This article was written by OceanX CEO and Founder Georg Richter and first published on LinkedIn on 11/1/17. Read the full article here or reprinted below.
A subscription business even with the best products and marketing is only as good as the platforms through which it operates. There are so many touchpoints with each consumer in an ongoing subscription relationship: Every moment from a customer’s first visit to your website to the “welcome” email to opening each box makes a direct impression on each subscriber.
Most systems can handle simple tasks like sending similar items to a particular address on routine intervals, though big e-commerce players like Amazon and Walmart have pretty much perfected the simple replenishment of goods. Many e-commerce and billing solutions offer “subscription” or “recurring revenue” tools and features, and many third-party logistics and order fulfillment businesses can put products into a brown box and ship.
But billing and shipping aren’t the only components of a successful subscription platform. There are lesser-known, more vital elements that should be considered. A good subscription platform should capture every piece of data available about customers, inventory, and customer interactions with the brand. The larger overall platform should also include inventory management, business intelligence, payment processing, custom fulfillment capabilities, customer service, and reverse logistics capabilities.
The underlying subscription platforms are getting more and more sophisticated as the subscription industry continues to grow. In fact, in the past three years, subscription box websites have seen a 3,000 percent increase in U.S. traffic.
Building a Strong Foundation
For growing subscription businesses expanding their products to variable offers, split testing, shipping product from multiple locations, and assembling truly customized packages are key requirements, but they must be integrated with capabilities for keeping track of inventory, weight and shipping weight, addresses, and customer feedback and interactions.
As cloud computing becomes more prevalent and transaction speeds increase, adaptable live data feeds are increasingly necessary. Legacy systems designed for the subscription channel are outdated, to say the least. Old-fashioned reports and analytics are being traded out for relational databases relying on live — often self-service — business intelligence.
Keeping up with all of the speed and cost pressures means getting new systems — systems that reach deeply into the supply chain, distribution, and customer service. Solutions are certainly available for each of these individual needs, but stitching multiple systems together compromises data integrity and raises overhead costs to coordinate numerous vendors.
We at OceanX see and hear these stories all the time. Reaching the magical number of 20,000 subscribers each month is no easy feat; it takes hard work and passion. The journey to hit that milestone often takes years, and established executives can feel threatened by outsourcing solutions or platforms. But this human factor can lead to the demise of entire enterprises.
That’s why it’s impossible for subscriptions to run profitably on a large scale without a large integrated platform that encompasses customer service, warehousing, and supply chain. Here are the key elements to look for to be sure your subscription platform is giving you all the functionality necessary for success:
1. It’s subscription-focused
A truly dedicated platform focused on the subscription industry is essential. It can’t just be an e-commerce platform with an ancillary subscription function. Regular e-commerce platforms don’t usually have split testing abilities, retention marketing tools, or credit extension/dunning and collection mechanisms.
2. It’s cloud-based
Your platform should also have the real-time reporting and analytics capabilities needed to keep up with all of its subscribers — and that means it should be cloud-based. Digital advertising demands the ability to review results immediately and make self-serve adjustments easily.
3. It offers end-to-end integration
Given today’s demand for instant gratification and real-time information delivery, a platform can be successful only if it is completely integrated into both front-end and back-end functionality. That means frictionless performance during everything from acquisition all the way down to distribution and supply chain logistics. Any “friction” along the way will lead to slightly wrong conclusions or actions and rack up unnecessary costs.
4. Its warehouse operation runs smoothly
Ensure that the platform’s warehouse operations are direct-to-consumer-focused. Vary kit configurations at scale; allow for true customization. Customers will be willing to stay part of only interesting programs. Distribution is easy to underestimate, but variety and customization are the keys to mastering it. And these cannot be achieved without agile, completely integrated systems. Pay special attention to addressing hygiene, multiple and varied shipping locations, weight below breakpoints, shipping rate optimization, and fraud prevention.
5. It has DTC-experienced customer service
Every channel you use to communicate with customers, from email to chat or phone, should be backed by live, completely integrated information. This real-time data should update customers about details and pricing options while giving customer service agents intel about individuals reaching out for assistance. Information about subscribers, such as purchase history, service needs, and potential wants can enable your agents to give them the information they need along with an enhanced experience that could inspire them to purchase additional items.
6. It has experience to back it up
One of the biggest indicators that a platform will work for your subscription business is whether the people behind it have the right experience to help you clear any hurdle. While there may be smaller companies in the industry with reasonably sophisticated technology, that technology alone is not enough. Sophistication still needs experienced management to implement it correctly.
The subscription box wave isn’t slowing down anytime soon. To make sure your company will last, build it on a platform that meets these six criteria to deliver efficient, extraordinary service.
