The crowded world of subscription businesses offers ongoing opportunities to screw up your relationship with subscribers.
At Disrupt San Francisco 2019, I spoke with Forerunner Ventures’ Eurie Kim, Lola CEO Alex Friedman and KiwiCo CEO Sandra Oh Lin about key issues and priorities for scaling a subscription service post-launch. A primary theme: building relationships with customers who’ll help you decide where to look for your next product.
“The first product just has to work or else you’re just not gonna have a company. But to be a big company, you have to have much more than just the product, it has to be the full experience and the full relationship that you have,” says Kim. “And then certainly you have to have the muscles on your team to be able to listen, evolve, test, and grow. So we’re obviously searching for companies… where the founders know so much about their customer that for the first few years, you have a very clear line of, you know, path forward. It’s not complicated. It’s just execution. And that’s hard to do. But you need to have a pulse on that customer.”
Instead of striving to meet the needs of every customer, entrepreneurs should focus on trying to understand the subscribers they’ve zeroed in on by being purposeful — instead of throwing a bunch of ideas against the wall to see which ones stick.
“What’s hard is your cash constraints. So you’re starting with one or two products. It’s not like an amazing experience, because it’s one or two products,” Kim said onstage. “You have to have like that laser-sharp product that is actually solving so much of the need that someone’s like, ‘well, it’s only one product, but it’s like a really good product. And so I’m going to start there, I’m going to trust Lola, and I’ll get this tampon. And then if I like it, I’m going to stick with it. I’ll sign up for the subscription, because I do need it monthly. And then hey, maybe I’ll buy something else.’ And so the brand relationship builds over the course of time naturally.”
Lola, which makes women’s health products, launched with an organic cotton tampon that shipped to users monthly. After entering that space, the startup’s co-founders strategized about how expand their offerings.
“We figured, okay, there’s this opportunity to build an end-to-end experience here,” says Friedman. “Where do we start? Obviously, there are a lot of different categories and moments. So how can we be there for [our customer] at every stage with products and content and community. And so after period care, we went to sexual wellness, because that is very resonant with our current customer base.”
Growing with your consumers is key for reducing churn, but it’s also essential for identifying complementary products that can help a startup scale naturally. In our chat, Kim contrasted this with the relationship some box companies fostered after they bombarded subscribers with multiple products at once — a move that can lead customers to decide that the company just doesn’t understand them.
“We have a joke of how many box companies we’ve seen and… what’s in the boxes. And there are a lot of things that you don’t even need the first time, much less needing it every single month into perpetuity,” she says.
Kim, who is an investor in KiwiCo, said the startup has been very targeted with its offerings. “It’s not good enough to be a really successful box company with like the same two things in the box. Because at some point, these people are going to churn out and at some point, it’s just not going to be good enough. So you have to evolve, you have to be targeting a category and a use case that’s broader, that’s going to evolve as your customer grows, and that you have the vision and the desire to grow with.”
After launching with a focus on early elementary school-aged kids, KiwiCo makes subscription kits for kids 0-16+ containing science and art projects. As the company grew, it decided to double down on product offerings aimed at its target market and expand its customer base and reduce churn by creating new lines for children of different ages.
“This was a pretty pivotal point for us, we decided to actually launch three additional lines. So we launched the line for preschoolers. And then we also launched a line centered around STEM for kind of tweens, and then one centered on art and design for tweens,” Kim recalled. “And we put them out there. We thought, you know what, we’re going to double down on the one or ones that actually do really well. And they all ended up taking off. And we decided to invest in all three additional lines.”
The key to giving subscription startups a strong foundation to breathe and expand? Ironing out which customers to approach with new products.
Check out the rest of our talk here: