Leigh Metcalf, the founder of an Atlanta-based sewing studio, Topstitch, was looking for a way to build a community of fellow stitchers. When the pandemic hit, the need for an alternative way of doing her business became even more pressing.
An online community. She built an online stitching group for garment sewers using Mighty Networks, and today, her online subscription business is booming – so much so that it’s her only focus now!
There are a lot of people talking about different ways to build companies online. People talk about popping an online course up on Skillshare, dropshipping with Amazon, or flipping merchandise.
And while these each might have a place, the online business model that’s really dominating is the online subscription, with a touch of community mixed in! In this article, we’ll tell you what you need to know if you’re wondering how to start an online subscription business.
If you want more support in building your online community, come join OUR Mighty Community for free and meet other new and established community owners! We’d love to meet you. Join for free!
In this article…
What is an online subscription business?
An online subscription business is an online product, service, or space that members pay for regular access to. Online subscription businesses usually either sell access to a digital product or service, such as an online course or software, OR to a digital community.
The online subscription business is a subsection of the wider subscription economy, which is booming. If you’ve ever signed up for a monthly shave club, vegetable delivery, or wine box, you've used a subscription business.
Some businesses are even merging online subscription with physical products, like ArtSnacks Mix, which delivers regular art supplies by mail but also offers membership in an online community that provides art classes, inspiration, etc.
Why start an online subscription business?
Without a doubt, the biggest draw to an online subscription business for both solopreneurs and multimillion-dollar companies alike is the recurring revenue.
You might remember a time when you would buy software like Microsoft Office in a box from the computer store, and have access to that for the life of your computer. Now, Microsoft, like many other companies, has moved to a subscription model. This means you pay less up front, but they earn way more from a customer over their lifetime – all thanks to recurring revenue.
And at a smaller scale, many solopreneurs are also thriving from an online subscription business. You can read examples of these in our Stories of Awesome.
The second huge advantage to an online subscription business is that it offers you tremendous scale as a business owner. You can create something once and it can reach thousands or hundreds of thousands of people. For example, if you are creating content in an online community, it doesn't make much of a difference to you whether there are five people consuming it or hundreds.
You still only create the content once.
It's the same thing with an online course. You don't need to keep recreating a course again and again. Selling a course on an online subscription model simply means adding recurring payments for access.
Long-term customer relationships
Another huge benefit to an online subscription business is that it puts you in a position to have long-term relationships with customers or members.
Unlike a traditional, transactional business, an online subscription business means that you are building a lasting connection. This might be through membership in an online community, sending out a regular newsletter, or by reaching them with social media.
The value of a long-term customer or member relationship to a business is incalculable. It gives you a willing audience to test new products on, get feedback from, and upsell to.
The network effect
The value that we see in online communities is what we like to call the network effect. In essence, the network effect means that the value you deliver to a community member is not one-directional.
In fact, when you create a community-based subscription business, members deliver value to each other as well. They will talk to each other, help each other out, and build real friendships. All this adds to the value of your community, even without you doing much additional work.
Last, but definitely not least, starting an online subscription business can give you clear and predictable growth. Basically, as long as your membership churn isn't too high, you can be pretty certain that any growth you accomplish next month will build on the shoulders of what you have done this month. As a result, you can even project where your subscription business will be a year from now.
How to start an online subscription business in 5 steps
1. Refine your niche
If you have a general sense of where you would like to apply your creative power, the first step in building an online subscription business that actually works is to clarify your niche.
When it comes to building online communities, we teach a process that we call Community Design™ to help you do this. And the first step in Community Design™ is to identify an ideal member for your community. This is someone with a problem to solve that you can help with.
Usually, we recommend talking to potential ideal members for your subscription business, in our case an online community. Use these interviews to help identify pain points that members have, and clear areas where they would be willing to pay to have some help.
Once you have done these interviews, you can build what we call a Big Purpose Statement. It looks like this:
We have a guide to finding your Big Purpose in our FREE Mighty Community!
2. Choose your monetization model & platform
The next step, once you know who your ideal member is and the problem that they have, is to choose a business model that will actually help them. In part, the business model that you choose is going to rely a bit on the problem that they have. If you have teaching that you need to do, you need to include a course platform. If you have a software solution to their challenge, you are probably building something altogether different.
Since we think a lot about online communities, the platform that we built at Mighty Networks is centered on community subscriptions, but it gives you different ways to monetize. You can add paid subgroups, online courses, events, and more. Plus, you can bundle all of the above.
Pick a monetization model that will help you serve your ideal member while you build your business.
And, as you are beginning, don't forget the KISS principle – that is, keep it simple… You know.
3. Find your customers
The next step will be to figure out how you are going to acquire customers. There are a bunch of different ways to do this, so we won't talk about a one-size-fits-all approach. You need to figure out what will work for your ideal members.
But at the very least, you can go back to the people you interviewed and let them know that you are building an online subscription business.
Then, use the tools that you have at your disposal to find other customers. This could include things like:
- Social media
- Email lists
- Custom invitations
- Free trials
4. Deliver value
Getting people in is half the battle. KEEPING them in is the other half. That's why, once you have some paying customers for your online subscription business, you have to start delivering value.
The good news is, if you did the work to identify your ideal member, you can just give that person what they need. That's why the Community Design™ process makes your business more efficient, since you're not trying to deliver value to a bunch of different kinds of people who all want different things.
Resist the urge to think of volume as value. Too many people start an online subscription business and think that customers will be happy if they have an avalanche of content, and creators get burnt out trying to deliver it.
Instead, focus on the transformation your members are trying to go through and give them only what they need to make that happen.
5. Assess and adapt
Finally, make sure you constantly take stock of what is working and adapt. It's in your best interest to be lean as a subscription business, and don't be afraid to make the changes that will help you serve your audience better.
So now that we've walked through how to start an online subscription business, the only thing left is to get started! And believe it or not, this can be the hardest part. Many people dream of trying, but suffer analysis paralysis, overthinking to the point that they never take the first step.
Don't be that person. Just get started! Even if you don't have it perfectly figured out, you'll learn as you go. That's the beauty of this journey.
Ready to launch your subscription business?