Today, you can buy about anything on subscription, including dog toys from BarkBox, razors from Dollar Shave Club, streaming video content from Netflix, music from Spotify, beauty samples from Birchbox, ready-to-make meals from Blue Apron and even rental cars from Zipcars.
We are living in a "subscription economy." Today's consumers would rather subscribe to services, with a much lower upfront cost, than pay to own products outright. Millennials, in particular, have gravitated toward this purchase model.
So what is it that our largest generation in history finds so appealing with subscriptions?
Ownership is no longer important to this generation. Consumption is much less appealing. In fact, having access to everything is much more important than owning a few things. The average age of first-time home ownership has increased significantly over the last several years as Generation Y is happy to rent, instead of buying their own home.
Combine this comfort level with renting with the anxiety Millennials have in committing to a product or service that will inevitably go out of date, and it's no wonder why the subscription model is thriving today. The product, service and technological advancements this generation has witnessed in their lifetime have created a constant desire for newer and better things. Subscription services don't require a large financial commitment, and if something better should come along, many subscriptions are built around the premise of constantly updating their inventory to the latest and greatest.
Millennials also prefer to have mobile access to products and services while they're on the move. Convenience is a top priority, which is why services like Spotify have proven so popular.
Zuora, a subscription billing company, estimated in 2012 that more than 15 million companies in the U.S. and Europe were already using or were likely to soon embrace a subscription model. Imagine what that number looks like today.
Part of what makes a subscription service appealing to business owners is the high rate of inertia. They are counting on consumers to be too lazy to cancel a fairly low-cost subscription, even if they aren't actively using it. The other appeal is the predictability of sales months in advance giving confidence in future revenue projections.
Customer acquisition is often the most challenging aspect of a traditional sales model, but with a subscription-based model, it's all about customer retention. Retention begins with quality products, of course, but customer service must-haves like on-time shipping and accurate, real-time package tracking are just as important.
Inspired to start your own subscription service? Don't be bound by the notion that it's only for typical consumer products. Countless unexpected industries are jumping on the subscription bandwagon. Case in point: Doggie Lawn delivers real-grass patches in a box to apartment and condo dwellers each week.
Let your creativity fly when dreaming up your subscription service, but make sure to conduct consumer testing before you invest heavily.
Lori Turner-Wilson can be reached at www.redrovercompany.com.