There was a time when only book publishers persuaded customers to pay up front to receive a series of products in the mail byinstallment. Now companies in other consumer businesses are applying the concept of continuity, or club, sales totheir own industries.
"When we didn't have much money, the club helped with cash flow," says Bruce Pavitt, cofounder of Sub Pop Records, theSeattle record label that launched Nirvana. To publicize the company early in its life, Pavitt produced limited editions ofseven-inch singles and began a single-of-the-month club. Soon it had 2,500 members paying $35 or $60 in advance for 6 or 12months of new music, giving the label a stronger national presence as well as upfront cash.
For Starbucks Coffee, the Seattle-based retailer and distributor of coffee, a coffee-of-the-month program meant a reduction inthe cost of direct mail. "Instead of printing a catalog and getting just one order out of it, you get all these cumulative orders andcan spread the marketing costs out over them," says Dwight McCabe, former mail-order director.
And club sales create a wonderful predictability of demand. When mail-order flower company Calyx & Corolla was startingout, flower-of-the-month-club sales accounted for at least 15% and as much as 40% of revenues, depending on the season. Forthe San Francisco company, that smoothed out fluctuations in what is a highly seasonal business.