SHOPIFY 1% WINS: The One Thing the Best Subscription Brands Do Different.

Hey friends, and welcome to another Shopify1Percent Daily Short. Guess what? Today, you're joining me on my drive. These are just little shorts, five to 10 minutes long. The whole purpose is to share a short, meaningful, impactful bit of something that can help you grow your store.

I, I listen to probably like, I don't even know, maybe 40 or 50 podcasts a week. I'm a huge consumer of podcasts as well, so I'm on, I'm on both sides of the fence and. Sometimes I love a big long podcast. You know, that's like two hours long, like the Steven Bartlett and Joe Rogan style, and sometimes I love short five to 10 minute ones that I can just get a little bit of wisdom from.

And so that's my goal with these shorts. And so it's been really fun. I've been getting a lot of positive feedback. Some people say they should only be shorts my, so I don't know what that means. Maybe my other episodes are too long. I don't know. We'll work on that. But either way I've been having a lot of fun with you, so I'm gonna keep doing them.

And I just love having you on my, my walks and, and my drives and so. What I wanna talk about today is something that is like very near and dear to my heart, and I actually get asked this question a lot. And it, the question is like, exactly what makes the best subscription brands successful. And you know, I just wanna say right now, before you go any further, whether you're selling subscriptions or not, you should listen to this because, if you're not selling subscriptions, there is a very, very, very good chance you will be within the next year or two. It's, there's just a massive movement towards subscription. Every single, I mean, I talk to investors all the time, my, like Nick Sharma and Jeremy Horowitz and you know, guys that invest in the D two C space and they, they almost exclusively won't invest in a brand that doesn't have a subscription component.

They just rule it out. If you're a one time. Product company, they, they won't even look at you. And it's rare. There is some, but it's very rare. So, you know, having a, some type of a recurring revenue component is so important. So, this doesn't just apply, you know, like if you're selling vitamins that get shipped every month, like we're seeing clothing brands that you would think like, oh, clothing's not a subscription.

But it can be, it absolutely can be. You can have membership programs where. You, you're, you pay a, a membership and they get a discount on, on product. They might actually get physical product every month. They might get credit every month. Fab Tics does that. They do a great job of that, where you pay like 50 bucks a month, but you get a $75 credit every month.

It, it's worked incredibly huge. And I'll actually, I'll talk a little bit about that in a minute. 'cause that was rolled out as a emergency when they were low on inventory, but they wanted to keep their customers. But it's turned out to be one of their main. Revenue drivers. And so they've kept it. So whether you're selling subscriptions or not, this is a very gonna be an important episode.

Okay. So the question I get asked is, what makes a great subscription brand? Like what, what are the, what are the good ones doing that? The bad ones are not. And we've had. Gosh, I don't even know. Probably a hundred thousand Shopify stores use Shopify1Percent to power their subscription program. I, I, we've been doing subscriptions since 2014, so we have seen a lot, a lot of subscription brands we've seen.

A lot of really good ones. Some of them have been acquired for a hundred over a hundred million dollars, some of them. And some of them are just absolutely horrible. I, no offense if that's you listening, but there are some really, really bad ones out there. And actually one of the biggest mistakes a lot of brands make 'cause they just think, oh, I, I need a subscription.

And they, I always call it the subscription bandaid. They just slap on a subscription and they think that, oh, now I'm, now I offer subscriptions. And that's, no, you don't. Subscriptions actually like the a, a subscribe and save option is really table stakes now. Like if you sell anything that is, has any kind of replenishable component to it, if you don't have a subscription on it, it's like not offering credit card at checkout.

It's like not, not offering delivery. It's like making customers come and pick it up. Like you just have to, like, that's table stakes, but then how do you be great at it? So, let's dive into it. I think one of the biggest mistakes, well, not mistakes, but what a lot of subscription brands, they see themself as a certain type of subscription and, mcKinsey put out a report a few years back on the three different types of subscription, there's replenishment, curation, and access. And so Replenishment is a subscription brand that sells a specific product and. The customers get that product every month. Curation is a subscription, you might think of like subscription boxes or a t-shirt of the month or something, I dunno, but it, it's not the same product every month.

It's a different product with an aspect of curation. So the, you know, if it's a coffee box of the month, it's different coffee, different flavors. And then the last one is access. And so some people might say, oh, I'm an access subscription. What that means is you pay a certain. Amount every month to get access to something.

And then access can be to content on your site. It could be access to you, it could be access to products. Maybe members get access to VIP pricing. Maybe members get access to a different category on your blog. Like there's a member only section, but it's, it's access. Could be real life access too, like events and other things.

So those are the three. Types of subscription replenishment, curation and access. And the way it broke down actually replenishment, if I'm going off my memory, but I believe it was like 53% and access was 30, no, it was 51% replenishment, 38% curation. And 13% access. I believe that adds up to a hundred if it doesn't give or take.

But that's so, so just over 50% of all subscription brands said that they were a replenishment style. 38% said they were curation, and 13% said they were access. So we looked at the top. This was a couple years ago, we actually did a report on I think it was called like the the seven strategies of subscription brands that are winning.

And it's actually still an ebook. You know what I'll put, I'll put a link to it in the show notes. It's an ebook you can download on our website on, well on boldcommerce.com. So not on the Shopify1Percent, but I will put a link to it on Shopify1Percent. It, it may be from maybe three or four years ago, but it is 100% still relevant.

And so. What we did is we looked at, I think it was the top 100 subscription brands using Shopify1Percent, and we just tried to, like, identify tactics that they were doing that the bottom 100 weren't. So we looked at like the offer, how they were structuring it, what type of discount were they giving on their subscribe and save?

