The subscription economy is growing extremely fast these days, and it’s beginning to transform every industry. Companies that use a subscription business model as their core strategy are now separating themselves from the competition. This business model is a blueprint for businesses because it is forward-thinking, provides predictive revenue, and builds stronger customer relationships. When you invite a consumer to become a customer, and then this customer receives an invitation to become an actual member of your “exclusive” club, they’re at the heart of your business. This customer’s loyalty will be difficult to shake.
The secret to having this recurring revenue and these loyal customers is by understanding who your target audience is and how they make your company more valuable. Consumers have a choice, and they subscribe to companies that make their lives easier and better. Finding them is the key to building a successful business model and this paves the way for companies, in any industry and of any size, to have more cycles of growth and profitability.
Who Are These Active, Loyal Subscribers?
Chris George, the co-founder of The Subscription Trade Association, has collected data on consumer behaviors. The research shows that forty-two percent of all subscribers that have three or more active subscriptions are male, and twenty-eight percent of women are subscribed to three or more services. The study goes breaks these numbers down into specific groups.
These are some key findings: Ninety percent of the Gen Z population uses subscription services, making them the highest users, and millennials follow closely behind them at 70%. Let’s take a look at these two generations and their buying behavior.
The usage numbers of this generation group are critical to a subscription business because some members of this community are entering their mid-20s, and this generation is already a strong market force. Gen Z makes up around 20 percent of the U.S. population and is the first generation that has known technology since they were born. Their spending behavior is based on having access to goods and services rather than possession. This generation also uses brands and products to express their identities.
Gen Z loves to share information as well, and they become enthusiasts who attract other enthusiasts when they really like a product or service, and this makes them great advertisements for your brand.
Forbes magazine has stated that by 2026, Gen Z may just become the largest consumer population in the U.S., and this generation is already spending an estimated $143 billion per year. That’s a lot of buying power.
Millennials are another generation that is driving changes in the consumer marketplace, They want access to products and services as well, rather than making one-off purchases, and are willing to pay for this. The millennials are a consumer powerhouse and were the largest generation within the U.S. in 2019.
Some members of this influential group are now turning 40, which means that they are establishing themselves in their careers, buying homes, beginning families, and spending additional cash on products and services. These millennials, who are in their middle years, will continue with their subscriptions and add to them because they’ll be purchasing more, and searching for easier ways to access goods and services while balancing the rest of their life.
This is the perfect opportunity to grow your business with a subscription model and capitalize on this increase in millennial buying power; and their demands for convenience. Ordering products and services on-demand instead of just buying a single purchase, has become routine for them, and millennials are making more than half of their purchases online. Connecting with them will pay off in the years to come.
With these two generations spending this much money, you should want to get ahead of your marketing efforts now and position yourself as a subscription brand these consumers will love.
As you can see, when you reach out to the right target audience, subscriptions can benefit any business in any industry, no matter the size, product, or service. Businesses that wouldn’t even consider their products capable of fitting a subscription model many years ago are now surprised to learn how recurring orders benefit both them and their customers.
How Can We Help?
When you are finding the right target audience, this can make all the difference in how successful a subscription business model is, and consumers are becoming bigger fans of this concept because they feel as if these companies have their long-term well-being in mind. This business model is essential to the businesses that depend on sales and marketing, and so highly valued right now because companies have a better understanding of how customers are engaging with their products.
If your business isn’t a part of this subscription economy, you can be certain that your competitors probably are or soon will be. And now that you have a better understanding of who your target audience is, you can begin to understand who would value these features, build up a base of customers and keep them signed up month after month. This is a solid foundation that you can use to grow your brand. We want to help your business stand out from the crowd and make this a success.
At MaxQ Technologies, we know that it’s not enough to be able to just sell your products and services on a subscription basis alone. To fully benefit from this business opportunity, you need key technology that manages your product maintenance, automates customer communications, and makes the billing and invoicing process seamless.
This will give your business a competitive edge, help drive up the value of your company and increase the lifetime value of your customers. Please contact us today and find out how you can excel in the subscription economy.