description.
So the monthly subscription kind of Shipment has different
advantages one huge Advantage is that there
is a community aspect that you cannot get with a sequential subscription.
You can use the monthly shipment
as a way to generate lots of community engagement
and Direction so that everyone gets sent the same yarn in March
and we all knit the same pattern you can set up a Facebook
group and you can ask people to show you
what they got you can have events
and you can create all kinds of excitement around this month's shipment.
Whereas with the sequential subscription if people are getting
different boxes every month that just doesn't work.
Everyone gets really excited about what's shipped out this month,
which actually helps a lot with your marketing
because when people are excited people will
share and post and talk about
But your shop so what about that fomo the fear of missing out from
people who weren't a part of your subscription
when you sent out a really cool product that month.
There is a workaround for that. Some people make available after say three
or six months the products from previous month subscriptions
and they make that available for sale on your site.
You don't have to be a subscriber to the club to buy those products
so you can always do that
as a way to create separate product listings
for people who missed out
but you don't Want to get rid of the exclusivity factor that you've created with your subscription.
So there is usually some kind of wait time
and I also recommend that you price those products that you
release later at a higher price point then
what you would pay.
If you are in the subscription one of the biggest downside to the monthly subscription system is the
need for continuous Supply sourcing and designing which can be difficult.
And for me led to serious burn out after a year of being on this hamster wheel it For me,
especially since it usually takes me a long time.
Like it takes me two to three weeks to make a new necklace design the upside to that is if you know,
you have X number of subscribers,
you can order a just X number of supplies
for that thing and you don't need to constantly keep these items in stock like you would
do for the sequential system.
This way is also a tad easier on customer service.
Now, let's talk over the technology.
I'm going to go through this briefly
because I do have some other Videos that talk about which website platform is best for you.
So you want to have a powerful website that has access to the technology for handling subscriptions.
Now, I'm already a huge fan of automation
but Automation and the power of it and the value of it applies to your even more.
So because if your subscription is a success more people are going to be signing
up and they're going to be staying on
so you want to make sure that this system that you have is seamless
and smooth for Or everyone
for example a really quick
and easy way to get a subscription product started is with
using the PayPal subscription feature where you
create PayPal buttons that are set up to charge the customer on a recurring basis.
And then PayPal gives you HTML code that you can then take and put onto your website super simple,
but you're going to have to do a lot of other things manually
and that's fine when you're just starting small.
But as I said as you grow it becomes a huge pain
and switching off of using PayPal buttons is also a different kind of pain
and if you can I also really encourage you
whether you're a Shopify or woocommerce user to get an app that
connects your website with your shipping system.
You want this integration to be
as smooth as silk because you're already going to be dealing
with the ordinary struggles of running your
business plus the inventory struggles of getting the subscriptions rolling on time
and these hard deadlines and you don't want that your website or the payments.
To be a problem for you, right another
way for me to explain why it's
so important to start with the right systems is if your system had some leaky holes
and problems when you've got 10 subscribers
while it may not be any trouble to you to manually handle
and fix those problems for just 10 subscribers.
Those problems will be magnified when you're dealing with 50 subscribers or 100 subscribers,
and it's very very difficult to change systems later on.
So I really encourage you to spend more time.
Effort in the beginning to get your technology under control in terms of pricing keep in mind that
as you sell these items to more people and as your ordering in larger quantities,
you will be able to get price reductions from your suppliers that you can pass on to your customers.
So for pricing you could actually charge a lower price
point because your costs are lower
and you want to make it a no-brainer
for customers to join your subscription over buying your product sell a Cartwright.
Now when it comes to your marketing subscriptions make your marketing job
so much easier because you're doing the marketing work to turn a visitor into a customer
once and then they bring your recurring sales for months.
You're going to get a much better return on investment for all of your marketing work.
So for example, I might pay $15 worth of marketing effort
whether that's social media posting
or email marketing or paid ads to make a 40 dollar sale with a subscription product.
Know anyone who joins ends up staying
for a few months and then they usually spend a total of like a hundred dollars
and I've only spent $15 to make that sale so you can see how it's more profitable.
Right? So make sure you put on your marketing a game here.
This may even be the time that you want to start working on paid ads because like I said,
the return on investment is going to be so much higher with the marketing that you're doing.
I have an entire Facebook ads training for handmade sellers in my osela date.
An assistant program if that's something you're interested in.