Subscription box businesses have become increasingly popular, following the massive success of some amazing brands like BarkBox, Butcher Box and about a thousand other problem solving companies that have made their mark while changing our consumer buying habits. With the popularity of subscription boxes still on the rise, there is plenty of opportunity for interested entrepreneurs to create engaging, problem solving and fast-growing businesses.
When I started Plate Crate, a monthly box of baseball gear, in late 2015, it was not to become rich; it was to create a side hustle to support my professional baseball career. I quickly learned the power of subscription businesses, not only for making money, but for building a deep connection with my customers.
Here is a step-by-step guide on how to get to your first sale with your subscription box business. Without your first sale, you can’t have thousands more!
Identify your product
You can have a $100,000 website and the best graphics in the world, but if your product isn’t something remarkable, you need to keep thinking about ways to add value to it.
Items for the box
After you’ve decided on your product, you can start ordering items for your first box! I would suggest ordering 100 of each item to get started. Buying 100 of something allows you to meet low minimums with manufacturers and negotiate with brands on wholesale pricing. Use sites like Alibaba and Dhgate to get started buying in bulk. You can also email companies with products you like and inquire about wholesale pricing. Just remember, everything is negotiable.
Order physical boxes
Sounds easy enough, but packaging is actually a problem if you’re on a tight budget. You can start by getting boxes from Uline and stamping them with a rubber stamp. Not super sexy to start, but don’t spend an insane amount of money designing boxes right away. Hold off for a little. Once you’ve reached enough boxes per month, you can begin to customize your boxes. To start, keep it simple and cost efficient.
Related: What It Takes to Start a Subscription Box Company
Create a website
The most important thing you need besides the boxes themselves is a website. Your website is your best salesperson and the first line of trust you build with potential customers as they see you for the first time.
What we did for Plate Crate was replicate websites we loved, breaking down what made them effective. Don’t obsess over making your website perfect; you will change it a thousand times in the first year, believe me. Just make sure it has clean photography, precise copy that helps answer any potential questions your customer may have, and social proof.
The good news is, building an e-commerce website has never been easier. Using Shopify (or the e-commerce platform of your choice), find a theme that fits your aesthetic. A good way to start is by looking at themes with small catalogues. Plate Crate uses a Shopify theme called “Startup,” which is tailored to selling only one product.
The best way to look at your site from an e-commerce perspective is to think about how you can reduce friction. Friction is adding anything that interrupts your lead in the process of making a purchase. You want to cultivate a website and an order process that makes it as easy as possible for a customer to say “yes.”
If you find creating websites daunting, hire the task out to a Shopify Expert. Give them examples of what you’d like your website to look like and how you’d like it to function. Show them your favorite subscription box websites and explain why you like certain features, and why you dislike others.
Below is the Plate Crate model for essential sections of a subscription box e-commerce website:
- Homepage banner: Clean photography with website header and short explanation of what you do. Add call to action (CTA) within the header
- How it works: A 3-step list on how the process for your box works. Include copy that is fun and engaging. Use icons so people will understand the concept at a glance.
- What’s in the box? Answer your most frequently asked questions in this section about the things like the categories of items in your box, when deliveries ship, etc.
- Social proof: Add an image of a satisfied customer with a great testimonial.
- Features and benefits of your product: This is the problem your product is solving, the value you’re adding, and the way you are improving your customers’ lives.
- Contact us: Add another CTA so customers know how to get in touch for support, and have an email newsletter signup form. (For popup email subscriptions, we use Picreel, it also has exit intent to predict when your customers are about to leave your site and will offer them an incentive!)
Set up subscription management software…
Now that you’ve got your website up and running, it’s time to integrate your website with a subscription management software.
Subscription management is essential to maintain your client base, as this is where customer data for billing terms and subscription status lives. Do you want customers to be charged every month, quarterly, bi-annually? You’ll set all of these rules up in your subscription management platform. You can “cancel” subscribers, pause subscribers, and find your subscriber’s metrics like life timevalue (LTV) and churn within your subscription management software.
Plate Crate uses Recharge Payments for subscription management because they have a great integration with Shopify. Recharge is also our customer portal, where customers can change their shipping or billing address and cancel or pause their subscriptions, so it’s a great platform on both the business- and customer-facing side.
…and order fulfillment software
What happens after someone places an order? You need a simple service to create shipments, order and pay for postage, and track deliveries.
