To Beat Your Subscription Competition, You Have to Get Personal

What are the key factors that contribute to a successful subscription service? A popular — and important — question. Of course, there are many elements involved in subscription services that contribute to success. Some of them, such as having a high-quality product and reasonable price point, are no-brainers. Others aren’t as obvious.

Customization and personalization are two overlooked factors that rank high in importance in the new membership economy. But a few innovative companies are taking it to the next level. Take clothing subscription pioneer Stitch Fix, for example. The company is reportedly thinking about an initial public offering — and it was most recently valued at $300 million.

Stitch Fix uses customer-provided data and product info to continually improve on the goal of getting the right clothes for the right person. The company recently expanded its offerings to include Stitch Fix Plus and Stitch Fix Men. By adding new clothing sizes and programs to its portfolio, Stitch Fix is giving subscribers additional options to customize their experiences and ensuring deliveries feel even more personalized.

The long-term success of a company’s subscription service is directly proportional to its ability to customize and personalize its products and the entire subscription experience.

Creating Moments That Make an Impact

The terms “personalization” and “customization” are often used as buzzwords. Many times, they’re also treated as synonyms. In subscription commerce, however, the terms have different meanings.

Customization refers to various items, experiences or messages selected or curated by an individual subscriber. This can happen when a customer places her first order or later in her relationship with a subscription company. Customization can be difficult, especially at a large scale. It can require an investment in new technology, product assortment, fulfillment capabilities and more.

Personalization, on the other hand, means addressing subscribers on an individual level. For example, if a business can address a customer by her first name — on more than invoices and emails — a true and long-lasting relationship is more likely to blossom. A truly personalized customer experience can make the difference between someone becoming brand loyal or buying from a brand only once.

Diving Into the Psychology of Subscriptions

Several underlying psychological factors are at play when businesses successfully implement customization and personalization into their subscription services. The most dominant feelings in this context are “wanting to belong” and “being known.”

In our increasingly fast and digitally connected world, many people are beginning to feel more alone and disconnected. If a company can capture a customer’s needs and deliver a truly customized experience, she will enjoy being part of the company’s movement and will want to cultivate a relationship rather than just complete a transaction.

In the ever-changing apparel industry, Stitch Fix is using a great mix of customization and personalization to bring customers into the fold. Stitch Fix realized early that apparel is all about the customization and personalization of style, trends, color, size and fit, and that every person is unique. It created and improved the questionnaire at the heart of its process through deep data science and analytics.

The Path to Successful Customization and Personalization

When it comes to customization and personalization in subscriptions, apparel and beauty brands likely are the first to come to mind. However, any company can use customization and personalization to improve its products or service offerings. Keep these tips in mind as you implement those psychological factors into your business.

• Surprise, people are real. We all get mired in numbers, but brands should remember real people are at the end of the product or service. Rather than stopping the thought process on the shelf or in the distribution center, marketers owe it to customers to think about their experience and how they can uplift it through personalization.
• Customization can cross multiple channels. Personalization is rapidly becoming omnichannel driven, even at the retail store level. Consider Sephora: The beauty retailer is using subscription boxes to drive e-commerce and subscription e-commerce sales. At the same time, subscribers are encouraged to shop Sephora's brick-and-mortar stores for unique, curated experiences. It’s a full-circle approach and personalized every step of the way.
• Customer data is the lifeblood of business. The age of big data is upon us, and the more we have, the better we can deliver. If you understand how to interpret your customer data, you can know what offer they came in on, what media channel brought them in, how many times they’ve been in contact, and more. Data is a gold mine and resource; use it to personalize campaigns, messaging, product assortment and more beyond today’s capabilities.
• The personal touch isn’t going anywhere — nor are customer expectations. Borrow personalization tactics used by the strongest subscription model companies to make your marketing intuitive, fresh and irresistible.

Georg Richter is founder and CEO of OceanX, which is reinventing the membership economy by transforming customer-brand interactions and providing a powerful engine for subscriptions.