If you ask any entrepreneur, starting a business comes with its fair share of challenges.
Starting a subscription box business requires a great deal of effort, dedication and most importantly passion.
If you're willing to put in the effort to build your own business, you're going to want to follow the critical steps to creating a successful brand.
We've created a guide that covers each step of the process - from making key financial decisions, to launching and marketing your business the right way, and tips/strategies on how to grow your business effectively.
💡 Introduction To Starting A Subscription Box Business
Is The Subscription Box Business For You?
Let's look at the pros and cons of starting your own subscription box business
- Flexibility: One of the biggest advantages of starting a subscription box business is that you can put as much time into the business as you'd like. If you like the work and have some initial experience, you can start small and manage all aspects of the business on your own.
- Ability to start your business from home: It's not necessary to have a physical storefront or office space to get your business started. You can do everything from the comfort of your own home, at least in the beginning!
- Little startup costs required: The cost to start a subscription box business costs significantly less money than most businesses, ranging anywhere from 12 to 27,209.
- Rewarding work: Starting a subscription box business can be really rewarding and fun work. After all, you're bringing joy and excitement into peoples lives.
- Crowded space: Competition is high when it comes to your subscription box business, so it's important that you spend a good amount of time analyzing the market and understanding where the demand lies.
- Finding the right supplier: Most businesses in this space go the supplier/manufacturer route, which isn't a bad thing! However, finding the right supplier can take a lot of time, energy and trial/error. If done properly, this process can save you months (if not years) of time and energy. More on this below in the "finding a supplier" section.
Creating a successful subscription box business means that you will have the ability to sell, provide stellar customer service, communicate with vendors and motivate your team (even if it's down the road)!
We've interviewed several different founders in the subscription box business and asked them how much $ they're making today.
- $78K/year in revenue
- Sells candy surprise boxes
- Solo founder
- 0 employees
- $420K/year in revenue
- Sells curated shopping service
- 2 founders
- 5 employees
- $4.8K/year in revenue
- Sells unique gifts for brides
- Solo founder
- 0 employees
- $120K/year in revenue
- Sells tiny books.
- 4 founders
- 0 employees
- $120K/year in revenue
- Sells gourmet food box
- 2 founders
- 5 employees
- $240K/year in revenue
- Sells cigar subscription service
- 2 founders
- 0 employees
How To Name Your Subscription Box Business
It's important to find a catchy name for your subscription box business so that you can stand out in your space.
Here are some general tips to consider when naming your subscription box business
- Avoid hard to spell names: you want something easy to remember and easy to spell for your customers
- Conduct a search to see if others in the space have the same name
- Try not to pick a name that limits growth opportunities for your business (ie. if you decide to expand into other product lines)
- As soon as you have an idea (or ideas) of a few names that you love, register the domain name(s) as soon as possible!
Why is naming your subscription box business so important?
The name of your business will forever play a role in:
- Your customers first impression
- Your businesses identity
- The power behind the type of customer your brand attracts
- If you're memorable or not
It's important to verify that the domain name is available for your subscription box business.
You can search domain availability here:
Find a domain starting at $0.88
powered by Namecheap
Although .com names are the most common and easiest to remember, there are other options if your .com domain name is not available. Depending on your audience, it may not matter as much as you think.
It's also important to thoroughly check if social media handles are available.
As soon as you resonate with a name (or names), secure the domain and SM handles as soon as possible to ensure they don't get taken.
Here's some inspiration for naming your subscription box business:
- Shutterbug Box check availability
- Aspect Box check availability
- Rule Box check availability
- Optimum Box check availability
- Measured Subscription check availability
- Premium Box check availability
- Subscriptistic check availability
- Boxlia check availability
- Forward Box check availability
- Perspective Subscription check availability
- Unleash Box check availability
- Lensman Subscription check availability
- Approve Subscription check availability
- Process Box check availability
- Top Subscription check availability
- Subscriptnetic check availability
- Developed Box check availability
- Affiliate Box check availability
- Nature Subscription check availability
- Progress Box check availability
- Infinite Subscription check availability
- Prime Subscription check availability
- Boxvio check availability
- Expert Subscription check availability
- Asset Box check availability
- Boxnetic check availability
- Unlimited Box check availability
- Path Box check availability
- A1 Box check availability
- Solve Subscription check availability
- King Sub Box check availability
- Boxwind check availability
- Affordable Box check availability
- Haste Box check availability
- Subscriptzilla check availability
- Genuine Box check availability
- Capture Box check availability
- Depot Box check availability
- Viewfinder Subscription check availability
- Digital Subscription check availability
- Subscriptella check availability
- Dub Subscription check availability
- Boxporium check availability
- Boxlada check availability
- Boxzen check availability
- Boxry check availability
- Upgrade Subscription check availability
- Boxado check availability
- Subscriptorzo check availability
- Cool Box Sub check availability
- Subscriptvio check availability
- Marine Subscription check availability
- Resolution Box check availability
- Allied Box check availability
- Astonish Box check availability
- Boxlux check availability
- Conversation Box check availability
- Subscriptlada check availability
- Subscriptprism check availability
- Support Subscription check availability
- Subscriptaholic check availability
- Sage Box check availability
- Dart Subscription check availability
- Thrive Box check availability
- Propel Box check availability
- Boxopedia check availability
- Lens Box check availability
- Method Box check availability
- Universal Subscription check availability
- Holo Subscription check availability
- Obscura Box check availability
- Command Box check availability
- Platinum Box check availability
- Boxable check availability
- Capture Subscription check availability
- The Month Subscribers check availability
- GeneralSubscription check availability
- Depiction Subscription check availability
- Portable Kit Up check availability
- The Unpaid Syndication check availability
- Envision Subscription check availability
- The Yearly Subscribe check availability
- Crops Box check availability
- Generous Syndication Trading Co check availability
- The Top check availability
- Blue check availability
- Mailbox Pro check availability
- Yearly Unsubscribe check availability
- The Charitable Subscribing check availability
- Clerical Unsubscribe Collective check availability
- Condition Subscription check availability
- Membership Spot check availability
- The Fixed check availability
- PeriodicalSubscription check availability
- Shoebox Spot check availability
- Nonmember Subscribing check availability
- The Municipal Unsubscribe check availability
- The Charitable check availability
- Nonmember Subscribe check availability
- IndividualSubscription check availability
- Periodical Unsubscribe check availability
- The Professional Kit Up check availability
- Fee Spot check availability
- The Postal check availability
- The Blue check availability
- The Hand check availability
- Private Syndication Trading Co check availability
- Conviction Subscription check availability
- Postal Unsubscribe Pro check availability
- Eviction Subscription check availability
- Compulsory Subscribe Place check availability
- Postal Purchase check availability
- The Over Subscriber check availability
- Combined Syndication Co check availability
- The Plain check availability
- Big Bottle check availability
- The Week Membership check availability
- Charitable check availability
- The Compulsory check availability
Logan Christopher, founder of Lost Empire Herbs tells us the synchronistic story behind their name:
We used to be called Super Man Herbs (2012 to 2016). However, we were forced to change our name due to a trademark issue with DC Comics, the owners of Superman. While they did not take legal action against us it looked to be going in that direction, and on advice from legal counsel, we decided to be proactive in our efforts.
The new name selection process was not easy. Finding something that was open in a .com domain name and free of any other possible trademark issues was an arduous journey.
The brainstorming sessions, loaded up on bacopa and other herbs, went for hours upon hours.
We had come up with Empire Herbs. In some ways we liked it, but it didn’t feel quite right. (Maybe a little too Star Wars-y?)
