Top-Shelf Decisions: How Do Subscription Retail SMBs Get Them?
The wrong decisions can be disastrous. That’s why subscription retail SMBs feel so much pressure to impactful decisions. The problem is that guesswork and gut feeling aren’t enough of a foundation for consistent decision-making. This article explores the decision-making process, pitfalls, impacts and how proactive decision-making thanks to AI-driven solutions can both avoid mistakes and drive growth and sustainability.
In this article:
- Good Decisions: What’s the Big Deal?
- Bad Decisions: Where Do They Come From?
- Where Bad Decisions Hit the Hardest
- The Impact of Bad Decisions on Subscription Retail SMBs
- The Secret to Good Decisions Is In Plain Sight
- AI-Driven Insights: How They Give You Everything You Need
- It’s So Easy
Even the smallest of retail subscription SMBs requires daily decisions.
Whether it’s deciding on a product, or what kind of social media campaign would work best, or pricing models, all your decisions as an SMB have an impact on the business, and your profits.
There’s not a huge margin for error. But the problem is that many SMBs rely on inconsistent and unreliable methods to make their choices. And that can have serious ramifications.
This article will talk about dangerous decision-making methods, and what happens when people get it wrong. Then it provides one solution that can take care of everything and give you the firm foundation you need to make the best decisions possible.
Good Decisions: What’s the Big Deal?
It’s hard to build a great business without great choices.
The stakes can be very high- especially for subscription retail SMBs that don’t have a lot of wiggle room. Why? Because you need your customer relationships to be long-term versus one-off. But your choices could impact anything in the end-to-end subscription process including:
- how to acquire customers
- which offerings and pricing models
- how to personalize the experience
- which method to invoice
- what kind of payment options
- how
- which KPIs to monitor
- when to act on problems
Let’s look at a decision about product offerings as an example. Make your offering broad, and you might attract more customers. But that makes logistics challenging. It puts more pressure on inventory management. And you might choose the wrong products.
Customers who don’t like this new direction might leave. You could be stuck with tons of stock. And then you might panic (rightfully so, no one wants overstock!) and send out emergency buy-this-now marketing messages that haven’t been entirely thought through.
In other words, bad decision-making brings huge challenges.
Bad Decisions: Where Do They Come From?
Nobody sets out to make the wrong choice. That’s why it’s important to have what you need to make the right one.
But the resources and time of subscription retail SMBs are already stretched to the limit. How can you make sound decisions consistently?
Let’s look at where bad decisions generally come from:
- Gut instinct: There are some brilliant business leaders who talk about creating a long-term career thanks to gut instinct. But they are the exception, not the rule. Feelings change fast. They’re based on fear, or impulse, or information that is flat-out wrong. This system isn’t reliable or scalable.
- Guessing: Without any relevant knowledge or intel, SMBs might be forced to guess which way to go. For example, they might guess how many units of a product will be needed for an upcoming holiday season. But they don’t really know what their segments want, what their competitors are doing, or whether current economic conditions will allow people to spend money on these products.
- Copycatting: There’s nothing wrong with checking out what the competition’s doing to adjust to it. But just because something works for them, doesn’t mean it will for you. Each business has unique circumstances and challenges. On top of that, what a business is currently doing is the result of past decisions. You’re copying history in an industry where everything changes within minutes.
We’re not saying that these methods never work.
But they’re not consistently good. Or sustainable.
If your SMB is already operating with paper-thin margins, even one bad decision can take your business down.
Where Bad Decisions Hit the Hardest
The ripples of the wrong choices tend to flow the most into these areas:
- Customer acquisition and retention: If you don’t really know who your ideal and your current customers are, it will be hard to keep them. And you need them to stick around because you offer subscriptions.
- Offering: Your offering shapes your brand and your business. You need to know what customers want, when they want it. And you need to know what they definitely do not want.
- Prices: Subscription pricing models can be complex. But it’s essential to strike the perfect balance between affordability and profitability. Mistakes make customers run or cost you your bottom line.
- Marketing: Many SMBs don’t really know what will work over the long term. They spend a lot of time and money experimenting, hoping something will stick.
- Inventory management: It’s easy to make mistakes in inventory management because it is often the most difficult thing in retail to get right. There are punishments on both sides of the spectrum; overstocking and stock-outs. A nightmare either way.
Whichever part of the business is impacted, it causes trouble.
