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Recent reports indicate that more than 40 percent of all retailers have some type of subscription offering, which includes everything from wine and razors to shoes and apparel. While the skeptics in the market will point to the fact that 60 percent have yet to embrace the subscription economy; the remarkable aspect of this data is the speed by which marketers are embracing this “new” means of product/service consumer purchasing. The meteoric shift in consumer purchasing patterns has accelerated over the last 12 to 18 months. We have never seen anything like it. While brick-and-mortar retailing remains the dominant consumer purchasing channel, there can be no denial in the fact that today’s Millennial, Baby Boomer, Generation X and Gen Z are uniformly embracing the subscription model.

The reaction among the retailing community to this “sudden shift” in media buying patterns breaks out into several camps. There are the leaders — Amazon, Alibaba, Walmart etc. — who are doing all they can to either build out and/or acquire subscription infrastructure and operating units to establish a lead in addressing consumer needs and preferences. There are the followers. These are companies that are putting their toe in the water and making slow moves to adjust their current brick-and-mortar strategies to include components like; home delivery, online ordering, etc. Lastly, there are those who are either in denial or a death spiral. Just in the last several months, we have witnessed the closing of Toys ‘R’ Us, Bon-Ton and other stores. We have witnessed a meteoric rise in empty commercial real estate as chain stores cut back on expansion and/or focus on trimming their network of stores to only the most profitable.

To be sure, retailing of all kinds will never be the same. The core question in terms of picking the winners and losers in the new world is really focused on issues around the sustainability and uniqueness of the marketer’s value proposition coupled with the infrastructure and go-to market strategy that will strengthen their relevance in today’s market. I vividly remember a time when the Internet and e-commerce were in their infancy that many scoffed at the premise that a small company called Amazon, dared challenge booksellers such as Barnes & Noble and Borders. Amazon knew something about consumer behavior nearly 20 years ago that others dared to embrace.

The winners in the early rounds of the battle for leadership within the subscription economy understand and execute on several core principles. When you observe organizations like Stitch Fix, Netflix, Amazon, Whole Foods, Save the Children, Amora Coffee, Boxed, etc., these organizations all share a new DNA that is driving them to leadership positions in their respective market sectors. Here’s are several keys to their winning strategies.

Understand the Needs of Your Customers

Legacy retailing was dominated by the idea “if we build the store, mall, shopping center, the consumer will come.” Forget that today. Your customer is demanding that you, the marketer/retailer, provide them the services as opposed to huge square footage with endless aisles and racks. Your customer today is juggling a hundred different responsibilities on a daily basis. Winners are the organizations that are focused on providing services to the end customer that make their lives easier. The harder you make it for the customer to do business with you, the worse off you are going to be. Reach out and connect with your customers on their turf.

Make All That Data You Have Been Collecting Useful

You have been asking your customers all sorts of questions. Capturing data at check out. Building huge warehouses filled with all sorts of preference and transaction data. The winners: Companies such as Amazon, Stitch Fix, Boxed and others are using this data to sharpen their overall approach to their customers. When they connect with their customers they build loyalty by having “conversations” that are profile data relevant. You like a certain style, fragrance, coffee blend, and they engage by conversing in lockstep with these preferences and recommending related products.

They connect in a manner that reinforces to their customer that they really care about building affinity and loyalty. Customers crave this sort of connection and will reward the marketer handsomely. Just look at what Amazon has done with “Prime” membership. They continue to grow their participation while at the same time increasing the subscription cost! Dare to be relevant.

Conversation Builds Retention

Many are flooding the subscription economy with a wide range of offers and opportunities. The big mistake that many are making is they view this opportunity in the same manner as we once viewed magazine subscription. The flawed thought that once a customer signs up for the subscription, regardless of the product, your job is over. The reasoning is that there is no need for the marketer to do anything to nurture the consumer to build retention. It will all occur on autopilot. The exact opposite is the best practice that many in the early stage of subscription marketing are missing. In order to win — and become profitable in this arena — the first order needs to be the beginning of a value-based ongoing conversation with the consumer, that reinforces your ongoing value proposition in the months ahead.

If you go to sleep on a customer relationship after order number one, most likely you won’t see many order number twos and much less order threes. Remember, you haven’t built a “subscription business” until you have loyal subscribers — not one-off transactions. Retention strategies is a new discipline that needs to be learned by many marketers in our industry, quickly.

Quality Customer Service — Essential

In today’s market, you need to monitor the overall performance, features and professionalism of your customer service capabilities. You can do a lot of great work on the front end in building loyalty and yet see all this time and commitment squandered by a lackluster approach to customer service. Your brand lives and dies on the basis of your customer service.

If a customer feels that you have dropped the ball anywhere in the process of serving them, this rash will spread like wildfire. Customers are very vocal and viral today. It may take them some time to become flag-waving evangelists for your brand. But you can be sure that if they feel wronged, in a nanosecond they will wage “social warfare.” Build consistency between front-end marketing and back-end customer service.

The leading players in the subscription economy today are great students of their customer’s behaviors, preferences and buying patterns. They are also incredible observers and chroniclers of their competitor’s strategies and tactics. They realize that they are involved in a battle for the customer and share of wallet. They operate in real time. When they observe a shift in the competitive landscape, they don’t wait months to react. They move quickly and decisively. Do they make mistakes? Sometimes. The mistakes are always “aggressive” mistakes, not those made by sitting by the sidelines.

The DNA of each and every retailer — chain store or mom and pop — needs to change dramatically. Failure to do so will leave the door open to the many new upstarts who are beginning their retailing presence in the hottest channel movement in our world: the subscription economy.

Jim Fosina is founder and chief executive officer of Fosina Marketing Group.

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