Subscription Services

Subscription services certainly are not new. The business plan for gyms has long involved a number of people paying a monthly fee for a service they never use. With the proliferation of online services in recent history, though, the comfort people have in signing up for an ongoing relationship has increased. Heck, you may have signed up for a streaming service for the first time during the pandemic lockdown that you are still paying for every month. And now, this pricing mindset is becoming a hot thing to think about across different types of businesses.

And it doesn’t even really have to be a subscription in the strictest terms for companies to embrace it. This week, Applebee’s offered a pass for $200 that would cover a year of weekly date nights (52 uses). The pass includes up to $30 of food and non-alcoholic beverages per use. And really, any way you break down the numbers, it is a very good deal for those who purchased it. And many agreed, as the passes sold out in a minute.

What does Applebee’s stand to gain from this, though? Well first, I am clearly talking about them, so it gets them some immediate word-of-mouth advertising. Also, since the deal does not include alcohol, if a couple goes out and gets a couple drinks each, the company’s profit starts to rise again. And what if this couple brings along their children or another couple? What this also does is establish a habit. If you can get people to visit your establishment weekly for a year, chances are they will do so more frequently than they had before even after the deal runs its course.

Beyond that, though, from a psychological point of view, it strikes me that the company is tapping into something that people are just now more comfortable with, the concept of having a subscription. After all, in many stories this was described as a subscription, but it really isn’t. Anything that you pay for once does not fit that model of repeated payments at regular intervals.

I also recently have written multiple times about the idea of not being afraid to try something new. This can be scary in one’s business because you can never know the outcome, but you can always pull back if things don’t work. Sometimes they do, though, passes sell out in a minute, and then a company gets to see how it plays out. Seems worth a shot anyway.

Warmly,

Josh Bousquet
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