The Impact of Bad Decisions on Subscription Retail SMBs
We work with a lot of subscription retailers. Generally, they come to us already stuck in a cycle of damage control and recovery.
Here’s what they experience the most on a business level:
- Churn: When customers face a poor offering and pricing, bad communication, delays in deliveries, and late and incorrect invoices, they leave. Churn forces you to double-down on acquisition and retention costs. You may have to offer steep discounts to either woo customers back or tempt new customers to try your brand.
- Operational inefficiency: Manually processing invoices, or using siloed retail software, or not offering a wide variety of payments forces your team to have to work longer and more stressful hours. Your operations can get to a breaking point where they’re riddled with so many delays and mistakes, there’s no coming back without a huge investment that you might not have.
- Revenue loss: Losing money is serious for an SMB. Whether you’re overspending on customers, or you have revenue loss or leakage in your operations, you might trigger a debt cycle, or a stream of panic-led decisions that make things worse.
And that’s not all. Poor choices personally impact you and your people too:
- Stress and burnout: It’s exhausting to constantly put out fires. The more prolonged the stress, the more likely you and your employees will suffer from burnout. That’s bad for their mental health and your bottom line.
- Self-doubt: No matter how brilliant you are at subscription retail, and no matter how much you care, a series of bad decisions can erode your confidence. Next thing you know, you’re hesitant to make any more decisions.
- Turnover: It’s really expensive to replace employees after they quit.
None of these are ideal. Which begs the question, can this be turned around? If so, what’s the key to good decision-making?
The Secret to Good Decisions Is In Plain Sight
As a retail subscription SMB, you can get out of the cycle for good. And the solution’s closer than you think.
It’s in your data.
Most subscription retail SMBs collect lots of data that is woefully underused.
Your sales data will tell you what works when. Which marketing compliments your offerings. How things like seasonability and trends impact you. Why customers say no, and what makes them say yes.
Your customer data will show you who your current (and ideal) customers are. It will reveal all kinds of information from demographics to customer behavior, buying patterns, preferences, and circumstances. That’s the foundation of personalized experiences.
Subscription data reveals lots of information. KPIs will show you how performance levels, and churn and ROI rates. They show what types of subscriptions and pricing models work best too.
Sounds amazing, right? All that is needed is the right tool to consolidate and make the most of the data you have.
But you don’t have to go to those expensive analytics platforms, or consultants. All you need is one solution.
AI-Driven Insights: How They Give You Everything You Need
AI-powered automation turns things around fast. In fact, it can be a game-changer.
It pulls together all the data into numbers and insights that give you a clear idea of what’s going on in your business at any given time. And this works throughout the entire end-to-end retail subscription management process.
Here are just some of the ways data works for you:
- Predictions: It looks at historical data, subscriber behavior, trends, and seasonal changes to predict future demand with a lot more accuracy. That cuts back on expensive overstock and stockout crises.
- Customer personalization: AI segments your customer base according to demographics so that you understand the kinds of people who are your target customers. It then uses data on behavior, preferences, and purchasing patterns to create a wholly personalized experience for each customer.
- Excellent pricing and boosted sales: AI makes the best recommendations for the optimum pricing at any given time. It also crunches the data to give your sales team the add-on, cross-selling and upgrading opportunities that save your sales team untold hours. And it speeds up the sales cycle and even offers self-serve portals for customers that want to manage their own subscriptions.
- Inventory management and fulfilment: When you have real-time visibility into your inventory, you stay both proactive and agile. Human error and guesswork are gone for good. You’ll have a better hold on your stock, cutting way back on the recurrence of stockouts or overstocking.
- Reporting: Because AI-data crunching brings you real-time financial data and insights, you can make the best decisions where and when they are needed. In an industry like retail where everything changes so fast, this is a huge advantage.
With AI-driven analysis, your retail subscription SMB can finally move away from guesswork and to confidence.
You can be proactive instead of reactive. Confident instead of nervous. On firm ground instead of unstable.
And it scales.
It’s relief from the pressure.
It’s So Easy
People who run SMBs shouldn’t have to struggle through decision-making. The last thing you need is the nightmare that guesswork brings to you, your team, and your bottom line.
These days turning your data into powerful tools that back good choices is a necessity.
Curious to see how fast you can turn things around? Book a free Discovery Call with our team today.
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