Building and running any successful business or startups is tough. It is necessary to have a solid strategy, a great product, and a hardworking team to pick up in the market. Along with technical advancements, the type of market access has also changed. There are now fewer barriers, lesser regulations, and a gradual increase in competition. With this increase in competition, to maintain the role of your business, it is essential to keep evolving and innovating.
You cannot stick to the same interface and provide no enhancements. This will cause redundancy and let your customers feel dejected. There is a need to constantly innovate, produce the kind of products that are customized for customers, and are super lucrative.
Smart, savvy businesses have evolved into subscription services. Be its SaaS solutions, cosmetic boxes, or even Netflix- subscription services rule the roost.
Research by McKinsey has proved that subscription services are being opted than before and are highly in demand.
What are Subscription Services?
Subscription service business models are focused on selling a product or service to customers at a regular frequency for a fixed price. Customers or users can access the products or offerings as they pay the subscription fee to be it – monthly, annually, or quarterly.
Subscription services allow the business to grow, create an opportunity for discounts, and run some revenue streams that allow for greater customer loyalty.
If you are looking to grow your business with maximum customer retention, here are four reasons you must consider starting a subscription service.
Subscription Model Demand is growing
Google Trends will reveal that consumer searches for “subscription boxes” have been increasing. It is not strange since subscriptions are known to be interesting, offer decent value, and cater to several products. There are no contracts involved, less rigidity, more flexibility, and a lot of variety to choose from. This demand is also fuelled by millennial needs to improve the range of products available to them.
Consumers love subscriptions since they are like ‘pay and forget,’ which improves convenience. Also, from the business or brand point of view, there is improved revenue for the longer-term. There is predictable revenue involved with lower costs of business expansion or onboarding involved.
Not a long-term commitment
Increasing competition has led to a steep increase in the subscription service market and the induction of innovative onboarding tactics by smart companies. Subscription models are based on the concept of customer lifetime value (LTV), which is what all businesses desire.
Fewer restrictions and commitment barriers make it easier for companies or consumers to purchase or sign up for a subscription service. There is less financial complication involved, which makes people want to sign up for the package. Customers now can plan for these subscriptions, and they do not feel it is a burden of any sort.
Deeper customer insights and loyalty
This financial freedom that subscription services offer results in better product feedback. You will know customer preferences in a better manner, which will help improve product aspects. Using customer feedback, CRM tools, analytics, and other data points, brands will get insights on how to improve their offerings.
Subscriptions, by nature, involve a lot of communication and have regular in-built interactions with customers. Multiple touchpoints can create the near-perfect brand experience, which improves LTV and gives customers a feeling of customization. The longer time a customer subscribes, the more revenue you make. The cost of acquiring a customer for a high amount could be easily recovered in the monthly revenue they provide thereafter.
Easy, one-time engagement
Subscription services are typically easy purchases. Customers get their products or services punctually from time to time. This improves their ease and makes it easier to subscribe again for the products or services. If you sign up for a juice subscription, you will receive a box per week. You will know for sure that you will receive it. This builds discipline and makes it work like a clock. There is also no need to engage with customers continuously. Once the engagement or onboarding is done, it gets easier to improve aspects like product quality or customization. It also is easier for a business that will reduce ad spend, costs of marketing, and more to bring a customer on board again.
Startups or any business looking to strengthen their customer base should look at subscription services as a viable option. Customers like them; they are attractive when packaged well, offer a great deal of innovation in products, and provide new experiences. These are aspects most customers look for. To build a steady revenue stream, subscriptions should be billed regularly, provide excellent customer support, increase user touchpoints, and offer attractive products and services. With great products, it is easier to hope that subscribers choose the offering again. Sometimes subscribers are used to the offering and so end up being lifetime customers.