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You Too Can Grow a Successful Subscription Company. Here's How. Dog toys? Baby stuff? Puzzles? Makeup? How can you think 'outside the box'?

By Matthew Gallagher Edited by Dan Bova

Opinions expressed by Entrepreneur contributors are their own.

BarkBox

Subscription companies have a unique opportunity to connect with their customers. By offering a recurring product, they get multiple chances to interact. Products range from razors like those sold by Dollar Shave Club to wristwatches like the ones we offer at my company, Watch Gang. Then there's BarkBox, which treats your dog to a monthly shipment of toys and treats. These companies are vastly different but share a common goal: curating a high-value experience for members.

Related: 5 Essentials for Building a Subscription Business Customers Won't Quit

Thousands of businesses have adopted the subscription model. We're seeing new companies launching all the time, in every niche, from Sock Work, which sends monthly socks and donates some of its revenues to veterans, to iFind Seekers, sending monthly puzzles.

What may be surprising to some is that businesses offering a recurring product have been around since the dawn of commerce: The Romans sold and delivered food and newspapers on a repeating schedule 2,000 years ago. In this country, weekly milk deliveries were common even before the Constitution was written.

Related: 6 Easy Ways to Grow Your Subscription-Based Startup

Interested in establishing a subscription business for your product? In my experience, I've come to recognize what I call the "five pillars" for the foundation of a successful and sustainable subscription business. Those pillars -- community, value, discovery, service and integrity -- are exactly what you should focus on:

Pillar 1: A thriving community

Having a community of enthusiasts speaks volumes about your company. It's a sign of trust and brand affinity, and proof that people are genuinely interested in what you have to offer. They are willing to share their experience with others. Your community is a trusted group of peers who are more than ready to authenticate a product, provide feedback on the service and help create a sense of belonging for like-minded members.

Your community drives your business forward, motivates you to improve and helps you craft service improvements. You have to be dedicated to growing and nurturing your community, because ultimately it is the backbone of your business.

Pillar 2: The delivery of value

Consider this: Why would customers want to "set it and forget it" when they can just order when it's convenient for them? Why would they agree to a recurring payment every month for your service? The answer is value.

People have to get a product far more valuable than what they are paying for, which means you as the company founder have to go above and beyond to deliver added value.

Watch Gang, for instance, has price levels to fit all budgets, from $29 to $999 a month, and the watches members receive have a value that's higher than their membership fee. At Barkbox, a $20 box is valued at over $40. Bluum, which offers a box containing the best-reviewed baby, toddler and mom products, has a monthly subscription fee of $34 with the box's guaranteed retail value at $45. These are tangible savings, and for customers they provide convenience.

Apparently, customers agree. A Gang member recently sent a testimonial that stated, "My Watch Gang subscription is the only bill I actually look forward to paying every month." A bill that's welcome? This tells me that we have honored our commitment to delivering value.

Pillar 3: Opportunities for discovery

Subscription companies need to serve as a point of discovery. One of the reasons why subscription businesses continue to be so successful is because of the element of surprise -- people love to open a box without knowing what's inside. Subscription boxes give members the opportunity to discover new brands and styles.

Companies today are engaging members beyond just the monthly shipment. Birchbox offers loyalty points and money back for purchasing the full-size version of samples. At Watch Gang, we launched the "Wheel of Watches," where members can spin a virtual wheel full of watches they may be interested in. They earn points to apply to the wheel every month they remain a member. This has become one of the biggest draws at Watch Gang, because it provides an entirely new kind of discovery experience -- and it's fun.

Pillar 4: Amazing customer service

While not a subscription box, Zappos has repeatedly been recognized as a shining example of how to treat customers. The often forgotten, but arguably crucial, benefit you can provide to a member of a subscription company (or any company) is world-class customer service.

Of course it's easier and cheaper to outsource customer service or offer email-only support to cut costs. But you have to remember that every call, every customer and every situation is unique. Your customers deserve exceptional service from real people whom you've empowered to solve their problems.

Some of the most important changes your company can make may revolve around your customer service department. A single phone call can have immense impact. Having a well-trained customer service team gives your company the opportunity to learn from valuable feedback. It's crucial to give your team members a voice in your business and encourage them to share what customers are saying, both positive and negative. These team members are on the front lines with your customers every day, so they need to be adequately supported and compensated.

Pillar 5: A high standard of integrity

Without a sincere commitment to the above four pillars, your subscription business may never be profitable or sustainable. That's why maintaining a high standard of integrity means you put people over profit. You need to take a stand to help your customers and deliver on your promises -- even when that might cost you.

Every time a customer reaches out for support, you have an opportunity to demonstrate your integrity. It's not an opportunity to make more money from the customer or even to deter him or her from canceling. It's an opportunity for you to shine, as a beacon of good morals. Set an example for all your employees and team members from the top, and it will trickle down to all day-to-day dealings within your company -- with your customers, with your shareholders and with the public at large.

Related: How to Improve Your Subscription Business Churn Rate

Today, anyone can launch a subscription business and start selling memberships; however, the businesses that will stand the test of time and truly become successful are those built with a solid foundation using these five pillars. Investing time and resources into these five areas will help you not only grow quickly but also stand out as a company committed to taking care of its customers and employees.

Matthew Gallagher

Entrepreneur Leadership Network® Contributor

CEO of Watch Gang

Matthew Gallagher is a Los Angeles based founder and CEO. Matthew oversees the day to day business operations of several businesses with over $300m in sales. Matthew's childhood in poverty made him passionate about helping others and led him to becoming a committed philanthropist.

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