When I was growing up, my grandmother—a woman who wasn’t happy unless she was feeding someone—brought the most amazing thing into her house: a mail-order subscription to Gevalia Coffee.
Not only did her subscription yield include what would become her treasured Gevalia coffee pot, but every month, she received three bricks of coffee. Two of the three flavors were always used, while the third—usually a hazelnut blend—collected dust until she could find someone to gift it to.
In the 1980s, my Oma’s purchasing habits were quite ahead of the times. Were she still alive now, she would be bowled over by the array of products available through subscription.
And it’s not just for coffee and other goods. Internet of Things (IoT) and software as a service (SaaS) have mostly moved away from the traditional payment model, where a customer makes a one-time product purchase, to the subscription-based business model.
Interestingly, traditional journalism was one of the earlier subscription-based payment methods, but even that has witnessed many changes since the world’s first website went live in 1990. Slowly, print publications found their way to the internet, but in the rush to provide news as fast as possible, some online publications such as the Huffington Post disrupted the more traditional news providers. Regardless, journalism is transitioning into more of a service, where the quality is dictated by the readers themselves.
Subscription businesses have exploded over the last several years. McKinsey & Company reports that over the last five years, the subscription e-commerce market has grown by more than 100% each year.
With so many companies transitioning to a subscription-based business model, there’s something for everyone—and the fascinating ‘world’s firsts’ show how creative businesses are when adapting to the subscription era.
Here are nine of the ‘world’s first’ subscription businesses.
1. Hit the slopes, Jack: The world’s first snowboard subscription
With winter almost upon us, who’s not thinking about barreling down the slopes on a new board? Signal Snowboards has launched the Signal Subscription Service (SSS). Now snow enthusiasts can get access to new snowboards for as little as $35 a month, not much more than one might spend in the lodge toasting a good run with a few well-deserved beverages.
2. It’s time to fly: The world’s first airline subscription
One of the most exhausting parts of taking a trip happens long before Uber shows up to take you to the airport: booking the trip. SurfAir takes that problem away for customers in California and the UK with the first ever subscription-based airline.
For a fee—actually pretty nominal compared to last-minute flight bookings—customers have access to unlimited flights per month on private jets. There might not be free peanuts, but with the time you’ll save going through private terminals, you’ll have plenty of time to get your legume fix.
3. A new way to access new currency: The world’s first continual cryptocurrency exchange
Are you interested in trading crypto assets? Unlike trading stocks and commodities, which are traded through exchanges (and their time clock), trading cryptocurrency through INFLIV is available anytime, all the time. Instead of a trading fee, customers subscribe to the trading platform and can tap into huge profits (or large losses) on their own terms.
4. Just imagine… The world’s first international lottery subscription
Everyone dreams about winning the lottery but who wants to deal with the lines at the convenience store to pick up tickets? Jackpot.com launched earlier in 2018 to give customers first-ever automatic access to 19 of the largest lottery games in the world. For a monthly subscription, you can play the German Lotto, EuroMillions and the U.S. Powerball, without ever having to buy a ticket.
5. “Off to never never land”: The world’s first subscription band—Metallica
<div style="width:100%;height:0;padding-bottom:68%;position:relative;"><iframe src="https://giphy.com/embed/xClR7LXq7JF5u" width="100%" height="100%" style="position:absolute" frameBorder="0" class="giphy-embed" allowFullScreen></iframe></div>Heading to a concert just got a little easier, if your favorite group is Metallica. The heavy metal band is selling their ‘Wherever I May Roam Black Ticket’ to faithful followers. For one subscription price, fans can get into any or all Metallica shows in their 30-date 2018-19 tour. If fans were to attend every show on the schedule, they would be paying less than $20 per ticket.
6. Not wet behind the ears: The world’s first scuba subscription box
ReefBox has jumped on the subscription box bandwagon with the first-ever box for scuba divers. Each biodegradable box comes with fun scuba-related gizmos, safety gear, and other accessories. The box also features information on popular dive areas, conservation updates, and additional discounted offers on other products.
7. The music that ‘thinks out loud’: The world’s first jazz video-on-demand subscription
As Molly Ringwald said, “jazz music is kind of like my musical equivalent of comfort food.”
Co-founded by music legend Quincy Jones, Qwest TV is the world’s first streaming video subscription for all things jazz, from concerts and interviews to jazz-related documentaries and archived material.
