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4 mistakes to avoid when launching a subscription business

With advanced technology and resources, subscription companies avoid common mistakes.

The widespread popularity of subscription box companies offers huge opportunities. A 2018 report from McKinsey & Company found that 15 percent of online shoppers had signed up for at least one subscription to receive products on a recurring basis, including everything from meal kits to contact lenses. Over the past five years, this area of the ecommerce market has grown by 100 percent, and new brands continue to enter the field.

As with any kind of new organization, a lot can go wrong when a subscription business is getting off the ground. Watch out for these common mistakes to keep your venture on track:

1. Missing out on insights into customers

"Success depends on maintaining a strong base of customers and attracting new people."

For a subscription-based company, success depends on maintaining a strong base of customers and attracting new people to sign up. That means the more you know about how subscribers are interacting with your business, the better. With a thorough awareness of customers' experiences and challenges, an organization can more effectively fulfill their needs and keep them coming back for more products.

Businesses gain a detailed perspective on subscribers by implementing a real-time, unified relational database. Bringing together a variety of information from different systems into a single customer record allows an organization to develop more effective marketing campaigns and customer service.

2. Using the wrong solution for order management

A subscription company must be able to efficiently process orders and securely accept credit card payments. A cobbled together approach to these essential processes opens the door for errors and inefficiencies. By contrast, a subscription company using a powerful order management system gains an advantage in connecting customers with the products they want as conveniently as possible.

An OMS should have an encrypted inflow system capable of working through orders in real time and keeping customers up-to-date on the status of their packages. Working with PCI-compliant Level 1 service provider means a subscription company never has to worry about having customers' credit card information on its own servers, even when running automated charges for repeated payments.

3. Fulfilling too slowly

Speed and reliability are essential in ecommerce. Subscription-based organizations need to be capable of dispatching packages quickly if they want to keep customers happy over the long term. One major step toward efficient fulfillment operations is integrating an OMS with inventory management so packages are ready to go as quickly as possible.

Fulfillment services connect a company with warehouse facilities and trained personnel. They can arrange service from leading carriers at a reduced rate, ensuring that subscribers get the products they're expecting as soon as possible. 

4. Not planning for growth

A business may start with just a few subscribers, but it's vital to look ahead. As a company grows, the demands of processing orders, serving customers and shipping packages quickly mount. It's vital to select tools and build processes with scaling up in mind.

That's why an experienced partner with extensive resources is invaluable for subscription companies. SFG offers a full range of technology and business solutions to assist organizations in building up their operations and expanding over the years to come.

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