Nobody Beats Amazon When It Comes to Subscription Services

Three Questions Marketers Should Ask Before Launching Subscription Models

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It seems everyone wants a direct, subscription-based relationship with their customers these days. HBO announced it would go direct in 2015, followed quickly by vague announcements from CBS and Lionsgate. Even Apple, after years of suggesting that subscription music services simply had no future, bought the Beats headphone and music-subscription business last year for $3 billion. Microsoft even offers subscriptions for services ranging from its Office 365 productivity suite to its Xbox Live service.

But when it comes to subscription relationships, nobody beats Amazon. When the company unveiled Kindle Unlimited -- a book-subscription service -- earlier this summer, it added its ninth subscription service. The announcement was interpreted as a book-industry event by most, but it was more than that. Amazon knows that the future of both digital and physical products and services requires tethering a customer to you with a stronger bond than a brand alone can permit.

That's where subscription comes in. In Amazon's case, the subscription everyone thinks about is Amazon Prime, clearly the most important consumer-facing subscription the company offers. But beyond Prime there are eight other offerings that have subscription-like properties: FreeTime, Prime Instant Video, Prime Music, Amazon Mom, Cloud Drive, Audible Membership, and the aptly named Subscribe & Save. Didn't realize that Amazon had so many services up its sleeve? That's by design. Some of them, such as Prime Instant Video and Prime Music, are both "free" services in that they come with the Amazon Prime service. Yet they are branded as distinct services, precisely to communicate to the user that they are getting a discrete value, even if they don't have to pay for it for the time being.

In fact, the wide diversity of subscription models Amazon employs is further evidence that digital customer relationships are diversifying. Not only can customers have a relationship with Amazon, Apple, and Google at the same time, they can also have more than one relationship with each of those companies. That digital complexity is partly necessary as companies experiment to discover what consumers really want and what they'll pay for, but it's also a luxury that relationships -- in a digital era at least -- are easy to set up, both for the company and for the customer.

What's a marketer to make of this? Brand isn't a strong enough gravity well to keep consumers in your orbit anymore. You'll need some kind of digital tether. And in some cases, that tether can actually become a source of revenue, as UPS has learned with its My Choice shipping-management subscription service.

Where is that possible? Forrester's new report on the topic of digital subscriptions recommends that you attempt a subscription model only if you can answer these three questions affirmatively:

1. Does your customer need this frequently? The best digital subscription models exploit a behavior that is already frequent and then go on to make the service so valuable that people use it even more. People signed up for Netflix because they already wanted to stream a few movies on the weekend, then went on to streaming TV shows every day.

2. Can the experience be made more emotionally engaging? For services that don't automatically benefit from high frequency, capturing the attention of potential subscribers is difficult. That takes marketing. For example, Dollar Shave Club uses over-the-top, humorous viral videos to draw attention to its services, adding layers of emotion to the experience of buying shaving materials.

3. Will your solution be more convenient than the alternatives? Unless your subscription experience is more convenient than every other experience of equal frequency and emotional depth, you will not attract subscribers. Hulu Plus struggled at first to get people to upgrade to the subscription version of Hulu because it was only available on a few devices consumers owned. Once Hulu made Plus more widely available -- and assured consumers that Plus would provide access to more exclusive content on those devices -- subscribers climbed to more than 6 million paying customers.

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