About to give up for the day, we decided to clear our heads and turned to nature, going on a hike in the forest, with the intent to find a sign on what the name should be.
...and we literally did!
About an hour into the hike the name of a trail was presented. And the name of our herb company was found.
All of us liked it immediately. We shared it with the rest of the team and we knew we had a winner on our hands.
Thus, with the help of human hands in nature, Lost Empire Herbs was reborn.
Let's take a look at the search trends for subscription box over the last year:
- Smithsonian Magazine (6.89K Alexa Ranking)
- Vikatan (17.9K Alexa Ranking)
- Birchbox (48.6K Alexa Ranking)
- ConseCrate (52K Alexa Ranking)
- Colorado Springs Gazette (55.8K Alexa Ranking)
- PenaltyBox Sports - Revenue $400K/month
- Cannabox - Revenue $350K/month
- Plate Crate - Revenue $325K/month
- Bambox - Revenue $60K/month
- Urban Tastebud - Revenue $51K/month
- Bundleboon - Revenue $35K/month
- Southern Cigar Co - Revenue $20K/month
- EatTiamo - Revenue $10K/month
- Mouse Book Club - Revenue $10K/month
- Candy Japan - Revenue $6.5K/month
- Lit League - Revenue $3K/month
- Comic Crate - Revenue $2K/month
- Vowed Box Co. - Revenue $400/month
- Richmond VA Moms - Revenue $0/month
🎬 How To Start A Subscription Box Business
Write a Business Plan
Writing a business plan from the start is critical for the success of your subscription box business.
Because this allows you to roadmap exactly what you do, what your overall structure will look like, and where you want to be in the future.
For many entrepreneurs, writing out the business plan helps validate their idea and decide whether or not they should move forward with starting the business.
You may want to consider expanding upon these sections in your business plan:
- Executive Summary: Brief outline of your product, the market, and growth opportunities
- Overviews and Objectives: Overview of your business, target customers, and what you need to run your business
- Products and Services: Specifics on the products and services your business will provide
- Market Opportunities: Analysis of customer demographics, buyer habits and if your product is in demand
- Marketing: Outline of your marketing plan and how you plan to differentiate yourself from other customers
- Competitive analysis: Analysis of your competition and the strengths and weaknesses therein
- Operations: Hierarchal structure of the company and what it will take to run the business on the day-to-day
- Leadership Team: Detailing roles and responsibilities of each manager based on their specific skill-set
- Financial Analysis Understanding of all expenses, operating budgets, and projections for the future.
Learn more about how to write a business plan here
Setting Up Your Subscription Box Business (Formation and Legal)
When it comes to setting up your business, you may find yourself in a place where you have to make some financial and legal decisions.
The first thing you'll want to decide on is whether you want to be an LLC, S-Corp, or C-Corp.
These three options are found to be the most common when starting a small business, and all serve to protect your personal assets and also provide you with certain tax benefits.
- LLC: All income and expenses from the business are reported on the LLC personal income tax return.
- S corp: Owners pay themselves salaries + receive dividends from profits.
- C Corp: C Corps are separately taxable entities that file a corporate tax return (Form 1120). No income tax is paid at the corporate level and any tax due is paid at the owners individual expense.
Depending on where you're conducting business, you'll also want to consider securing the proper permits, licenses and liability insurance.
Need to start an LLC? Create an LLC in minutes with ZenBusiness.
Determine Which Business Bank Account You Need
There are hundreds of banks out there, and it can be overwhelming to find one that's right for your business.
Here are some factors you may want to consider:
- Location - Is your bank close enough that you can easily make deposits or get cash?
- Low Fees - Make sure to understand any and all fees associated with setting up and maintaining your bank account. Ask for a list - banks usually try to keep this hidden and in the fine print.
- Online Banking Services - Make sure you can easily navigate through your online portal and you have easy access to everything you need.
- Line of Credit - What do your options look like (even if you don't need this now, you may need this down the road).
- Every bank has something that differentiates them from the rest, so make sure whatever that is applied to your needs and values.
Check out this list of the 13 Best Banks for Small Business in 2020 and what makes them so unique.
How Much Does It Cost To Start A Subscription Box Business
If you are planning to start a subscription box business, the costs are relatively low. This, of course, depends on if you decide to start the business with lean expenses or bringing in a large team and spending more money.
We’ve outlined two common scenarios for “pre-opening” costs of starting a subscription box business and outline the costs you should expect for each:
- The estimated minimum starting cost = $12
- The estimated maximum starting cost = $27,209
|Startup Expenses: Average expenses incurred when starting a subscription box business.||Min Startup Costs: You plan to execute on your own. You’re able to work from home with minimal costs.||Max Startup Costs: You have started with 1+ other team members.|
|Office Space Expenses|
|Rent: This refers to the office space you use for your business and give money to the landlord. To minimize costs, you may want to consider starting your business from home or renting an office in a coworking space.||$0||$5,750|
|Utility Costs For Office Space: Utility costs are the expense for all the services you use in your office, including electricity, gas, fuels, telephone, water, sewerage, etc.||$0||$1,150|
|WiFi & Internet: Whether you work from home or in an office space, WiFi is essential. Although the cost is minimal in most cases, it should be appropriately budgeted for each month!||$0||$100|
|Total Office Space Expenses||$0 (min)||$7,000 (max)|
|Upfront Costs For Inventory: This includes all upfront inventory you will need in order to launch. Be sure to compare prices of wholesalers to ensure you're getting the best deal and margins remain high.||$300||$5,000|
|Inventory Storage: If you decide to have a physical space for your subscription box business, whether it be used for inventory or as a showroom, you may have monthly rent payment or a large down payment associated with renting/buying the space.||$0||$5,000|
|Package Design: Packaging refers to wrapping and protecting products during distribution, shipping, and sales.Your package design is your customer's first impression of your brand, so it's important you spend some time and energy to get this right from the start.Many businesses design their own packages using design software and tools. There is always the option to outsource this to a design expert, but that route tends to be much more expensive.||$50||$3,000|
|Shrinkage: Shrinkage refers to the loss of inventory at any point between the purchase from your supplier and the purchase by your customer. Although you will try to avoid this at all costs, this does happen sometimes (especially in the learning stages of your business), and it's important to plan ahead financially in case this happens. Fortune states that retail shrinkage costs U.S. retailers approximately 1.4 percent of their total sales.||$0||$1,000|
|Distribution costs: Depending on what distribution plan you choose, expenses such as renting vans, hiring delivery drivers and gas costs can add up. If you are looking to save money upfront, you may want to consider conducting distribution on your own.||$0||$750|
|Total Inventory Expenses||$350 (min)||$14,750 (max)|
|Design Programs & Software: These programs might include the Adobe family of design tools: Photoshop, Illustrator, InDesign and others. This is typically a monthly subscription ranging from $10-$50/mo.||$0||$50|
|Email marketing tool: If you plan to grow your email list and email marketing efforts, you may want to consider investing in an email marketing platform (ie. Klaviyo, MailChimp). We put together a detailed guide on all of the email marketing tools out there + the pricing models for each one here.||$0||$100|
|IT Support: IT support installs and configures hardware and software and solves any technical issues that may arise.IT support can be used internally or for your customers experiencing issues with your product/service.There are a variety of tools and software you can use to help with any technical issues you or your customers are experiencing. This is a great option for businesses that do not have the means to hire a team of professionals.||$150||$2,000|
|Accounting & Invoicing Software: It's important to have an accounting system and process in place to manage financials, reporting, planning and tax preparation. Here are the 30 best accounting tools for small businesses.||$0||$50|
|Project Management Software: You may want to consider using a project management and collaboration tool to organize your day-to-day. This can also be very beneficial if you have a larger team and want to keep track of everyones tasks and productivity. For a full list of project management tools, check out this full list here.||$0||$25|
|Internal Communication Tool: If you plan to have multiple members on your team, you may want to consider an instant message tool such as Slack or Telegram. The cost is usually billed per month (approx $5/user/month) or there are freemium versions available on many platforms.||$0||$20|
|Social Media Management Tools: If you plan to do social media marketing for your subscription box business, you should consider investing in a social media automation or publishing tool. This will save you time and allow you to track performance and engagement for your posts. Here is a list of 28 best social media tools for your small business.||$0||$50|
|Payroll Software: The main purpose of payroll software is to help you pay your team and track each of those payments (so that you don't have to do it manually). If you do not have any employees or have a very small team, payroll software may not be necessary at this stage. Here are the 11 best payroll tools for small businesses!||$0||$200|
|File Hosting Service: It's important to make sure the information for your subscription box business is stored and protected should something happen to your computer or hard drive. The cost for this is affordable and depends on how much data you need to store. To learn more about the different options and pricing on the market, check out this article.||$0||$299|
|Total Software Expenses||$150 (min)||$2,794 (max)|
|Domain Name: Your domain name is the URL and name of your website - this is how internet users find you and your website.Domain names are extremely important and should match your company name and brand. This makes it easier for customers to remember you and return to your website.||$12||$200|
|Business Email Hosting Service: An email hosting runs a dedicated email server. Once you have your domain name, you can set up email accounts for each user on your team. The most common email hosts are G Suite and Microsoft 365 Suite. The number of email accounts you set up will determine the monthly cost breakdown.||$1||$15|
|Total Website Costs||$13 (min)||$215 (max)|
|Advertising & Marketing Costs|
|Customer Research & Surveys: Many subscription box business's conduct industry and consumer research prior to starting their business. Often times, you need to pay for this data or hire a market research firm to help you in this process.||$0||$300|
|Affiliate Marketing Commission & Fees: If you want to increase revenue for your subscription box business, affiliate marketing is a great way to promote your product to a new audience. When determining affiliate commission rates you will offer, you will want to take into account the price and margin for your product to ensure affiliate marketing is worth it for your business. According to Monitor Backlinks, the average affiliate commission rate should be somewhere between 5% to 30%. To learn more about how to set commission rates, check out this article..||$0||$250|
|Influencer Marketing: Partnering with like-minded influencers is one of the most effective ways to grow your social media presence. Many small businesses simply gift a free item in exchange for an influencer post, or pay the influencer directly.||$0||$750|
|Press: If your business and story is unique enough, press and media attention may come to you, but odds are, you may need to do your own outreach and budget for this. We put together a guide here that discusses different press opportunities (both free and paid).||$0||$500|
|Google Ads: With Google Ads you have the ability to control how much you spend by simply setting a monthly budget cap. Additionally, with these ads you only pay for results, such as clicks to your website or phone calls! It's okay to start with a small budget at first and make changes accordingly if you see valuable returns.||$0||$300|
|Facebook & Instagram Ads: With Facebook and Instagram ads, you set your budget and pay for the actions you want (whether that be impressions, conversions, etc).You can learn more about pricing based on your impressions here.||$0||$350|
|Total Advertising & Marketing Costs||$0 (min)||$2,450 (max)|
|Total Starting Costs||$12 (min)||$27,209 (max)|
Leslie Eislen, founder of AlmondClear discusses how she raised the money to start her business
To fund the launch of the business, my husband and I put in about $10,000 of personal savings.
That initial infusion of cash was gobbled up surprisingly quickly, like in a matter of a couple of months, and that was well before any inventory was purchased.
We also took out a home equity line of credit for $100,000. So far I’ve only used $20,000 of the home equity credit, and I intend to never use more than $50,000.
I’m trying to follow the Lean Startup model and well as Profit First, so the goal is to grow the business incrementally as revenue allows, and build a profitable business model from the start.
I know that some people would advise me to get investments or use more of my loan in order to grow the business more quickly, but I’ve chosen to pursue a more lean, build-as-you-go model for now.
How To Find A Supplier For Your Subscription Box Business
Here are the steps to consider when finding a supplier/manufacturer:
Know your design
One very critical step to finding the right supplier is having an initial idea of what your design/product will look like.
Sketching is one of the most simple ways to get started in the design phase.
What's great about sketching is that you can practically do this anytime, anywhere - even on the back of a napkin.
To get started, all you need to do is pick up a pen and paper and start drawing - or if you are working on a virtual/software product this can be a diagram that outlines the user interface or experience.
Decide your supplier type
You'll want to identify the type of supplier you are looking for.
Here are some questions you may want to ask yourself prior to searching for a supplier
- Are you looking for a manufacturer to produce your product idea?
- Do you want to find a supplier that can simply purchase existing products for you?
- Do you want a drop-shipper to supply and fulfill orders?
- Do you want a domestic supplier or an overseas supplier? Read more about the pros and cons of each here
Where to start your search
Once you have an understanding of what type of manufacturer/supplier will be best to bring your idea to life, there are several areas you can start your search:
Purchasing Inventory For Your Subscription Box Business
When first starting out, it's important to start small with your overhead to get a gauge for what people want.
Just remember - if you order a line of items that don't sell, it's nearly impossible to recoup the money lost.
Buying the right inventory takes research and planning in order to get it right.
- Identify your target audience: Identify the age, gender, annual income that you will be selling to. This is a defining factor in ordering the right inventory that will sell.
- Research your competition: Conduct market research and identify the different types of styles, price points, and materials being used. This will help you see what's trending and ways that you can improve/stay ahead of the competition.
- Create an inventory wishlist: Identify what you need for the launch of your business and create a budget that you will stay within. Remember, it's okay to start small.
- Find a supplier Make sure to first compare prices and analyze different options.
- Delivery timing: Schedule the inventory delivery to match with seasonality and trending buying seasons
Pro-tip: It's easy to become biased based on your own fashion preferences on what types of shoes/apparel to purchase. This is where a lot of fashion businesses go wrong. It's important to base purchase decisions on current buyer behavior, trends in the market, and specific to your niche.
Erin Hooley, founder of Bailey's Blossoms tells us how poor inventory projections led her to lose over $2M
When we first launched Peyton Bre we did so in a social or direct sales model.
Through poor inventory projections we were forced to change models but only after losing $2 million dollars.
It was a devastating time for us and one we were not sure we could survive.
I have since become very intentional about the way that we project our inventory needs and we continue to refine that quarterly and even monthly. We have created a KPI for the cost of goods sold to help us hold ourselves accountable.
Ultimately, the better we manage our inventory the less we have need to discount and the healthier our profit margin becomes.
This is, of course, a very high-level overview of the importance of inventory control.
To see the full breakdown on how to manage inventory, check out my guide over on my blog..
Design A Prototype
Turning your idea into a reality can feel like a daunting task - but it's critical that you have an idea of what your product will look like (even if it's just a sketch) prior to finding a manufacturer.
Here are some common ways you can design your prototype:
- Draw Your Initial Design on Paper
- Form pieces of fabric together
- Consider Taking A Generic Product And Putting Your Own Brand On It
- Try Making the Product Yourself
- Consider Building A Prototype With A 3D Printer
To learn more about how to design and prototype a product, check out our latest guide here.
Michael Arciola III, founder of Southern Cigar Co dives deep into the process of designing and prototyping their product:
This was possibly the easiest part. Since we aren’t doing anything new or novel, there’s processes and companies in place to help us out.
