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What Stage Is Your Subscription Box Business In?

  • Jennifer Cline - SUBTA Director of Marketing
  • Aug 17, 2021
  • 5 minute read
SUBTA What Stage Is Your Subscription Box Business In?

Business growth is divided into stages, but how do you gauge when your company has moved from one stage to the next? And beyond that, how do you know when it’s achieved success? Most subscription businesses measure success by revenue or subscriber count, but neither is necessarily the healthiest or most accurate benchmark. 

According to SUBTA Co-Founder Chris George, your goals and lifestyle as an entrepreneur define your idea of success. So, identifying your goals in terms of overall business growth should be the first step you take when trying to determine what stage your subscription is in.

Read on to learn about the stages of business growth and how to accurately measure your subscription box business’s success.

SUBTA’s 4 Stages of a Subscription Box Business

At SUBTA, we identify four major stages of a subscription box business. These stages aren’t defined by revenue or subscriber count but rather the company’s development as a whole. 

The four stages are:

  1. Launch: The starting point when a business has just launched into the market.
  2. Growth: The business is scaling and coming into its own.
  3. Established: The business is profitable and sustainable.
  4. Expansion: The business is adding a new revenue stream to adapt to changing markets.

Because these stages depend on your goals as the business owner, your subscription box business may not need to reach all four stages. If you are happy in the established phase, you may never need to move on to expansion. 

However, these four stages are not the only way to think about the life cycle of a business.

Jay Myers’ 5 Stages of a Subscription Box Business

According to Jay Myers, Co-Founder of Bold Commerce, a subscription box business naturally cycles through five stages:

  1. Launch: You’re still figuring out the model and need to stay closely connected to customers. According to Myers, “If you are launching a subscription offering, that portion of your business is in the launch phase.” Track metrics closely — especially customers who were referred by friends. 
  2. Growth: You have a solid understanding of your customers and their behavior to build on. Before you scale, make your value proposition crystal clear and plug any holes in communicating that value. Then you can pour money into marketing because you have a proven model to follow. 
  3. Shakeout: When the market becomes saturated, you’ve grown your subscription box business as much as you can, and the rate of new subscribers is slowing.
  4. Maturity: Your growth has flatlined. From here, there are only two directions your subscription can take: decline or rebirth. Often, businesses enter decline because in their maturity stage, processes become more important than taking risks.
  5. Decline or rebirth. You must decide whether to decline or pivot to a new model. At this stage, disruption is going to happen either externally – from your competitors – or internally by rethinking your value and pivoting.

Refusing to take risks in the maturity stage can keep you from being able to enter rebirth — like Blockbuster, who famously passed on an opportunity to buy Netflix. On the other hand, some companies, like Mercedes and Volvo, thrived in the maturity stage when they shifted some of their focus to offer rental cars at a monthly rate

Paul Chambers, SUBTA Co-Founder and CEO, notes, “Shakeout doesn’t necessarily mean you’re going to fail or that you’re not a success. There can be many winners in the same marketplace.” 

Just because your subscription box business doesn’t end up “on top” when other competitors arise doesn’t mean it will inevitably fail.

And — according to George — keeping up with your competitors isn’t what matters most anyway. Instead, focus on getting to the established or expansion phases based on your personal goals, such as the design of your lifestyle business or whether or not you want to be acquired

How to Identify Which Stage You’re In

SUBTA What Stage Is Your Subscription Box Business In?

So how can you know when you’re in maturity and facing the turning point of decline or rebirth? First, Myers says businesses need to accept that times will change. “What we know today and what we’re doing today won’t get us to where we want to be tomorrow.”

You need to innovate and iterate. 

Accept that not every idea will be a winner, keep trying, and learn from what does and doesn’t work. For reference, check out Killed by Google, a record of ideas Google has tried and discarded in its growth and development.

Myers also emphasizes investing in R&D and projects that aren’t making money yet. To evaluate your subscription box business’s success, keep an eye on its viral coefficient: the relationship of churn versus referral. If your current subscribers refer an average of 1.5 people each, your business will continue to grow, even if your churn rate is high. 

To keep your subscribers happy, build a healthy referral program that offers incentives like member discounts and rewards for referring friends. Limiting referral invitations, like Clubhouse did, is also a great way to get your customers to really think about who they send referrals to. Above all, be ready to try new things as the market shifts.

The Key to a Successful Subscription Box Business

Ultimately, the success of your subscription box business shouldn’t be measured by emotionless metrics like revenue or number of customers but by the goals that drove you to start that business in the first place. 

If your motivation is to give back to your community, then your business’s success should be rooted in sustainably meeting that goal. Instead of measuring yourself against competitors and people who have gone before you, focus on building a subscription that aligns with the lifestyle and the impact that you want to have.

SUBTA is the only professional organization built by subscription business owners for subscription business owners. Join today to get access to our supportive community, shared resources, new content, virtual events, and discounted tickets to our annual world-famous conference, SubSummit.