How are they packaging it? What type of wording were they using on their product page for like, objection Busters, like canceling time. What, what did their subscription management look like? Just every aspect of their offering and their subscription program. And then we tried to figure out what were the top brands doing that the bottom rounds brands weren't.

And there's a lot in there, but one thing that. Really stood out. And if you wanna read the full seven, the seven strategies that we found that the top brands do that the others don't read the ebook. But one thing I wanna highlight that we found was actually unexpected, and we weren't really looking for this, but one thing that we found is.

All of the top brands, we couldn't put them into a bucket. We couldn't put them into a replenishment bucket only, or a curation bucket or an access bucket. The top brands, all their subscription offering all had a component of each bucket. So for example, there's some coffee brands just, I often use coffee as an example, but like there this, there was some coffee brands just killing it and they didn't sell.

The same coffee every month. They sold coffee every month. So I could subscribe to the flavor I like. But they also had an aspect of curation where each month they would, the subscribers would get an email. With an offer for a handpicked flavor of the month from the head roaster or something. But some, some type of curation or there would be something of a seasonal flavor offered.

And so even though it was just a replenishment subscription, like I just literally want my dark roast every, every two weeks or whatever there was still curation built into it, and not just that, they also had access built into it. So. Because they were a coffee subscriber. They got the curation component, but they also got VIP pricing on everything else on the website.

So like if they needed a milk frother or extra cups or spoons or, I dunno, coffee makers, any other coffee supply syrups, creamers. They had VIP pricing on everything else and they also had, some of them did member access to, like, while you're subscribed, you have access to products and discounts. That other customers don't.

And sometimes they were just discounts on the front end of the website. Sometimes they were exclusively in the customer portal. Often we found that a lot of the top brands had access to founders. They did things where, I think this was during the pandemic, 'cause I remember one of the most common ones was like Zoom calls with a founder.

So let's just, I using the cough example, but this can be with pet food. This can be with health. Health and wellness supplies. This can be in the furniture industry. Actually, we saw one where. Your membership gave you access to a designer you'd get, it was like half an hour of a designer's time per month for consulting.

But the, the whole premise was that as I'm a subscriber, I get my coffee every month. I got my curation, I got my, my product that's recommended to me. And I then also had access to the VIP pricing, but I also had once a quarter a member's only Zoom call with the head roaster. And this would be like, have coffee with Jay, you know, if I own the company.

And on this Zoom call I talk about our company, I give a behind the scenes, some sneak peeks at new flavors coming out. I talk about how the beans are made. Maybe I show some video from behind the scenes or, you know . But it's like exclusive access to to the founder.

And that was a component of the membership subscription. So. And the point is all of these great subscriptions, the ones that were like in our top 100, they weren't in one of the buckets. They had a component of all three buckets in and so, what I want to get across here is that if you want a great sticky high LTV recurring membership subscription program, you need an aspect of replenishment, an aspect of curation and an aspect of access. Because at some point that customer is gonna get tired of your product. And if your subscription is only about the product, when they hit subscription fatigue and subscription fatigue is when you've hit it. I guarantee you. Let's say, let's, I'll stay with my coffee example.

You get three or four bags of coffee built up in your cupboard. Maybe you went away on vacation for a month or two. Maybe a friend bought you a bag of coffee and now you've got some extras or whatever it is, but you've got a few extra bags of coffee and this applies to everything deodorant, your vitamins, your.

Whatever. Once you have a couple extra and then your subscription comes, you go, oh, shoot, I need, I should cancel that subscription. I've got too many. And now if it's only about the product, of course they'll cancel. There's not, there's no other benefits there. So that needs to be about more than just a product.

But now if they hit this point of subscription fatigue. But now if they cancel my coffee subscription, they are going to lose their VIP pricing. They're gonna lose their monthly curation curated flavor. They're gonna lose access to exclusive products, access to the founder. They're gonna lose all these other benefits.

Well, they'll think a little bit longer about canceling the subscription, right? So it's not just the product I'm losing, I'm losing everything else. And so that's why, once we saw this trend, it all, it, of course it like light bulb went off. It makes sense. Yes, of course these brands have a higher LTV, longer retention, lower turn, like every metric was better.

Of course it makes sense because there's, it's a multifaceted subscription. It's not just about the product. And the same thing goes about brands that are just curation or just access. If you just give access. Well, they might get tired of your access. They might not need, maybe they find coffee somewhere else that's cheaper.

So your VIP pricing doesn't mean anything. Maybe maybe they've had three calls with the founder and the novelty of that has worn out. And so people will get tired of just access, just like they'll get tired of just replenishment. And they'll also get tired of just curation. There'll be times where, you know what the, the flavor that you recommend.

That month. Well, they don't like it or they're, they're tired of, they just want their flavor they like and, and be done with it. So all three components, it's very easy for a subscriber to get tired of, but when you have three different value benefits of your subscription, it's very hard for them to get tired of all three of them.

Okay. So I went a little bit longer than I thought. It's we're, we're closing in on 15 minutes. I apologize. I try to keep these. Around the seven to 10 minute mark. But this is something I'm very passionate about. If those who don't know me, I, I speak on subscriptions all the time. Huge, huge part of what we do at Bold.

So I, I sometimes I can go on and on about subscriptions further. There was a, just for the record, there was about 20 things I wanted to say in this daily short, but didn't. And so I'm gonna save some of those things for my next one. But, if that's it for today, hopefully you got something out of it and hopefully this helps some of you.

This is so fun. I love having you on my, on my walks and my drives, and I'm really excited for the next one. I'll see you tomorrow.