Consumer buying habits have long been trending towards convenient shopping experiences, and have driven the subscription market forward dramatically in the past few years.
You only have to look at companies like Dollar Shave Club to see just how popular and profitable a subscription model could be for your business. Dollar Shave Club, a subscription service offering cheap shaving razors for $1, achieved sales of $152 million in 2015, and their customer base continues to grow from strength to strength. So, why are subscriptions so popular and how can you capitalize on their success?
Simplicity and Transparency for the Customer
By selling your products or services online, you instantly make the buying process easier for your customers. They can browse, research and place their order online quickly and from any device. Subscription models take this concept one step further.
The subscription model has proved so successful because it offers value to the customer and the company in equal measure. Customers receive value in the way of convenience and simplicity. They don’t need to think about manually buying from you when a subscription is in place — the buying decision is made the moment they agree to subscribe, and the rest happens on autopilot, until such time they cancel or change their subscription.
Subscriptions also give the customer the convenience of paying a flat rate and freedom to cancel at any time. They will know when their next subscription charge will be taken from their bank account, what they are paying for and how to cancel or amend their subscription freely. In short, subscriptions offer one of the most transparent, flexible and simple ways for consumers to shop online.
Predictable Revenue for the Business
The value of subscriptions to a business are obvious from a guaranteed revenue perspective. Possibly the most compelling reason to introduce subscriptions into your business model is that they open the door to predictable recurring revenue. Such consistency allows companies not only to increase profits but also to manage inventory, predict a customer’s lifetime value and offer simple pricing that is irresistible to the customer and easy for them to understand.
The real beauty of the subscription model is that it works with practically any product or service, from artisan foods to financial and technical services. Why not take a look at your current offering and consider how you could package some or all of your products or services into a subscription model. It could be the best thing you do for your business this year.