Are Subscription Models The Best Pricing Strategy For DTC Brands?

Summary

MarTech Podcast ™ Episode Summary
Title: Are Subscription Models The Best Pricing Strategy For DTC Brands?
Release Date: January 23, 2025
Host: Benjamin Shapiro
Guest: Kelly Thornton, Founder and CEO of Tiege Hanley

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Introduction to DTC Subscription Models

In this insightful episode of the MarTech Podcast™, host Benjamin Shapiro delves into the burgeoning trend of subscription models within Direct-to-Consumer (DTC) brands. Kelly Thornton, the innovative founder and CEO of Tiege Hanley, joins the conversation to unpack whether subscription pricing strategies are indeed beneficial or simply a fleeting trend.

Key Topics Covered:

• The viability of subscription models for DTC brands
• Benefits for both brands and consumers
• Challenges and solutions in managing subscriptions
• Best practices for implementing flexible subscription systems

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Subscription Models: A Trend Worth Embracing

Kelly Thornton kickstarts the discussion by affirming that subscription models are a "trend" rather than "trash" when executed correctly. She emphasizes the mutual benefits such models offer:

• For Brands: Provides a steady revenue stream and enhances business efficiency.
• For Consumers: Offers reliability, convenience, and cost savings.

Notable Quote:

"If done correctly, it's great for everybody, it's great for the consumer, it's good for the brand... it's super convenient for them."
– Kelly Thornton [01:55]

Thornton highlights the importance of flexibility in modern subscription services, allowing customers to "pause," "change addresses," or "cancel" with ease. This flexibility not only enhances customer satisfaction but also fosters loyalty.

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Balancing Recurring Revenue with Customer Convenience

Benjamin Shapiro introduces a critical perspective by presenting potential pitfalls of subscription models from a consumer standpoint. He shares a personal anecdote about managing subscriptions, illustrating how misaligned delivery schedules can lead to excess products and customer frustration.

Notable Quote:

"Every time I've had a subscription... I have two extra bags... I need to go online and manage my subscription."
– Benjamin Shapiro [02:47]

This commentary underscores the necessity for DTC brands to prioritize user-friendly subscription management to prevent such inconveniences.

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Implementing Customer-Centric Subscription Management

Kelly Thornton responds by detailing Tiege Hanley's approach to subscription flexibility. She stresses the importance of "putting yourself in the shoes of the customer" and minimizing the effort required to manage subscriptions.

Notable Quote:

"Figuring out ways to make it as absolutely painless as possible for customer to manage their subscription is the name of the game."
– Kelly Thornton [03:45]

Thornton contrasts her company's strategy with cumbersome systems like that of the Wall Street Journal, where cancellation processes are intentionally complex. Instead, Tiege Hanley opts for a straightforward notification system:

"We notify everybody and say, hey, your orders are coming up in three days. Let us know if you want to pause, change or otherwise cancel."
– Kelly Thornton [05:06]

This proactive communication ensures customers have ample opportunity to adjust their subscriptions without hassle, thereby enhancing the overall user experience.

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Innovative Solutions for Subscription Management

Benjamin Shapiro suggests an ideal system where customers receive a prompt before their subscription renewal, allowing them to "confirm or cancel" with a single click. However, he acknowledges the challenges in implementing such seamless systems without risking customer attrition.

Notable Quote:

"I wish there was a system that was easy where it was a check with me. Hey, your subscription's coming, click here to confirm or cancel..."
– Benjamin Shapiro [04:50]

Kelly Thornton reveals that Tiege Hanley already employs this customer-friendly approach, prioritizing transparency and ease over rigid subscription terms.

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Conclusion: The Future of Subscription Models in DTC

As the conversation wraps up, both Shapiro and Thornton concur that subscription models, when designed with the customer in mind, are a powerful tool for DTC brands. They offer reliable revenue streams for businesses while providing consumers with convenience and value.

Final Thoughts:

• Emphasize simplicity and flexibility in subscription management.
• Maintain open communication with customers regarding upcoming shipments.
• Strive to align subscription terms with actual consumer usage patterns to avoid overstocking and dissatisfaction.

Closing Quote:

"My advice is to just focus on keeping your customers happy."
– Benjamin Shapiro [06:38]

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Connect with Kelly Thornton and the MarTech Podcast™

For more insights from Kelly Thornton, visit her LinkedIn profile or follow Tiege Hanley on Instagram @TiegeHanley and their website teege.com. Interested in being a guest on the MarTech Podcast™ or seeking marketing and technology strategies? Visit martechpod.com and subscribe to stay updated with daily marketing wisdom.

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Transcript

[Podcast Announcer]

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[Benjamin Shapiro]

From advertising to software.

[Kelly Thornton]

As a service to data across all.

[Benjamin Shapiro]

Of our programs and clients, we've seen a 55 to 65% open rate. Getting brands authentically integrated into content performs better than TV advertising. Typical lifespan of an article is about.

[Kelly Thornton]

24 to 36 hours.

[Benjamin Shapiro]

If we're reaching out to the right person with the right message and a clear call to action, then it's just a matter of timing.