But first, when I got to this phase I realized I wouldn’t be able to manage the day-to-day activities. Not that I couldn’t, but at the time I was a double major in computer science and business, was running my own web design firm, very active in school clubs/activities, and just got accepted to be an intern at Viacom/MTV at their headquarters in NYC.
Due to my overwhelming schedule, I knew bringing on help would be my best help in bringing this vision to life. I ended up asking my roommate and good friend at the time to manage the day to day operations as I knew I could trust him with that.
With him now onboard we came up with the business name (fun fact: actually with another good friend, originally 3 of us, who ended up leaving after we all agreed we need to put $1,500 each into the company to be a founder as startup capital). The 3 of us after a brainstorm session decided on the name “Southern Cigar Co.” because we all were from the “South” US, and also from South Florida. (Another fun fact: our logo in the center shows M & J for Michael and Jason, and 4 & 15, because we came up with the name on 4/15/15).
Next came the product. This was something I refused to skimp on and the bulk of our money went to. We spent ~2k on the website which is still in use today! (which I consider our storefront since we don’t have a physical store).
Another ~2k to have professional boxes designed, manufactured and shipped to us. Next came the customer cigar bars, which is bought and had our logo put on. Last came lighters, cutters, and humidifiers which we standard we bought from wholesalers.
The rest of the money went towards buying the cigars to fill the boxes each month. At the time Jerry’s was letting us buy singles, so however many customers we had we would grab. Then I would fill in the description card and have that printed. The card was designed once from Freelancer.com contest which we paid like $300 for and are still using it to this day. Below is a photo of the first card we ever sent. We eventually removed the small text, but everything else is the same. I input the details, dates, and photos into the design with a standard backside with our logo and social media handles.
How To Price Your Subscription Box
One of the most challenging aspects to starting a subscription box business is determining how much to charge for your subscription box.
When businesses under-price their product, this can be extremely detrimental to their bottom line and reputation.
Often times, businesses under-price their products to drive demand and volume, but that last thing you want is for customers to view your product/service as "cheap." Additionally, this can have a big impact on the type of customer you attract, which can be difficult to recover from.
On the other hand, when businesses over-price, this tends to be just as damaging to the business.
When customers buy, it's likely that they will explore the internet and look at other competitors to ensure they're getting the best value + deal. This is why it's so important that you research your competition and understand where you land in the marketplace.
Here are some factors to consider when pricing your product:
Understand your customer
It's important that out of the gates, you identify the type of customer you want to attract and how much they're willing to pay for your service. One great way to do this is by surveying your customers. Here are some important items you'll want to takeaway:
- Customer demographic: Age, gender, location, etc.
- Buying habits of your customer: What they buy + when they buy
- Level of price sensitivity with your customer
All of these segments will help you identify the type of customer you're attracting and how to price your product accordingly.
Understand your costs
When pricing your subscription box, it's critical that you first identify all of your costs and consequently mark up your subscription box so you can factor in a profit.
The actual cost of your subscription box may include things like:
- The actual cost to make the product (ie. raw materials, supplies, manufacturer).
- Shipping + overhead fees
- Operating costs to run your business
You may want to consider creating a spreadsheet with every single expense involved in operating/owning your business. This will give you an idea as to what you need to generate in order to at the very least, break-even and will help you price your products to factor in a profit.
Create revenue goals
When determining the price of your subscription box, you'll want to create goals for revenue + how much profit you want your subscription box business to make.
This process is simpler than you may think:
- Think about your breakeven cost (by completing the above step).
- Create a revenue goal based on your break-even cost
- Evaluate the # of items you plan to sell in a given period (make sure this is a realistic number)
- Divide your revenue goal by the number of items you plan to sell
This figure will help determine your estimated price per product in order to meet your revenue goals.
Evaluate your competition
The last piece in determining how to price your subscription box is by simply looking at your competition.
The best way to do this is by finding like-minded businesses that offer product(s) with similar perceived value. Then, you can compare prices of the different businesses and determine where your subscription box fits best in the marketplace.
All of these factors play an equal part in pricing your subscription box, so it's important you evaluate each one individually to come up with an accurate price that will help optimize your business from the start.
Lauren Costanza, founder of Bluminary provides us with a detailed spreadsheet of all of her costs associated with running her business:
I knew this would be a self-funded adventure, and I set aside $3,000. During the first three months, I had a detailed spreadsheet where I tracked where the money was going and what was going toward products versus researching and developing new products.
The spreadsheets involved columns and rows of numbers to craft a budget and gain an understanding of how much would need to be invested at each stage of the process - from gathering supplies to building a website, and shipping materials.
Identify Target Customer
A very critical piece in building subscription box business is to identify your ideal target customer.
- Develop a niche and create a consistent brand that reflects your target customer.
- The colors, logo, content, and overall website should resonate with your target customer and should draw them in by helping them solve their specific "need".
Eddie Huai, founder of Flyby Pill, discusses how critical it is to understand your customer base:
Our flagship product is Flyby Recovery, a pill formulated to help you bounce back after a night of drinking.
I’m sure you’ve heard it over and over again, but understanding your customer base is SO important. Whether it’s a 5, 20 or 30-minute phone conversation, hop on a call with your most loyal customers and really understand who they are.
When you talk to them, I think you learn two things:
- Clearly who they are, like what is their demographic.
- Why are they buying this? Aside from the functional benefit which we already knew (people go out to drink and buy Flyby because they want to wake up at the top of their game), it helps us understand what resonates with them emotionally, why they bought it in the first place, and why they came back.
We learned something very interesting in this. Demographic wise, we thought our main customer base would-be college students, fraternities, and sororities in the U.S so a lot of our messaging revolved around that age group.
But a lot of our customers turned out to be in their late twenties to forties. They were buying our product and only having a few glasses of wine instead of binge drinking.
They have to wake up, take care of their kids, prepare for work, that important presentation, or go for a run.
Time is very valuable for them and they’re not buying this product to party harder but instead to be more productive the next day. So after realizing that, we pivoted into really focusing on that angle in order to target the right audience.
🚀 How To Launch Your Subscription Box Business
Build A Website
Building a website is imperative when launching your business, and with the right tools in place, this can be a simple task to check off the list (without having to hire someone).
- Pick a domain name that's easy to remember and easy to type
- Choose a Web Hosting Plan (ie. Shopify, Squarespace)
- Make sure you choose the right theme and design
- Implement the proper page structure (ie. about page, contact page, pricing etc)
To learn more about how to build a stellar website with little stress, we give you all the details on this step-by-step guide.
There are a ton of different websites platforms out there, and it's important to choose the right one that will set you up for success
Here's everything you need to know about these two platforms:
Shopify is one of the #1 leading platforms for e-commerce businesses.
Here are some of the main reasons most e-commerce businesses are using Shopify:
- Geared towards supporting store owners. Provides a simple way to launch and manage your online store
- Customer support is off the charts (live chat)
- Easy to use - You don't have to worry about the technical side
- The design is clean and mobile-friendly. There are also hundreds of templates you can use.
- Easy integrations and additional channels (ie. Amazon, email marketing integrations, Facebook, etc).
- Basic Shopify: $29/month
- Shopify: $79/month
- Advanced Shopify: $299/month
Founder, Marc Debnam on recommending Shopify
The best move we did was to switch to the Shopify platform in 2016. Everything became simple.
Shopify is an easy to use software with great add-on apps so you can build your ecommerce business exactly how you like it.
And it intergrates with our accounting and logistics platforms. Xero, Auspost, DHL. As well as most sales and marketing channels.
It freed up so much time working in the business, allowing us time to focus on growth and brand awareness.
