Now that you have some idea of what a subscription business is and how it works, you’re probably ready to learn about starting one yourself. Here’s the step-by-step process to do the same.
1. Make A Plan
First of all, you need to decide the type of subscription business you want to start. It can be related to your current job or business or whatever industry you have experience in. Once you’ve done that, next you need to set goals in terms of how much revenue, customers and subscription you want in a certain period. At the same time, you need to identify a target audience based on the content or service you are planning to offer.
To keep things simple, set goals in terms of time, i.e. what you want to achieve in the next 6 months and so on.
2. Market Analysis
Before you get into the business of subscription-based content/service, you must research the market, including other businesses providing similar services to know more about your target audience and what kind of content they like the most. At the same time, you need to list down the limitations of each of your competitors so that you can create your product to overcome these limitations as far as possible.
After you have a good idea of what your competitors are offering, you can figure out what else you can offer or how you can offer a better service to attract their customers. For instance, a competitor might be offering services at a very high price and you can consider offering similar services at a reduced price to offer customers an affordable alternative.
Another thing you need to find out is whether there is an actual demand for this kind of service in the target market. You should probably not start a business where there are already too many providers of the same service (too much competition) unless, of course, you have something extraordinary to offer.
3. Identify your target audience
Now that you have some idea of the type of customers you want to target, make a detailed profile of an ideal person who would be willing to subscribe to your platform for a fee.
4. Identify your Value Proposition
Every business has a value proposition, i.e. the value they can offer to their customers. Identify or build yours. Include how your subscription will be different from that of the competition.
5. Set a price
Since you’re just starting, make sure that your subscription model price is competitive or if possible, the lowest among the competition. This will give you a good chance to get customers looking for great content at lower rates.
Some of the popular price models you can choose from include fixed-rate, per-user, per-view, content quality, usage-based, and freemium.
6. Analyze and adapt
So, you have built the perfect product based on your idea of what your audience wants and the type of content/service that will have a great demand in your industry, what’s next? Well, before you get all excited and are ready to launch your subscription business, the most important step is testing.
Besides in-house testing during and after the development of the project, you can consider beta testing, which involves finding people from your target audience who would be willing to test your product and share useful feedback about their experience. Based on the feedback you receive from beta testing, you can consider making appropriate changes to make your product more attractive. Then, test it again.
Testing shouldn’t be limited to before the launch of the product. Rather you should continue testing your subscription business and its performance throughout its lifetime. Here are a few metrics that you can track to get a good idea of the performance of your subscription-based business.
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Customer Acquisition Cost (CAC) – It’s the average amount spent by you on getting a new customer, including sales and marketing costs.
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Monthly Recurring Revenue – MRR is the monthly revenue or average monthly sum that you are making from your subscriptions.
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Average Revenue Per User (ARPU) – It indicates the average revenue each of your subscriptions is contributing to the platform.
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Gross MRR Churn Rate is the rate at which you are losing subscriptions. Ideally, the churn rate should be lower than the platform’s growth rate.
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Lifetime Value (LTV) is respective to each customer in your subscription business and indicates the value/revenue brought by that customer during the time they were active on the platform.
Marketing your subscription-model business is equally important, particularly when there is already a lot of competition in the space. You can try and use basically any marketing strategy for the online promotion of your new business. Some options include email marketing, social media marketing, content marketing, public relations, influencer marketing, video marketing, free trials, and paid advertising.
Now, you have all the information you need to start planning your own subscription-based business. There are many options you can consider – an OTT platform, email subscription, online course, or membership subscription, among others.