We’ve used Shipping Easy for 4 years. Shipstation is another great option to tackle all of the above tasks in one. You can buy a label printer for your shipping label and slap them on the boxes. When I started Plate Crate, I would handwrite shipping labels. Take it from me, just buy the printer and don’t handwrite hundreds of labels; your time is better spent elsewhere!
I schedule a pickup from the Post Office to pick up my shipments daily, but started off weekly. Call your local Post Office and they will set you up with a rep. You’re off to the races!
Start marketing
While there are numerous marketing tactics, strategy and theory, my aim is to get you on your way, so we will keep this simple.
Email Service Provider (ESP)
You need this for communication with prospects, but also to build your message. I used Mailchimp to get started (which is free up to 2000 contacts), and have since changed to Klaviyo.
Start by building your first welcome “drip” campaign. This is an automated series of emails that goes out to your prospects when they join your email list. Here is a quick article by Mailchimp to get your marketing automations started.
Other ESPs to consider include Drip.com, Active Campaign, Constant Contact and Send Grid.
Social media
Our main social platform is Instagram. Yours might be different depending on your demographic. We have built our audience to over 100K followers by leveraging the relationships of influencers to review our products.
Don’t think of your social media platforms as a place to spam sales. Think of it as a place for your community to converse about relevant topics and discuss content that brings them joy or value.
The number one rule with social media is consistency. Plate Crate’s Instagram has posted three to five times per day for three years. Rome wasn’t built in a day, and neither is your social media count. Be consistent and bring the value.
Get your first sale
It’s great to think about preparing yourself for thousands of customers a month, but the reality is, it starts with the first sale.
Getting your first sale may seem like the hardest part so far. It’s scary, it’s risky, and it’s public. However, all of the fear of making your business real will dissipate once you see that first order come through. There is no other feeling like it. So here is how to do it.
My first order came from an influencer post three years ago. I reached out to a person with 20K Instagram followers in my niche (baseball). I said “Hi, my name is Josh Band from Plate Crate, a monthly box of baseball gear. What are your rates for posts? I’d love to work together.” He got back to me and replied, $25.
We posted a grand opening sale on his page, and I got 10 customers right away!
Don’t overthink this step. Go on Instagram (or your social platform of choice) and reach out to 20 accounts relevant to your niche with over 10K followers. Ask them for their rates and give them content to post.
We now negotiate bulk deals for influencers, and work with them regularly. There are countless ways to make that first sale, but the key is to stop focusing on big picture sales at the start and to make $100 first. After you make your first sale, you can go back and iterate, make fresh content, and expand your strategy.
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Measure key metrics for growth
Your subscription business heavily relies on three metrics: lifetime value, churn rate and customer acquisition cost. The way these three metrics interact with each other determines your startup’s growth. Your goal is to improve these numbers in order to grow your business.
Lifetime Value (LTV) aka Customer Lifetime Value (CLV)
LTV is the lifetime value of your customer. This is how much money your average customer is spending on your product in the total time they are a subscriber.
We need this metric to determine how much money you can spend on acquiring customers. If your LTV is $100 and your margin is 50 percent, you make (on average) $50 a customer. You can now spend up to $50 to acquire a customer and still have it be profitable. Become obsessed with extending your LTV. It is cheaper to keep customers than to convert new ones. You can find out how to calculate your LTV here.
Churn rate
Your churn rate is simply the percentage of customers that drop off each month. You can also calculate this annually. Reducing churn when you have a significant number of subscribers is crucial.
Be aware that when you start a company, you will have tons of failures. Use churn as a metric if you are continuously improving your product and service. It will get better as time goes and your product evolves. Here is a good guide to learning the basics of churn.
Customer Acquisition Cost (CAC)
Your CAC is how much money you spend to get new customers. If you spend $100 on Facebook ads and get 10 customers as a result of these ads, your CAC is $10. The amount of money you can spend to acquire a customer is based on your margins and your LTV.
Overview
Your product is everything. Make something your customers will remark on to friends. When it comes to your website, copy the template of websites you love, using clean photography and images. Subscription management software is essential; set it, but don’t forget it. It’s important to know how you’ll print labels and fulfill your subscription box orders.
When it’s time to market your subscription box, set up your first drip campaign with your email service provider, and determine the social media channels where your target audience hangs out.
Remember that you need just one sale before you get to any significant number of sales. Do the work and reach out to 20 influencer accounts to get you started. As you begin to make sales, track and improve lifetime value, churn and customer acquisition cost, and you’ll be at sale number 1,000 in no time.