With my basic technical skills, I built a great site. The one we still have. I experiment with apps that just plug in and if they add that’s great if they don’t we move on.
Once you have chosen the domain, web hosting, and platform, it's time to get started with the design phase.
Themes are a great way to produce the fundamental style and identity of your website - this includes everything from your font design to your blog post styles.
One of the best ways to get started is to simply explore the various themes (free or paid depending on what you're looking for) and test them on your site.
If web-design really isn't in the cards for you, you may want to consider outsourcing a web designer to help bring your vision and brand to life.
Launch Strategies For Your Subscription Box Business
There are various different ways you can launch your subscription box business successfully.
Here are a few different strategies to get customers excited about your subscription box business.
- Build hype with a landing page: you can effectively do this through waiting lists, discounts, countdown timer etc
- Create a teaser video: even just a 30 second video is a great way to exposure for your subscription box business, and possibly even go viral
- Reach out to influencers: The right influencer for your product has the ability to reach your audience with just one post, and because of their loyal following, this could lead to a big return for you.
- Get Press: Whether you plan a PR stunt or get exposure through a popular news outlet, this is a great way to attract initial customers
- Launch on popular sites: A great way to get buzz about your subscription box business is to submit your launch to popular startup sites.
Here are a few popular sites to launch on:
Learn more about how to launch your business successfully ➜ here
Nelli Jeloudar, founder of Bundleboon dives deep into the process of launching the business:
The MVP page was built in Weebly - a simple and easy drag & drop platform.
I built a style quiz in typeform, added some stock photos, and used HTML code to implement it to the website. It was a good setup to get more box orders in.
It wasn’t until April 2018, during our time at Startupbootcamp, where we decided to launch a full-blown, customized website and style quiz by using Shopify. We paid a branding agency plus a developer for something, we decided to change later. Our new website and quiz had everything we wanted.
The quiz looked super professional, the visuals and branding were beyond our dreams! But in reality, we found out that our users and paying customers didn’t find our customized style quiz engaging enough, causing a fall in our online conversion. We decided to keep it running and in the meantime, we went back to bootstrapping, analyzing the customer behaviour and gather as much feedback as possible by calling all of our customers. The quiz we have now is built based on what our customers wanted.
We didn’t hire employees until late 2018, so my co-founder and I did everything from customer service, styling to shipping and sending invoices. By this time, we were also dealing with our third co-founder leaving and cash flow running tight.
All of the investors we spoke to told us that we need to show more traction and show how we can scale. We needed an investment to really show the potential of the concept, so we started a small crowdfunding campaign on a Dutch platform called Leapfunder, which secured us €15.000 in convertible loans. We decided to use the money on hiring an employee and on online customer acquisition.
In August 2018, we moved to a small office in Amsterdam and hired our first employee, Noga. She has a broad background in fashion and she was one of the best performing stylists at The Cloakroom. She was actually one of our first customers and she had shown interest in joining our team. She is now running a team of 3 stylists and has the highest AOV (Average order value) and revenue of everyone in the styling team.
Month over month we secured small loans and investments. On top of that our monthly growth rate grew at 25%.
How have you attracted customers and grown the business?
Our customer acquisition strategy is built up in three groups; online customer acquisition , retention and referrals.
Online customer acquisition
We use multiple channels to acquire new customers, but the one that really works well for us is by using influencers. We reach out to real moms, who are active and engaging on Instagram and have them do a nice unboxing video for us in exchange for a box with clothes. If the influencer uses the right approach, we can get up to 35 new customers in pr. influencer. We have also noticed that the average basket size is almost 30% higher when the customer is acquired via one of our influencers. Next to influencer marketing, we also acquire customers via ads on Facebook and Instagram. The engagement, clicks and conversion are far higher when we use unboxing videos rather than regular photos. Our customer acquisition cost varies between $9-20, depending on the type of ad and target audience.
Getting our customers back is our main priority and we spend a lot of time on each of the customers, making sure that they receive a great service. We always call or Whatsapp them for a follow up chat after they have sent their box back. This way we can truly understand why they sent some items back and what they are looking for in their next box. 21% of our monthly orders come from existing customers and we aim to get it to 45% by the end of the year.
Two months ago, we launched our ambassador program, we will reward our current Bundlebooners when they refer a new customer to us. All they have to do is to share a unique referral code with their friends and family. If the new customer orders a box and keeps for min. €25, the current customer will get €10 to use on her next box.
Make Sure You Get The Package Design Right
The way you package your subscription box business is often the first impression your customer has - so it's important to get it right.
You may want to ask yourself these questions:
If my product is on a shelf next to hundreds of other similar products:
- Will my subscription box business stand out?
- Will the branding/packaging create a connection with my customer, and hence, lead them to buy?
There are hundreds of tools you can use to help with packaging and design:
- Canva - Allows non-designers to create beautiful Instagram/Pinterest posts, flyers, business cards, etc.
- Stickermule - High quality custom stickers you can include on or in your packaging.
- Noissue - Custom tissue paper and compostable mailers
- Rollo Label Printer - A great tool to print all shipping labels at home
Sheets & Giggles explains the motive behind their "Premium Unboxing Experience"
Sheets & Giggles explains the motive behind their "Premium Unboxing Experience"
I had a particular vision for our packaging centered around one goal: because we were a DTC company and wouldn’t do physical retail in year 1, we needed to focus entirely on an incredible unboxing experience that made the product feel as premium as possible.
Outside: a white box, nice wax coating, logo front and center with no other copy, easy to open, nice and sturdy.
Inside: make people smile from the get-go, have a social call-to-action, include free extra surprises (a knapsack that wraps the sheets and an eye mask), put funny copy all over the place, and add a donation bag that people could use to donate their now-defunct cotton sheets (sheets & blankets are the #2-most-requested item at shelters behind socks).
🌱 How To Grow Your Subscription Box Business
As a brand, you want to deliver an experience that authentic, honest and transparent.
Don't make the mistake of giving your audience less credit than they deserve.
Example from Monika Reti, founder of Hipcooks
Hipcooks is different from other cooking schools: we give confidence and inspiration to home cooks through our communal approach (we don’t divide people into teams).
We don’t use recipes or measuring implements. We make cooking stress-free and make sure that all leave inspired and confident they can make delicious food.
Each class ends enjoying great food, sipping wine, and making new friends around a large communal dining table.
Get Press Coverage For Your Subscription Box Business
The more buzz around your brand - the more the phones ring, the more traffic to your website, and the more customers as a result.
Here are a few ways you can get press for your business:
Press releases are a great way to share big announcements or news, but in order to get any traction, you'll need to find a way to make your press release stand out amongst others.
Try to convey a story that really matters, not just to you, but to the reporter and to their audience.
Here are some things to consider when submitting a press release:
- Craft a catchy subject (keep it short and sweet).
- Acknowledge the journalist's past work and interests - this is key!
- Include the main point of the story in the first paragraph, heck, even the first sentence. Reporters want to hear the juice first and foremost.
- Focus on the facts and try to limit the amount of jargon used.
- Pitch yourself! Help them put a face to the story.
- Make sure your topic is newsworthy. If it's not, find a way to!
- Try not to include any attachments of your release!
Email is one of the most effective and preferred way to send your press release, so as long as you keep your pitch brief, interesting and personalized (no cold emails), you should stand a chance!
Get Press Using HARO
HARO, otherwise known as "Help a Reporter Out" is an outlet for journalists to source upcoming stories and opportunities for media coverage.
The best part is, HARO is free to use! There are, of course, premium versions you can purchase, but the free version is still an accessible way to get press.
Once you set up an account, HARO essentially will email you based on stories (that are relevant to you) that need to be covered where you will then have a chance to essentially "bid on the story."
