Business and Operations
Building a new, steady revenue stream for your brand
March 21, 2016 By Michelle Brisebois
Retailing can be a tough road to hoe. The hours are long, the expenses hard to control and you never know what your traffic is going to be. Factors beyond your control like weather, construction and rival businesses can help or hinder financial results. What if you could identify a piece of business that was operationally efficient, very effective at building your brand and guaranteed steady income? There exists such a revenue stream: the club.
Many businesses offer their products as “clubs” that customers sign up for and receive shipments directly to their homes on a regular basis. This business model is known as the subscription model or direct to consumer. It’s a model employed by many industries, one of the most common being the wine industry, where wineries ship bottles to club members on a regular basis. The member’s credit card is automatically charged prior to shipment and after the charge goes through, the items are shipped. All kinds of industries are tapping into this revenue stream – artisan yarn dyers are offering yarn of the month clubs with patterns. There are clubs for snack of the month, tea, beauty supplies, crafts, shaving and coffee. Just about any business can offer their products by subscription as long as a reliable, effective shipping method can be identified. The subscription model is great for customers because it comes right to their homes or workplaces like a surprise present each month. The subscription model is great for you because there now exists a reliable stream of income, a reliable production schedule and a regular, ongoing connection to your most devoted fans. In terms of building your brand and a base of devoted fans, subscription sales are the secret sauce.
Shipping baked goods
For many bakeries, the thought of shipping their products is daunting. Baked goods typically fall into the more fragile end of the product spectrum. Wine bottles are made to ship and other products are shatterproof. Keep in mind that the proliferation of online shopping has made the shipping industry truly up its game in terms of speed, accuracy and product safety. The key is to do your research to find a good shipping partner and to build that cost into the price of the club. Sue Ellen Parrott, president and chief baker of Sue Ellen’s Pies in Toronto, has a thriving baked goods club with many devoted customers.
“I did lots of research before I launched the club to make sure I found a courier service that could keep the pies intact and ensure they arrived overnight. I spoke to friends who had businesses to get their advice on which companies were best,” she says.
Parrott connects with each of her club members prior to shipping to ensure they can be available to receive the package.
“Before I ship out I find out where and when they would like the club delivered. This ensures that most of the time someone is home. For my baked goods sometimes I deliver as late as 9 p.m. to just make sure they get it,” she says.
Not all baked goods are equally fragile. Brownies, fudge and truffles might be great candidates for launching a club initially until you have a comfort level with the logistical piece.
Managing the club
Establishing what type and size of club you want to offer is vital to creating a positive experience for both you and the customer. The steady revenue will be wonderful but along with that revenue will come steady production and the pace can be intense. The club can be monthly, or less frequent if that gives you some breathing room. You’ll want to think about how you’ll communicate with your club members. If you want to take the personal approach and call them, a smaller club will allow this interaction. You can also leverage digital tools such as email, text and free mass communication surveys such as Google forms and Survey Monkey. Will your club be a one-size-fits-all model where all members get the same items, or will you customize? You can combine the two models by offering pies or cookies with the member choosing the flavour within a certain range to make it personal yet operationally efficient. Parrott offers customization as well as flexibility around dietary restrictions.
“The members get to choose what they want to receive,” she says. “I also offer special flours upon request. My customers deserve the best so I try to ensure they are really excited about the shipment.”
You’ll also need to think about how your baked goods club will be marketed and whether or not it will be purchased as a gift for someone else or for the purchaser to enjoy.
“Most of my clubs are given as gifts,” Parrott says.
The club is a great present for the person who has everything and doesn’t need more “stuff,” but who also happens to love beautifully made baked goods. This knowledge will inform how you market your club. Investing in a lovely card or beautiful branded box with club information inside will make it nice to present. It’s a generous gift (Parrott’s club retails for $43 per month) so you’ll want to ensure that the marketing materials are worthy of the investment. The package inserts can be overlooked but keep in mind that they enhance the “kitchen table” experience of opening the shipment. Club members have invited you into their homes on a regular basis via their shipments. Take the opportunity to include a small newsletter to talk about new products, promotions and your business philosophy. A personal note could also be a lovely touch if the club size permits you to offer this.
Clubs in the store
While club shipment is the cornerstone of the subscription model, some bakeries are launching clubs that draw customers to their stores instead. Cupcake Junkie of Whitby, Ont., offers a “Cupcake Junkie Club” designed to draw members into the brand experience and have them act as a consumer advisory panel. The club is free to join and full of membership benefits, says Sean Aronson of Cupcake Junkie.
“We have an active Facebook page and members get a free cupcake and coffee every month with the purchase of a cupcake. For every month someone is a member, they get a ballot put into a year-end draw for a $100 gift card and a t-shirt. For members, the exciting part is getting access to the featured cupcake of the month, which are new flavours not launched yet. The members get the inside scoop and Cupcake Junkie gets feedback on new products before they’re launched.”
Having a trusted group of devoted customers to vet new ideas is a great asset. Cupcake Junkie holds tasting parties so members can interact and bond over their favourite products. Providing opportunities for club members to interact with each other is a great way to reinforce the experience. Member exclusive tastings, cooking seminars and dinners are great ways to facilitate more connection between members.
Launching a club takes planning, honesty and a new level of intimacy with your customers. Some members have clubs ship great distances so they can continue to have Sue Ellen’s Pies as a part of their lives. Think about what you’d like your club to accomplish — for your brand, your profitability and your reputation — and then create one that works for you and your customers.
Michelle Brisebois is a marketing professional with experience in the food, pharmaceutical and financial services industries. She specializes in brand strategies.
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