by It’s a new year and I hope everybody is fully focused to achieve massive growth in 2020. I want to share some information with you that I have learned from growing my own company to thousands of subscribers and from spending the last few months studying a lot of subscription box models and talking to many different subscription box owners in many different niches.
I have spent some time reflecting and trying to figure out why some people seem to have phenomenal success with this model and grow their companies to thousands of subscribers and why other people struggle to get anywhere. I keep seeing the same reasons pop up time and time again so in the hope that it helps some people I have broken it down into 2 sections.
In my opinion, these are the 2 reasons which cause a lot of subscription box entrepreneurs to struggle.
1. You don’t know who your customer is.
One of the main reasons why we managed to grow BusterBox so quickly is because we fully understand who our target demographic is. From the outside looking in you might go, yeah well that is easy for you it’s somebody who owns a dog. The truth is that is nowhere near accurate and if I set up a Facebook campaign targeting people who own dogs it would be like throwing money down the toilet because the CPA would be so high. The truth is much more complicated than that and we really dig deeper into our ideal customer persona.
The same applies to you in your business. You can have the nicest looking boxes and spend thousands designing your website, but if you don’t truly understand who your customer is and know why they would buy from you you’re completely wasting your time and you won’t be able to grow to any scale. When I talk about understanding who your customer is I mean going really deep with this and painting a clear picture. You should have your key customers split into multiple demographics.
Here’s the type of information you should know.
1.Gender
2.Age
3.Interests
4.Shopping Habits
Depending on your box you may have multiple customer personas purchasing from you and it is your job to find each and every one of them. Only when you truly understand who your key customers are will you be able to target them and come up with ad creatives and offers that will resonate with them enough so they make a purchase from you.
When you have done the work and you are confident you understand who your key customers are then you must try and figure out why they would actually purchase from you. Think about it logically for a second. If you want to sell thousands and thousands of boxes you need to know who will buy them from you and why.
We know why somebody purchases from us in BusterBox and it is our job to capture that experience and present it in our offers, ads and copy. If we do a good job of that all we need to do is keep putting that experience in front of the right people and people will keep signing up over and over again. It really is that easy. On the other hand, if we didn’t know who our ideal customers were and we didn’t know what makes them purchase from us we wouldn’t be able to sell them anything.
Now you are probably asking who is my ideal customer and how do I find them?
Well, this is where it requires a good bit of work to find this information out. You need to spend some time using some common sense and putting together difference customer personas. Once you have put together a few different personas you can then spend some time testing them with some Facebook advertising. All you are really looking to do at this point is to purchase some data back through your ads to see if your assumptions about your customer personas are accurate. If they are accurate great now it’s time to refine them and test more interests. If they were completely wrong, which is highly likely then its back to the drawing board to test again.
You can also put together surveys through survey monkey and do a give away to gather some customer data. This can be very useful and I have done this tactic myself for multiple product launches in the past and I will do it again in the future if I ever launch anything because it works. You should also join Facebook groups which are related to your niche and ask the admins is it ok for you to post your survey in there. That is a great way to connect directly with your target market and get feedback.
There is also company’s out there which can do the market research for you. If you have the cash it might be worth your while looking into getting something like this done as it can save you a lot of time. The main thing is you should never assume you know everything about your ideal customer without having some actual data and results to back it up. I promise you, once you understand everything about your ideal customer it will become so much easier to sell to them.
2. You don’t have product-market fit
This is kind of building on the last point but, it is very relevant and true. I see so many people struggling because I believe they don’t have product-market fit for their box. When I talk about product-market fit I could be talking about a number of things.
Product market fit is defined as the following
Product market fit means being in a good market with a product that can satisfy the market.
Sometimes subscription box entrepreneurs launch their box without really spending any time putting themselves in the customer’s shoes. This means they launch with a box that simply doesn’t satisfy any market. There could be a number of reasons why their box doesn’t satisfy any market. One of the main reasons though is the price.
· Price
When you decided to launch your box, where did you get your pricing from? Was it simply a case of pulling it out of thin air or was there some serious thought put into it.
I know it is very important to build a healthy margin into our boxes so we can sufficiently support our businesses, but we also have to look at things from the customer’s perspective. Remember, we are running subscription businesses so we need the customers to pay month on month. Do you really expect somebody to pay $80 per month for 12 months for a Basketball box? (Maybe if you provide unbelievable value but it will be tough)
Sometimes it’s necessary to admit the original ideas for our boxes aren’t going to cut it so we need to take things back to the drawing board and re-jig the concept a bit. This could mean putting fewer items in the box, providing more value so the price is worth it or finding a cheaper supplier so you can make the price of your box more assessable for the masses.
The main thing is you should spend some time doing market research and actually launching your box with a price that people are going to pay for it month on month and it won’t be a massive battle to get any volume with your sales.
We have done a lot of price testing throughout the years and you would be blown away by the difference a couple of dollars can make. We launched BusterBox in a new market a few years back and I will admit sales were slow and we were struggling to get any volume. So we spent a serious amount of time sending out surveys and doing market research. We came to the conclusion that if we found a way to reduce the price by a few pounds it could make a big difference. It wasn’t easy and required a lot of work on the product to ensure we didn’t lose any quality but we managed to pull it off. The results were outstanding. Literally overnight our sales exploded and our CPA dropped massively.
Another big mistake I see all the time is people copy a competitor’s pricing. This is not a good idea because your competitor could have it all wrong and their business could be a bomb site or they could have a competitive advantage that you simply don’t have. My point is you should do your own research and don’t depend on anybody else as it is very lazy and has the potential to ruin your business.
Do you know the number one reason why start-ups fail? Nope, it isn’t anything to do with cash.
The number one reason is there was simply no market need.
This again falls into the category of product-market fit. I keep seeing it time after time again. People are launching subscription boxes that the market simply has no need for or you have set up a box that will never get enough volume to grow into a healthy business. It is great to niche down, but my advice is when you are doing this, make sure there are enough people in the market to support your business.
You should run your numbers and see how many people you need to sign up to have a healthy business. You should also factor in things such as churn because remember people will be cancelling and you will need to keep finding new customers. You should then do some research into your market and make sure the demand is there for the product and there are enough people who will keep purchasing it from you.
I have witnessed people launch fantastic boxes and the concept collapse further down the line as the market wasn’t big enough to support the venture. It is not good to see and could be avoided by doing some market research at the start.
Thanks for taking the time to read my post and I hope it helped you in some way. The subscription box model can be a fantastic business, but like any business, you need to do your research first and make sure the market is there.
Everything I write in my blog posts is from my own experience of growing my own company to thousands of subscribers. If you have any questions about your own subscription business, please let me know and I would be happy to answer them.
