Over the last decade, companies have increasingly been pivoting to a subscription model to increase their profits. This isn’t just a North American trend, either: it’s a global phenomenon. If you’re not sure what all the fuss is about, don’t waste another day without getting brought up to speed. The future of e-commerce could very well rest on the subscription model.
While the future will always be somewhat unpredictable, current trends favor continued growth of the subscription model. Here are three reasons why you should consider making it an option.
Reason 1: Numbers don’t lie.
People are coming onboard with subscription services in record numbers. For everything from shaving kits to underwear to cloud storage and streaming services, people are signing up for convenient, personalized services.
One of every two online shoppers says they are a member of a subscription box service, according to a new report from Clutch. Subscription box services satiate consumers’ desires for convenient and novel experiences. (PR Newswire)
Though it’s still a bit too soon to back this up with statistics, it seems likely that the ongoing effects of the coronavirus pandemic through 2020-2021 will only lead to an increase in these numbers. With people staying at home at higher rates, they’ve been even more open to the idea of having every manner of product delivered safely to the comfort of their homes. By pivoting to a subscription model, you have a chance to ride that wave.
Reason 2: Leaders are believers.
Though not everyone has yet successfully figured out how to pivot their product or service to a subscription model, 70% of all business leaders believe that subscription business models will be key to their prospects in the coming years. If you’re going to have a shot at keeping up (or potentially even getting ahead!), now is the right time to get to work on fleshing out your subscription model.
Some questions to ask:
- What exactly is our value proposition?
- How does our product or service enhance productivity/enjoyment in daily life?
- How will subscription add value for current customers?
- Does our customer data provide any clues?
It’s important to mention at this point that you don’t need to re-invent the wheel here. Those who have gone before you can help light the way. Investing a bit in industry research and consulting could go a long way toward starting off on the right foot.
Reason 3: There’s stability in recurring revenue.
Even with a subscription model, there’s no assurance that your customers will stay with you forever. Factors such as their own personal finances, changing whims, or their changing perceptions of the quality/value of your product will always lead to fluctuations over time. However, with a well-established subscription model, you have the possibility for a much steadier bottom line than businesses that rely on single, one-time purchases to produce revenue.
With subscriptions, sustainable growth has two prongs: attracting new customers and retaining current ones. When it comes to holding on to customers over time, it’s important to remember that you’re not just providing a product or a service: you’re building a long-term relationship. And all relationships require attention.
Some ways to build equity with long-term subscribers:
- Offer them perks, such as sneak peeks and bonuses
- Ask for their input regarding future additions to your services
- Invest in building strong levels of customer satisfaction
Adding new subscribers is always a plus, but if you’re unable to hold on to them for the long haul, you’ll ultimately struggle to grow.
Fortunately, you don’t have to work through these issues alone.
We Can Help
To learn more about how you can make subscription models work for you, please feel free to contact us.