An Espresso Shot for the Subscription Economy

By Aarthi Rayapura February 1, 2012

by Jeff Yoshimura, VP of Marketing

 

Just in case there weren’t enough Starbucks cafes near you, Starbucks has gone one better. To continue to serve the make-at-home crowd, Starbucks just introduced automatic delivery of its coffees and teas by subscription.

 

The Zuora team went crazy when we saw this! When we started Zuora in 2008, we had all these ideas of how we thought the Subscription Economy would grow in traditional product categories. Our CEO Tien would say, “I think you’ll one day see Starbucks by subscription. Why not?”

 

It wasn’t an accident that Tien chose Starbucks. Subscriptions are the obvious next step for a company that is masterful at retaining customers. It’s the idea that you are giving the customer MORE, and that the relationship shouldn’t end with the swipe of a credit card.

 

Starbucks laid this groundwork with its Gold program, offering loyal customers 10% off every purchase, free Wi-Fi use, free beverages on their birthday, exclusive discounts, and more.  Rather than continuing to chase customers, they wanted to solidify recurring customer activity. And the benefit of the long term engaged customer pays off in increased revenues and profits.

 

This is precisely what Zuora means when we talk about the shift from the “Buy Here” button of the 20th century to “Subscribe Now” button in the 21st century. It’s not just about mail order. It’s about providing customers what they want, where they want it and how they want it, which each customer may view as unique to them. Quoting the Starbucks email campaign:

 

Want to be sure you always have your favorite coffee on hand? Simply subscribe online to have your coffee or tea sent to you automatically, as often as you like. You can easily modify your order, rearrange your shipments or pause when you go on vacation. We’re flexible for you.

 

Start your subscription now.

 

What does this mean for other companies as well? Who else is amazing with customers? Who will be next to shift to the Subscription Economy? What other retailers? Maybe clothing companies? Who knows? And, again, why not?Whoever is that next big brand to make the shift, the Starbucks example itself should serve as a warning to companies who think the Subscription Economy is only about digital goods. As we’ve seen over and over, it’s about a fundamental change in the way you serve your customers. If you want to sit and think about that any longer, companies like Starbucks will come eat your lunch and have a tall half-skinny half-1 percent extra hot split quad shot (two shots decaf, two shots regular) latte with whip while they’re at it.