Here are some tips when crafting your pitch:
- Discuss your experience and expertise in the space. Make sure it's obvious why you're relevant to this story.
- Answer the question in 3-4 sentences. Try and be as direct as possible
- Offer to provide the reporter with more information and make sure to give them your contact info
Plan a Publicity Stunt
Planning a publicity stunt is an effective and quick way to raise awareness for your brand and gain some traction from the press.
If you're looking to plan a stunt, the objective should be to be bold and create something memorable
However, being bold has a fine line - it's important that you consider the timing of your stunt to ensure you don't come off insensitive or unethical. For example, timing may not be in your favor if you plan something during the general election, or in most recent cases, a global pandemic.
In order to measure the success of your stunt, it's important that you first determine your end goal, for example:
- Is the stunt aimed to raise money for your business or a particular organization?
- Is the stunt aimed to drive more traffic to your website?
- Is the stunt aimed to get more followers and engagement on Instagram?
Here are a few tips for creating a great publicity stunt:
- Research to ensure that there haven't been similar stunts done in the past by other businesses - this could easily turn off journalists and your audience.
- Make sure you can explain the stunt in one headline - this will help grab the media's attention. In other words, simplify!
- The stunt should be related to the product you are promoting. Even if the stunt is a success in terms of viewers, but it doesn't tie back to your original goal, then it's not useful.
- Keep the stunt visual with videos/images.
- Leverage the internet and social media platforms for your stunt by sharing your message across a variety of audiences. This will help with word of mouth and the overall success of your event.
To learn other strategies on how to get press, check out our full guide here.
Build A Blog
One of the most effective ways to build brand awareness and grow your business is through consistently blogging.
We've outlined some useful tips for you to consider when creating content:
Consistency and Quantity
Quality is important, but it should be the standard for any content you publish.
What’s more important is consistency and quantity.
Consistency is as simple as committing to publishing and sharing a certain number of posts per week. For me, that’s three per week right now.
This kind of commitment is key, because one day, a random post will blow up, and you will have never expected it.
The easiest mind trap is to think "I’m posting too much", and “I need to give my readers/audience/this platform a break”.
This is nonsense.
There is no such thing as oversaturation. Well, there is, but it is just someone else’s opinion.
For every person that tells you you are posting too much, there is another person that wants even more of your content.
You should ignore people’s opinions on how much you post.
Patience & Persistence
Keep posting, keep trying, and keep putting out good content on the regular. Your time will come, and when it does, it will change everything.
The only thing you have control over is your content.
You can’t control how people will react to it. You can’t control pageviews, likes, or shares.
So the only metric you should focus on is how much content you can put out in a week, month, etc.
Where to share your blog content
I know it sounds obvious, but the best places to share your content is on your mailing list. It is guaranteed traffic and it is a great way to get rapid feedback from your most loyal readers.
Send newsletters often. I have done once a week since starting, and I’m moving to twice a week soon.
Work on increasing your mailing list as well. Look into ways to increase your conversion rate to your mailing list. I added a flyout popup thing to my site and now I’m collecting ~30 emails per day.
An email newsletter is one of the most powerful assets you can have and it is worth its weight in gold.
Reddit is one of my favorite places to promote content.
It is a very scary place because you will often get banned or heckled, but it can really pay off.
Create social media accounts for your blog, the main ones I use:
Twitter Facebook Instagram LinkedIn
Set up Buffer and share all of your blog posts to all of your accounts. All of these little shares really do add up.
Automate this as much as possible. I automated all of my social media for Starter Story.
When I started out, I put together a spreadsheet of relevant Facebook groups for my niche, and I would post to these groups whenever I had a big story I wanted to share.
Improve your SEO
SEO is not just about driving traffic to your site, it's about driving the RIGHT traffic to your site, and ultimately, converting leads into customers.
One of the most important aspects of SEO is understanding what your customers are searching for, otherwise known as "keyword research."
Here are some tools that can help you choose the right keywords for your subscription box business.
- Google Ads Keyword Planner invaluable for discovering search trends.
- Google Search Console is very helpful once your website is up as it shows you what words/phrases are generating traffic.
- Ahrefs and SEMRush are paid tools that allow you to look at results of your competitor's website.
Publish Great Content
Finding keywords is an important piece of the puzzle, but Google also ranks your site based on the actual content you produce, as this is what your customers are reading and engaging with.
There are various different "forms" of content that you may want to consider diversifying on your sites, such as blog posts, articles, studies, and videos.
So let's discuss what google considers "good content:"
- Length - This will vary depending on the page, however, generally having a sufficient amount of content helps search engines recognize that your site is a good source for a specific topic
- Engagement - The longer people stay on your website to read your content, the higher Google will rank your website. It's important to have informative and "thick" content that keeps people reading
- Avoid Duplicating Content - Google will recognize this and may consider your content to have low value
- Ensure pages load quickly - This will also help with engagement and time spent on your website
- Shareability - Create content that people want to share, and is easy for them to share, especially to their social media accounts (ie. "click to tweet" is a great example of this).
Another element of creating good content is creating consistent content.
If (and hopefully you are) publishing content frequently, it's important to stick to a schedule - this helps build brand trust and easy user experience with your customers.
Planning out your content with a content calendar is key to staying consistent.
Here are a few great content calendar tools that can help you:
Backlinks are an important piece to SEO, as they allow for other websites to link to your content.
Search engines recognize that other sites are essentially "verifying" your content and essentially rank you higher because of this.
Of course, some links are more valuable than others and can affect your site in different ways.
For example, if a highly valuable and credible site like the New York Times links to a page on your website, this could be remarkable from an SEO perspective.
Aside from organically getting mentioned from other sites, there are other ways that you can increase and earn backlinks:
- Create infographics with relevant data that people want to share
- Promote your content on different sites/look into "guest blogging"
- Contact influencers/journalists/bloggers and ask them to mention you!
- Write testimonials for other sites in exchange for a backlink
- Leverage existing business relationships
Monika with Hipcooks discusses how solid Yelp and Google reviews lead to the business ranking #1 on Google search:
Top Google Placement
We deliver a great quality product each time we teach a class. I call it “pennies in the piggy bank:” one by one, each customer contributes to a solid, dedicated customer base.
Number one Google ranking (or at least the top 5 Google ranking) is important, so we keep our Google business pages full of updated content. Our Google and Yelp Reviews are solid.
Ryan Schortmann, founder of Display Pros talks about their investment in PPC Ads:
My name is Ryan Schortmann and I’m the founder of Display Pros. We are a custom trade show display booth company offering easy to use portable display “kits” for small and medium businesses wanting to get into the trade show game.
It did not take long to come to the realization that to compete at any reasonable level, we were going to need to take the plunge and invest in Pay Per Click ads and display.
From experience, I know that it is important to give Google’s hivemind some time to settle in before each campaign starts seeing consistent results (this is largely dependent on budget).
A certain amount of PPC budget must be viewed as a “marketing research” expense and then you can look at the analytics data and make informed decisions on where to refine, tweak or plain scrap an idea.
Google Shopping was an entirely new concept for me. You can’t assign keywords to products so at first, I was asking myself “How the hell do you refine these?”. Then I found some good reading material and courses and learned of some advanced methods that the pros are using. It turns out you can utilize negative keyword lists combined with the priority setting on each shopping campaign to “shape” the keywords that are coming in and how much you are spending on them.
To learn more about PPC Ads and Google Shopping, check out this video to learn everything you need to know!
Grow Your Email List
The more engaged list of emails, the more engaged customers, which ultimately leads to more sales.
