When beauty and wellness business Caci started offering subscriptions in 2008 it had just 24 clinics – now it has 84 and has survived the global financial crisis and the Covid-19 pandemic.
Caci co-founder and director, Jackie Smith puts it down to the success of its membership and subscription model, which she credits to the business’ survival.
Smith started out as a registered nurse and built commercial and management experience while her husband David Smith completed a master of business administration.
Together they opened the first Caci Clinic in Auckland in 1994.
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The couple were no strangers to a business during difficult times – the global financial crisis (GFC) in 2008 was one of them
“Similar to all businesses during the GFC in 2008, we experienced challenges.
“Customers were feeling the impacts of the recession, and we were there to support them, while maintaining our own business acumen.
For many women, especially in times of financial difficulty, justifying purchases solely for their own benefit remained challenging, Smith said.
Subscription shopping services promise to make life easier for time poor consumers.
“Especially as most of our service require a course of treatment. Customers were coming into the clinic, and having to make the decision ‘am I worth it?’ each time they visited.”
So they developed a membership model and subscription with laser hair removal treatments, that also helped them pull through the Covid-19 pandemic successfully.
“The GFC made us recognise how successful the model withheld during a tough economic environment, and it all started with understanding our customers and their needs.”
Caci commissioned research into the subscription economy and found 83% of consumers paid for a subscription-based service or product for themselves or their household.
This was highest among Gen Z and millennials, 96% of whom aged 18 to 29 paid for a subscription-based product or service, and lowest among baby boomers and Gen X, 65% of whom aged over 65 were subscribed to something.
Income was also a factor with the research finding the higher the household income, the more likely it was to have a subscription – 96% of people whose household incomes fall between $130,000 and -$150,000 had a subscription compared to 62% with an income base of $30,000.
Entertainment such as Netflix fitness, food and health and wellness were the most common forms of subscription products and services, while beauty subscriptions were most common among 30- to 34-year-olds (15%) and among those with household incomes above $70,000.
Following the success of its laser hair removal membership model, Caci introduced memberships based on customer demand for muscle relaxing and filler injectables, skin rejuvenation and body shaping.
It also introduced a membership rewards programme, giving members access to a myriad of benefits including free treatments, and discounts on casual beauty therapy and Caci’s own skincare range.
Caci has nearly 23,500 members and 80% of its customers have a membership – managed by more than 600 staff, including more than 80 registered nurses.
“Since 2008 our membership numbers, alongside our clinic numbers have grown significantly, in 2008 we had 24 clinics, we now have 84,” Smith said.
Throughout the peak of the pandemic many customers chose to keep paying for their memberships.
“We offered extra support during this time allowing members to redeem services when clinics re-opened or pause their memberships,” Smith said.
But with high inflation and the cost-of-living crisis, the membership model would be tested again, but Smith said she was confident the model would weather the looming recession.
“We know that the desire for people to look good doesn’t change, and therefore we need to understand what opportunities this downturn offers us to strengthen our model and respond to the needs of our customers.”
Retail commentator Chris Wilkinson said savvy retailers were increasingly including subscription models to provide greater certainty and make their businesses more efficient.
“While pure-play etailers like My Food Bag have helped make subscriptions a mainstream and well accepted channel, there are many smaller and independent businesses, such as vege boxes, artisan bake houses and skin-care entrepreneurs who are also embracing the model,” Wilkinson said.
Similar models were also working well for lawn care products, home care services and other categories that had reliable, regular needs that for consumers were a chore, not experience, he said.
“Retail in general is becoming more about experience, with chore shopping, such as groceries, increasingly relegated to do-it-for-me solutions, such as click and collect and delivery.
“In an increasingly variable economy, subscriptions are the holy-grail of retailing and something many businesses aspire towards,” Wilkinson said.
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