8. My future’s so bright: The world’s first subscription box for sunglasses
Shadesclub is a monthly subscription that brings new premium sunglasses to your doorstep for all occasions. Hand-selected, comfortable, high-quality sunglasses are sure to garner attention without costing an arm and a leg.
9. Let’s get away: The world’s first virtual reality app subscription
<div style="width:100%;height:0;padding-bottom:100%;position:relative;"><iframe src="https://giphy.com/embed/z61f8iheeGlvq" width="100%" height="100%" style="position:absolute" frameBorder="0" class="giphy-embed" allowFullScreen></iframe></div>Vive—a virtual reality system with room-scale tracking technology—enables users to completely immerse themselves physically and emotionally with its product. With the world’s first VR app subscription, Viveport Subscription, customers have access to numerous apps. Now, with a small monthly payment, you can trek Everest, visit museums, or head to Mars.
Looks like there’s truly
an appa subscription for everything!
It’s all about the customer experience
The days of ownership being the most important reason for a purchase have been overshadowed by the fact that customers place a higher value on a superior experience. Subscriptions can be an easy way for consumers to reduce clutter while maximizing the paycheck.
However, businesses know even if a consumer has purchased a subscription, that doesn’t mean she’s going to keep that purchase. If a customer isn’t happy—no matter the reason—she won’t hesitate to push the cancel button.
The sting of high churn rates from dissatisfied customers has actually been around for a very long time. In a roundabout way, even the fundamental preventative nature of ancient Chinese medicine was based on the subscription-payment model. A doctor was paid when his client was keeping good health. If a patient fell ill, the doctor wasn’t paid until the patient was healthy again.
While it’s not easy to put a price tag on the value of a customer experience, there are some interesting numbers out there. For example, the Harvard Business Review compared the customer experience and future spending of two like-companies, one traditional and the other subscription-based. They found customers who reported the best experiences spent 140% more money than those who had a poor experience.
Gartner, Inc. predicts that by 2020 all new SaaS businesses and 80% of historical businesses will offer a subscription-based purchase option. Businesses that focus on creating superlative subscription experiences are poised to reap the benefits of the subscription commerce era.
Are you ready? Is there a specific idea you have that would roll well into a subscription-based business model?
Quick FAQs about Subscription-Based Business Model
Q: What is a subscription-based business model?
A subscription-based business model is a business strategy where a customer pays a recurring price at regular intervals for access to a product or service. This model has expanded beyond its traditional domains and is now prevalent in various sectors, including software (SaaS), IoT, and e-commerce.
Q: How has the subscription e-commerce market grown over the last five years?
According to McKinsey & Company, the subscription e-commerce market has experienced a growth rate of more than 100% each year for the past five years.
Q: What are some examples of the ‘world’s first’ subscription businesses?
Some of the ‘world’s first’ subscription businesses include Signal Snowboards’ Subscription Service for snowboards, SurfAir’s subscription-based airline, INFLIV’s subscription-based cryptocurrency trading platform, Jackpot.com’s automatic lottery ticket subscription, Metallica’s concert subscription, ReefBox’s scuba diving subscription box, Qwest TV’s jazz streaming subscription, Shadesclub’s sunglasses subscription, and Viveport Subscription’s VR app subscription.
Q: What is the importance of customer experience in subscription businesses?
The customer experience plays a crucial role in subscription businesses. This is because customers value superior experiences and can easily cancel their subscriptions if not satisfied. Studies have shown that customers who report the best experiences spend significantly more than those who had a poor experience.
Q: What are the future predictions for the subscription-based business model?
Gartner, Inc. predicts that by 2020 all new SaaS businesses and 80% of historical businesses will offer a subscription-based purchase option. This indicates a continuing trend towards subscription models in various sectors.
Q: How can subscriptions benefit consumers?
Subscriptions can provide a superior and convenient experience for consumers, allowing them to access products or services regularly without making a one-time large purchase. It can also reduce clutter and help maximize the value derived from their spending.
Q: How can subscriptions benefit businesses?
The subscription model provides businesses with a recurring revenue stream, increased customer retention, and opportunities to build stronger customer relationships. It also allows businesses to predict revenue and manage inventory effectively.
Q: What are the challenges in maintaining a subscription-based business model?
High churn rates due to dissatisfied customers can pose a significant challenge for subscription businesses. Therefore, it’s crucial for these businesses to focus on creating superior subscription experiences to retain customers and promote customer loyalty.
