How do I find out how many subscription box customers are on gift plans?
Ask for a subscriber export that flags the plan type, purchaser, recipient and end date, then count gift plans separately from self-purchased ones. Check how many gift recipients converted to paying customers when the gift ended. If the system cannot flag gifts, ask the seller how the number was estimated and what it is based on.
Gift plans behave differently from ordinary subscriptions. They often end on a set date and may not renew on their own, so recurring revenue that includes them can look steadier than it is. Ask the seller to produce a report that separates gift plans from the rest, and to explain how the system labels them.
Look at the full life of a gift: who bought it, who received it, when it ends and whether the recipient continued. The conversion rate from gift to paying customer says a lot about how valuable the gifts are. Check timing. If gift sales bunch up around holidays, they may lift the figures at certain times of the year. Compare against monthly revenue and cash received. Ask whether gift purchasers are asked to renew on behalf of the recipient, and whether the business emails the recipient before the plan ends. Those small steps can decide how many gifts turn into regular customers.
Ask how prepaid gift plans appear in the accounts, since money received for boxes not yet sent is a liability for the business. Your accountant can explain what it means for working capital. Compare the report with a sample of actual records, to make sure the labels are consistent.
Key takeaways
- Ask for a subscriber export that flags gift plans, recipients and end dates.
- Check how many gift recipients went on to pay for themselves.
- Ask how prepaid gifts are recorded in the books.
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Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaGovernmentHow to conduct due diligence when buying a business
- 02Business Development Bank of CanadaGovernmentWhat are the steps to buying a business?
- 03Business Development Bank of CanadaGovernment4 key steps to plan your cash flow in the coming year
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