Subscriptions

More than a decade ago I worked with an e-commerce startup. You could buy their products online, or you could sign up for a subscription, allowing you to continue to receive products on a monthly basis.

My job was to evaluate the subsequent behavior of a subscription customer vs. a classic e-commerce customer.

• The e-commerce customer bought +/- 3 times per year, had a reasonable repurchase rate, and continued to buy +/- 3 times per year moving forward.
• The subscription customer? The customer bought for three consecutive months ... unsubscribed ... then just disappeared. No/Few subsequent purchases.

You should have seen the mortified look on the face of the Owner - I met him in Seattle for lunch, to go over the results of the analysis. He looked like somebody slapped him in the stomach with a pickleball paddle. He realized, quickly, that he simply accelerated all purchases that would be spread out over time into a short window, got a sugar high for his efforts, and then immediately needed new customers or he was finished.

A year later, his business was finished.

It isn't easy to do, but a good subscription program accelerates purchases without dissuading subsequent activity. The best subscription programs capitalize on perishable goods that must be replaced. You need 5G to make your iPhone work, so you keep paying for it. You don't necessarily need to keep eating pretzels with specialty mustards.