If you look around, you will come across many businesses in a variety of industries selling subscriptions of their products or services. This trend is only likely to experience much growth as this strategy has spelled success for those who have adopted this business model. The key is to carry it out appropriately. Once it has been launched in the right way, the business will be propelled for growth.
What Is A Subscription-Based Business Model?
In its most basic form, a subscription-based business model is one where customers pay a recurrent fee. This fee can be charged either monthly or yearly, in order to acquire a particular product or service.
In addition to the subscription-based business model, there is a subscription revenue model where a business can benefit from the “compounding value” of customer relationships. At the very least, if you are consistently delivering the value that customers want, they will be more inclined and continue to pay for that product or service.
With the recurring revenue model, a business can enjoy increased revenue as well as more robust customer relationships. Ultimately, it is through the subscription-based business model that customers become more invaluable, the longer they use your product or service.
Why the growing trend towards subscription services? Quite simply, consumers’ buying habits are leaning more towards stress-free and uncomplicated shopping experiences. The subscription business model delivers this need, providing a valuable product or service with minimum effort.
According to a survey conducted by McKinsey and Company, the percentage of customers that are currently paying for an online streaming service was found to be 46%. Within one year of the survey, 15% of customers subscribe to an e-commerce service.
More Reasons To Adopt e-Commerce Subscriptions In Your Business
Still unconvinced? Sure, it seems that most of the success stories you hear about highlight those that provide physical products or streaming services. Here are more reasons to strongly consider the subscription-based model for your business if you happen to provide a service.
- Offers Flexibility
With subscriptions, you have the luxury of planning your resources and predicting your revenue. If you are providing a service, you can be flexible with your strategies without having to worry about inconsistent service due to recalculating the costs. It’s also comforting for the client, knowing that they can have access to resources even if their needs change.
For example, if a client is set on opening another location for their business and needs additional design work, the hired graphic designer can raise his service subscription to meet the requirements of that month. Subscriptions offer peace of mind for clients, knowing that nothing is written in stone, but month-to-month.
- More Powerful Relationships
The subscription model is not one where you complete a project for a client and simply move on to the next. On the contrary, this model allows the service provider to serve their client in a way that meets their individual business needs. By only offering what is best for their business, the client develops trust and satisfaction. It’s about taking a more proactive approach to delivering the best service possible, strengthening relationships with clients along the way.
The Subscription Model Is Here To Stay
With the multi-billion success of Netflix, DropBox, Salesforce.com, and countless others, it is clear that consumers want subscriptions. Those that have not tapped into this wildly profitable business model are sure to miss out. It’s best to adapt in order to thrive during these uncertain times.