One of the best ways to start growing your list is by providing your customer with something free (or discounted) in return.
This could also be anything from:
- Fascinating case study
- Video series
- Free week of the product
- Discount on the product
Learn more about how to grow your email list and improve email marketing ➜ here.
Add an exit-intent popup to your online store
A great way to double, or even triple, your email opt-in rate and to grow your list is to add an exit-intent popup to your site, and offering a discount or content upgrade for subscribers.
Here's an example of what that might look like:
One thing that I spent years NOT doing, that I now kick myself about, is adding an "exit intent pop-up" to our site, which lets people enter a sweepstakes to win a Xero Shoes gift certificate.
That one idea has added over 100,000 subscribers to our email list, which is one of our most effective marketing channels.
Improve Your Email Marketing
Different types of emails
Here are the most common types of email campaigns you can send to your customers and their benefits:
- Welcome emails - the perfect way to provide information from the start with a clear CTA. Make sure to tell your customer everything they need to know about your product or service.
- Newsletters - a great way to give customers updates or send out your latest content
- Product launch emails - the quickest (and easiest) way to increase sales is by selling to current customers. Make sure they're the first on the list to know about your new product
- Promotional emails - promote discounts, deals coupons etc. Try and make this feel exclusive and for a limited time only
- Abandoned cart emails - give your customers a reason to complete their purchase!
Here's a great resource for finding curated email designs, for all types of email campaigns!
Newsletter Example - Food Industry Tips and Tricks
We have a lot of content to share and it is very well received. Most clients need to see your brand a few times before they purchase, and email is great for that. Email is also an effective reminder for past clients to order again.
We have close to 5000 subscribers and we aim for 2 emails per month. Most of our subscriptions came through the website.
So far we have been focusing on practical life hacks and tips on how to stay focused and disciplined. Many of our subscribers are past clients that took a break.
Our open rates are good, we’re averaging 24% - 53%, much higher than the 10% industry average. We need to work on our click rates which are at around 1.2%.
Offering free trials to your platform is a great way to gain exposure for your business and (hopefully) get new customers!
Finding the right subscription box business platform is a big deal for most people, so it's important to offer a free trial (typically anywhere from 7-30 days) so the customer can test this out prior to buying.
Social Media Advertising
Social Media Advertising is one of the leading ways to get the word out when it comes to subscription box business.
There are various different Social Media platforms available to you. Some may be more critical for your marketing efforts than others, however, it's important to have an understanding of what's out there and available to you.
Let's talk about a few of the main platforms and what makes them unique:
- Facebook Advertising - more than 2 billion monthly users. Facebook is the best for lead generation + capturing email addresses for e-commerce businesses.
- Instagram Advertising - approximately 500 million monthly users and has a higher audience engagement rate than any other platform. Instagram ads are best for linking to a product page or landing page and reaches the 18-29 age group most effectively.
- Twitter Advertising- Small businesses typically use twitter ads to drive brand awareness, but the platform is meant more for organic engagement (and is not as heavily used for paid advertising)
- Pinterest Advertising - 175 million monthly users and most effectively reaches the female audience. Pinterest is great for promoting products without "promoted". The promoted pins have a way of blending right in.
- LinkedIn Advertising - 227 million monthly users and is geared towards the B2B market and generates the highest quality leads. Great platform for recruiters, high-end products and services that will help businesses
It's important to first define your goal/objective so that you don't waste time and money into the wrong platform:
Here are some different questions to ask yourself as it relates to your goals:
- Do I want to simply drive brand awareness?
- Do I want to drive users to my website to gather information?
- Do I want to increase sales and get my customer to take action?
From there, choose the platform that targets your audience best and start experimenting!
Learn more about social media advertising ➜ here.
Consider Working With Instagram Influencers
Partnering with like-minded influencers (within your industry) is one of the most effective ways to grow your social media organically.
Industry influencers already have an established and loyal following. With one post, your product immediately establishes a connection with a brand new audience. It's that powerful.
When finding influencers to promote your product, do your research and make sure that their following will actually be interested in your product.
It's easy to be blinded by any influencer with a huge following, but if those followers don't resonate with your product, there may not be any value there... so make sure you do your research!
Evan Marshall, founder of Plain Jane discusses how "micro-influencers" have impacted his business:
Influencer marketing has been huge for us. Our approach is pretty simple. We give out samples of our products and ask people to post about us on social media aka a micro-influencer strategy.
We really like this approach because we get authentic stories and content. We cannot really control the messaging so the product has to speak for itself. We don’t really take product photos at all. Our customers take the photos and we ask to reuse them.
With any influencer strategy, you have to be very sure you’re targeting the right people and engaging with them. You can make sure you’re targeting the right influencers by looking through their posts and then looking through the profiles of their engaged followers.
It takes more time per influencer but the payoff is certainly worth it. Make sure their followers look like your existing customers.
It takes a ton of time and work to grow a social media following this way but it’s worth it. Other accounts have tried to grow themselves through botting or other manipulations. As a CBD company, we didn’t want to give Instagram any reason to shutdown our account so we’ve done everything through content and real engagement. It’s not magic to make this happen. You just have to post consistently and then reply or like every single comment you get. It takes months but it works
Host A Social Media Giveaway
People love free stuff and love competition. Giveaways and contests are a great way to create awareness for your brand, grow your email list, and eventually convert leads into customers.
If your goal is to gather email addresses, make sure the entry criteria is to "enter your email." You can do this by leading customers to your landing page where they can then enter their email to be in the giveaway.
One of the most important aspects of promoting a successful giveaway is having an amazing prize. The better the prize, the more engagement you'll get.
This doesn't necessarily mean choosing an iPad or an expensive/trendy watch, but instead a prize that is actually relevant to your brand/target audience.
Collaborate With Other Brands For Giveaways
Example from Benjamin Hebert, founder of Natural Stacks
Our customers have a billion choices for supplements out there, so if they decide to use our brand then we have to go the extra mile to help them.
Part of that means creating content they love, like coming up with unique promotions with other brands. Since we’re a consumable product, we naturally want them to enjoy our products and consume more. It’s the best use of marketing and sales dollars.
I think a lot of brands try to avoid working with other similar companies which is dumb. The market is big enough for everyone.
If I take supplements from one company, I’m definitely using others as well. Everyone can win.
The trick here is to offer a nice coupon out to everyone who didn’t win the giveaway. It’s a great entry point for your brand.
🏃🏼♀️ How To Run Your Subscription Box Business
How To Retain Customers For Your Subscription Box Business
Retaining customers is one of the most effective ways to grow your subscription box business.
Oftentimes, it's easy to find yourself focusing on generating new customers, vs retaining your current ones.
Look at it this way - you are 60-70% more likely to sell a new product to an existing customer than you are a new customer.
That's not to say that finding new customers and revenue streams is not important, however, the easiest (and most inexpensive) source of new revenue is right there in front of you.
Here are some ways you can retain customers for your subscription box business:
- Responding to comments on social media
- Send discounts (or freebies) to loyal customers
- Provide valuable content, for free
- Write a hand written thank you note
- Provide awesome customer service and build relationships with customers
To find out more tips and tricks on retaining customers, check out this article ➜ here
Josh Band, founder of Plate Crate dives deep into the process of attracting and retaining customers:
Short answer, relentless pursuit of a great product. Long answer, a lot.
We have taken the approach of the test, fail, learn, test, succeed, repeat. There is a great book to teach you how to test called Hacking Growth by Sean Ellis…this is my bible. Bring your thick highlighter for this one.
