Founder of Four Sigmatica functional food company that makes the world’s most nutritious foods tastier and easier to consume.
I don’t agree with the saying “the customer is always right”. But at Four Sigmatic, one of our first principles is that we need satisfied customers. Without them we wouldn’t have a business. This is true both financially (they pay our salaries and expenses) and spiritually (increasing their well-being is our goal). It’s also cheaper to keep a customer happy than to keep attracting new ones. As a company that started in DTC, we’ve found that the best way to keep customers happy in the long run is with a subscription that serves them even as we expand into retail and other e-commerce channels.
If you currently own a DTC business and are curious about starting a subscription service, here are four tips we found essential:
1. Find out who your customers are and what they value.
First, determine who your customer is and what would make them happy. For example, our key demographic members are busy moms, ages 30-50, who are focused on sustainability and health. They are focused on long-term routines that fit into their lifestyle and feel good, but also don’t hamper their budget. They are also busy, so if they need to change something or have a problem, they need help quickly or they are gone.
We’ve seen value for our consumers with a number of benefits you may want to consider for your business. First, flexibility is always the most important feedback. Allow members to easily skip, switch, pause or cancel on the online platform without having to contact customer support. Moreover, not every consumer is the same, so personalization is essential. One way you can achieve this is through a white glove service such as first-in-line membership concierge access. Always offering member discounts and free shipping in the US is a table bet, as I’ve found Amazon sets expectations for subscriptions and loyalty programs.
2. Get ready to compete with Amazon.More than 200 million people have Amazon Prime. Most people are used to smoothing out member portals. The online membership experience should be very easy to skip, switch or pause products. And yes, it should be super easy to cancel outright. Nobody likes subscriptions that take an email AND a phone call AND an opt-out form to come out (and then your credit card is charged again). While some consumers will be Amazon loyalists and others will never buy from Amazon, many of us do both. So make sure your own subscription offering is competitive to some extent with Amazon when it comes to price and convenience.
3. Make subscription customers your priority.
When marketing subscriptions, we make sure that we don’t just call it a subscription-and-retention program. We have a membership and our members are ‘Everyday Magicians’.
Make members your top priority for your DTC business. Consider creating member-only content in a restricted group on social media. One of our biggest mistakes at the beginning of our subscription program was having big sales (like Black Friday and Cyber Monday sales), trying to get as many customers as possible with really big discounts. While we wouldn’t advertise these sales to members, many would find them, cancel their membership and stock up while the products were on sale. We recently changed this so that all sales are available to members first, with full access to the highest discounts for existing members.
While price and convenience are often key drivers of success, don’t underestimate community and education. But whatever you do, to stay in this business, it’s crucial to make subscriptions a priority. Having a subscription offer and service as an afterthought will not make it a success in today’s competitive market. Again, if you do this, many of your customers will likely turn to your competitors.
4. Word of mouth is key.
We have found that members are our best DTC consumers. They are passionate about our products and true ambassadors of our brand. Very rarely do people subscribe before they know they like a product. So make sure it is easy for them to refer their friends. Consider implementing a program where customers earn money from their future orders when their friends place an order through your referral program.
Brands will probably always struggle to determine which competitive prices will drive new consumers to join your membership. Consider developing additional rewards (free products, merch) and several key milestones in the membership journey if you find yourself losing customers. For example, we’ll be testing our first member-only product next month.
Having strong referral relationships is very important. Especially now that the DTC brand is struggling to pay the high customer acquisition costs with Facebook and Google. So I’ve found that having really happy customers telling their friends is really one of the few long-term winning strategies.