[Podcast Announcer]

Welcome to the Martech Podcast, a member of the I Hear Everything Podcast Network. In this podcast you'll hear the stories of world class marketers that you technology to drive business results and achieve career success. Here's the host of the Martech Podcast, Benjamin Shapiro.

[Benjamin Shapiro]

Welcome to the Martech Podcast. I'm your host Benjamin Shapiro and today we're going to discuss D2C marketing. Joining me is Kelly Thornton, who is the founder and CEO of Tiege Hanley, which is a provider of uncomplicated skills skin care systems designed specifically for men, equipping them with essential skin care tools to confidently tackle their day. All right, here's my conversation with Kelly Thornton, the founder and CEO of Tiege Hanley. I want to move on to pricing. Let's go through an exercise called Trender Trash. Are subscription models the best pricing strategy for D2C brands? Is that a trend or is it trash?

[Kelly Thornton]

Trend. If done correctly, it's great for everybody, it's great for the consumer, it's good for the brand and it's very good for the brand. It's very good for the consumer if it's done correctly. If you consider yourself a modern day subscription, which we do, it's very good for the customer. Why is it good for the customer? It's reliable. It's delivered to them when they need it, when they want it. Modern day means it needs to be flexible. You need to be able to change things. You need to be able to change addresses, you need to be able to pause, you need to be able to do all kinds of stuff. Once you get it dialed in for a customer, it's super convenient for them. They can save a lot of money by doing it that way. We offer very significant discounts for people that do choose to subscribe to us because it helps us run our business more effectively. We can run our business more effectively than we can offer a lower price point for that service.

[Benjamin Shapiro]

I'll be devil's advocate on the side of the consumer. I understand for the D2C brand why subscription models are great. Reoccurring revenue consistency. Right? You just know what you can depend on and you don't have to continue to find new customers to sell your products. Goes without saying. Every time I've had a subscription, maybe not every time, but most of the times when I've had a subscription, the volume management becomes a problem. I love AG1, right? Take it every day. But I think I have two extra bags of AG1 because they deliver it every 30 days. And in reality, I need it every 37 days because I don't take it every single day. I forget sometimes and I always regret it. Love me some ag1. But there's the subscription management that becomes something that gets put on the consumer, or you end up with too much product and then it becomes a headache. As a D2C brand owner, how are you working with your customers to make sure that you are flexible with them?

[Kelly Thornton]

That is the core of being a good subscription company is putting yourself in the shoes of the customer and thinking about every single step that they take and how can you make it easier for them. I mean, I'm sorry to say, I think generally speaking, people are kind of lazy. Maybe they're not just lazy, they're just busy. They just have a lot going on in their lives. And the last thing on their mind, they've taken care of their kids. They're picking them up, and they're going to basketball this weekend. They got to play tomorrow night, and they're picking up groceries on the way home. It's like, holy crap, I've got too much ag1. Great product, by the way. I need to go online and manage my subscription. So figuring out ways to make it as absolutely painless as possible for customer to manage their subscription is the name of the game. And the easier you can make it, the antithesis of that is like the Wall Street Journal. You know, to cancel, you got to call, wait on hold for an hour, confirm your birth date and your firstborn, and then go through a whole series of why you're doing this, and then all these offers as to why you shouldn't do it. I mean, it's just the antithesis of it. So as easy as you can make it for a customer, the better it is. Everybody.

[Benjamin Shapiro]

I wish there was a system that was easy where it was a check with me. Hey, your subscription's coming, click here to confirm or cancel and then that manages it. But obviously that doesn't make much sense for the DDC brand because all that's going to happen is people are going to be like, no, I don't want it anymore.

[Kelly Thornton]

Actually, we do that.

[Benjamin Shapiro]

Do you?

[Kelly Thornton]

We actually do that. You are not required by law to do that. We would rather be a modern day pain in the ass subscription and deal with knowing that the customer has too much product and not ship it than to ship a product and the guy say I got too much, I don't want it and I want to return it. So we just notify everybody and say, hey, your orders are coming up in three days. Let us know if you want to pause, change or otherwise cancel.

[Benjamin Shapiro]

Good on you. And that wraps up this episode of the Martech Podcast. Thanks for listening to my conversation with Kelly Thornton, the founder and CEO of Tiege Hanley. If you'd like to get in touch with Kelly, you can find a link to his LinkedIn profile in our show notes. You can DM him on Instagram. His company's handle is Tiege Hanley. That's T I e G E H a n l e Y. Or you can visit his company's website, which is just teege.com, t I e g e.com if you'd like a summary of this podcast, or if you'd like to apply to be the next guest speaker on the Martech podcast, head over to martechpod.com you can also find our video clips for the martech podcast on YouTube, Instagram and on X. And if you'd like to contact me, let's connect on LinkedIn. My handle is Benjschapp B E N J S H a P and if you haven't subscribed yet and you want a daily stream of marketing and technology knowledge in your podcast feed, hit the subscribe button in your podcast app and we'll be back in your feed tomorrow morning. All right, that's it for today, but until next time, my advice is to just focus on keeping your customers happy.

[Kelly Thornton]

Foreign.

[Podcast Announcer]

Thanks for listening to the Martech Podcast and I hear everything. Production Looking to launch or scale a podcast like this one for your brand? Then visit iheareverything.com.