Over the past decade, we’ve witnessed a growing trend across nearly every industry: increasingly, consumers are moving from favoring single-purchase transactions toward the subscription model. Riding this wave of popularity could be one of the best decisions you make for your bottom line. Not only do subscriptions boost your monthly recurring revenue, but they also foster stronger ongoing relationships with your customers and clients, increasing their loyalty to your brand over time.
No matter what you have to offer, understanding what’s so attractive about the subscription model will give you a window into consumer motivations and help you plan the best subscription model possible.
Lower Barriers to Purchase
A big, one-time purchase can make consumers anxious. Even if it’s something they really want, many have trouble “biting the bullet,” as we say, and making the commitment. The subscription model can seriously lower initial entry barriers.
Streaming services like Netflix really have the onboarding process figured out. Rather than offering a year-long membership, the service bills month-by-month. Smaller payments made incrementally over time put less strain on monthly budgets than yearly buy-ins.
To further lower the purchase barrier, streaming services will often:
- Extend a free initial “trial month”
- Offer a range of monthly plans
- Emphasize that you can cancel any time
In these ways, subscription models significantly lower the barriers to purchase for new potential customers.
This is where services like the Dollar Shave Club and HelloFresh really shine. Once signed up, customers can sit back and wait for their subscription to take care of that area of life for them. They’re free to focus on other things.
With the software industry now offering cloud-based subscription models, customers can pay only for the services they actually need and use. Take, for example, the flexible plans and pricing now offered by Adobe. Everyone, from individuals to small businesses to schools and universities, has options that meet them exactly where they are. Acumatica also has a pay-for-what-you-use pricing model, which promises to provide the customers with more value for the cost of their subscription
Although this varies by product or service, the subscription model greatly increases your ability to curate your customers’ experiences and personalize them based on individual interests and tastes. Since people like what they like, intense personalization only compounds their enjoyment and loyalty over time. Although personalization may sound daunting, with good algorithms and systems in place to do the heavy lifting, you could easily increase your profits exponentially.
We love being adventurous and trying new things, especially when it comes to food and drink. However, in many cases, we’re hesitant to make full purchases unless we’re sure spending our hard-earned cash on something we know we’ll enjoy. In the end, we may be curious about the possibilities but wind up falling back on the same old things we already know we like.
That’s why subscription snack box services and other food and wine subscriptions are so brilliant. Every month, people get to try new and unique flavors on the small-scale, finding new favorites to add to their regular rotations while still staying open to infinite variety.
Sense of Exclusivity
People love feeling as if they’re in the know, as if they have access to exclusive information or experiences their friends, family members, or neighbors haven’t discovered yet. Subscription services help foster this sense of exclusivity, giving people the chance to try new things in a relatively low-cost, low-risk environment.
How subscriptions can trigger increased feelings of exclusivity:
- speaking of services in terms of “memberships”
- using language to make the membership feel like being part of a “club” or a “network”
- offering waitlists and pre-orders
- making bonus items available to members only
Anything you can do to increase feelings of exclusivity will only add value to your subscription model.
We Can Help
To learn more about how you can make subscription models work for you, please feel free to contact us.