In the beginning, days, as I mentioned, we were paying influencers to post giveaways and product sales, and building a strong social media presence. I essentially had no marketing budget. I didn’t know my CAC, ROAS, Retention Rate, LTV, or any essential metric of being a successful subscription company. This came with time. Now we use tools like Triple Whale and Google Analytics (GA) to have more visibility into these numbers. Not to mention endless spreadsheets…ohhhh the spreadsheets.
After we gained some customers and some traction on Instagram we turned to Facebook as our next venture. I did not have the capital to hire a paid media company so I learned about Facebook ads myself. In the golden days (pre-IOS-14), you would just toss a pixel on your site and retarget visitors with ads. This was super low-hanging fruit. They were hot leads and usually converted well. But you couldn’t scale this up. How would we get MORE traffic to our site so we would have a bigger pool to retarget? We would need to do prospecting. I would build audiences are people's behaviors or interests. I would build a group of people interested in similar baseball brands or an audience of anyone that liked a social media post in the last year and start to test different types of creativity. We would show photos of what was in the crates each month, or make a UGC mashup (user-generated content) video. These seemed to work well. We started generating more traffic and started converting more customers. Success! (for now).
What next? That's always the question. Well, I mentioned the product, right? I wanted a product so good that our subscribers would HAVE to tell their friends. In the book Purple Cow, by Seth Godin, he says if you saw a purple cow on the side of the road you would tell someone because that would be a remarkable thing to see. Remarkable means someone who remarks on the cow to a friend. We needed a purple cow product. We need to make our product remarkable. We could do this in a few ways. Quality, value, uniqueness, engagement. We still focus on all of these. How would we make this box so valuable, so different, with such great quality, and so many ways for our audience to use the items that they would have to tell a friend right? This part of the story never ends. Your product is never finished. It can always be improved, you can always add or take it away. I’d like to point out a common flaw as well…never, and I mean never listen to your customers…here’s why.
If you survey your customers you will inevitably find that they all say the same thing. They hop on their phone and say the first thing that comes to mind. The problem is I’m thinking about my product 24/7. I read about how to make it better, I daydreamed about it, and I asked other founders how to make it better. It’s quite literally my job. Your JOB is to make your product better. You are the one setting the standards, innovating, and testing. No one in the world will care or think about it as much as you. We’ve recently invented a few new products. No one asked us to invent them, we just are so deep in the process of creating and knowing what people like we eventually came to realize that we are the trendsetters. We say and make what is cool, not the customers. What you can do is watch their reactions carefully and iterate. What the sales and iterate. Watch the conversation and iterate.
Josh, define Product Market Fit like I’m 5 years old….
Product Market fit is when your company is growing organically through word of mouth. Your product is so good you do not need marketing for growth.
I tell every eCommerce entrepreneur the same advice Gautam Gupta from Nature Box generously gave me years ago…paid ads are like crack, once you start, you can’t stop.
Be patient, and make your product amazing. Once you start to see the organic word-of-mouth growth, you can put some gas on the fire with paid ads. If you start spending money on paid ads too early it will mask the deficiencies in your product because you are getting sales. But once you turn off the faucet of the beloved paid ads, your sales will disappear.
Today over 30% of our customers come from a referral. Below you can see where our customers come from. This is a survey filled out by about 75% of our first-time customers asking “how did you first hear about Plate Crate”. Between a teammate or a friend and a family member, we are at 30%. This is our holy grail. We know our product is good because most of our customers come from our other customers.
Provide Great Customer Service
Providing exceptional care and creating relationships with clients is a great way to build your reputation and retain customers.
Whether you are an online business or a physical business, it's highly important to communicate with customers and make them feel like they are the priority.
Just remember: customer service represents your brand, values, vision and YOU as a person.
Lousia with Funky Fat Foods states just how important their customer service is:
We’re consumer-focused and take care of our customers as quickly and correctly as possible.
I believe what is also working for us, is our customer service and the relationships we have created with them.
Even today we see huge support from Instagram, as you can talk directly to your (potential) customers all over the world. Basically, just ask them what kind of content they’re interested in, and always reply to their questions.
We’ve recently started sharing our struggles and learnings via IG stories and see a growth in our engagement. We try to stay in as much contact with our followers as possible and strive to create good and engaging content through social media. As a result, we have been steadily growing our follower base organically.
We also run contests on Instagram in collaboration with other brands and send our bars to micro-influencers, which really help to increase awareness of the brand but there is still a lot of room to grow in this area.
Build a Referral Program
Word of mouth is one of the best ways to get the word out about your business and acquire new customers. Especially when you are starting out, it’s important to build a solid referral program to encourage existing customers to help you find new ones.
A great way to do that is by offering a reward (ie. credit on your service or cash) to customers that refer you to their friends and family.
A fantastic referral program will help with clout, credibility, and establishing yourself in the space.
Founder Emma Lovel discusses tips for creating a great referral program:
We have had a lot of success with our Referral Program. Word of mouth is so valuable - happy customers will shout from the rooftops about your product if they love what you’ve done. So why not reward them?
We use a program called Referral Candy where our existing customers get cold hard cash paid directly into their Paypal account for every referral purchase they’re responsible for. Their friends get a discount on the product so everyone is a winner.
A word of warning - make sure you have enough margin in your product to allow for this. The discount, the cash and then the percentage to the referral program can add up to a big cost of sale!
Diversify Your Product Line
Adding new products to your business is a great way to expand into new markets and grow your business.
It's important to note that adding new products and diversifying may not be in the cards for you right this moment, and that's okay. You can always consider it down the road.
Here are some reasons you may want to considering adding/diversifying your product
- Meeting the needs of your customers
- Establish yourself as a top provider in your industry and stay ahead of the game with competition
- Resistance to downturns/trends fading
- Create new revenue streams
Preparing To Scale Up
Example from Hipcooks Cooking Classes
With 7 profitable owner-operated locations and 15 years in the business, I’m (finally) ready to scale up!
What we're looking to do:
- Open a Hipcooks in every big city in the US (and even internationally)
- Streamline and get ready to franchise
- Finish our second and third cookbook
We put together the best resources on the internet to help you start your subscription box business.
- Platform tools such as Shopify, WooCommerce, Amazon, Etsy, Cratejoy or trello
- Email tools such as MailChimp, Klaviyo, ConvertKit, G Suite or Superhuman
- Social media tools such as Facebook, Instagram, Twitter, YouTube, Pinterest, LinkedIn, Buffer, Reddit, Tiktok or Later.com
- Advertising tools such as Facebook Ads, Instagram Ads, Google Adwords, Bing Ads, Twitter Ads or Google ads
- Reviews tools such as YotPo, TrustSpot, Smile.io or Trustpilot
- Design tools such as Canva, Adobe Suite, Sketch, Gimp, 99designs, Penji or Typeform
- Shipping tools such as ShipStation, Sendcloud or Pirate Ship
- Analytics tools such as Google Analytics
- Productivity tools such as Google Suite, Dropbox, Slack, Trello, Evernote, Monday.com or Calendly
- Payments tools such as Paypal, Stripe or ReCharge
- Customer service tools such as Zendesk, Intercom or Gorgias
- Blog tools such as WordPress
- Accounting tools such as Quickbooks, Google Sheets or Exact
- Crm tools such as Hubspot
- Freelance tools such as Fiverr or Upwork
- Referral tools such as ReferralCandy
- Stock images tools such as Unsplash or Istockphoto
- Crowdfunding tools such as Kickstarter
- Seo tools such as Ahrefs or Semrush
- Web hosting tools such as WP Engine or GoDaddy
- Sales tools such as Salesforce
- App tools such as Pixel Cat
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Hey! 👋I'm Pat Walls, the founder of Starter Story.
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