According to a marketing survey done by Econsultancy and Responsys, 70% of businesses believe that acquiring new customers is more expensive than retaining existing ones.
This is one of the prime reasons why subscription models have grown quite popular in the eCommerce world, apart from the pandemic. Subscriptions help businesses to keep their hard-earned customers by renewing the purchase. Apart from this, they also provide a steady stream of revenue.
But, it’s not as easy as it sounds to create a successful subscription business model, or to add a subscription to an existing store. You need to have a thorough understanding of your customers’ needs, their preferences, and, most importantly, strategic planning and the willingness to explore new ideas.
Let’s take a look at why the subscription model is so popular and how we can create a successful subscription.
The Need For Recurring Revenue
For eCommerce shops, recurring and predictable revenue is essential. Revenue, which can be reckoned monthly, quarterly or yearly, could be the key player in the long run. In this world of turmoil and uncertainty where sales are conducted within a fraction of seconds, subscription-based business models will provide stability.
The business will always be aware of the number of active subscriptions and subscribers in each tier. It will help them to operate their billing cycle effectively and accurately. Subscriptions offer a steady stream of recurrent revenue that business owners can rely on.
The subscription-based business model also enables you to make better decisions to efficiently spend marketing money, invest in technology, and expand your business accordingly.
Key Factors for a Successful Subscription
We’ll go through some of the most important aspects of a successful subscription.
● Competitive Pricing
Wise pricing is the most valuable weapon for a subscription business since it is closely linked to three key growth strategies. These strategies are:
- Gaining new customers
- Improving the experience of the existing customers
- Minimizing customer turnover
A fixed monthly membership price is frequently ineffective. The days of one-price fits everyone pricing are gone since this strategy eliminates the down-sell chances and keeps money on the line from loyal customers. Subscription pricing is an inherently difficult task.
● Accurate Billing
Products or services are easily bought and billed in a typical business: create widgets, sell them, and acknowledge widget income.
Billing is much more complicated under the subscription business model. Businesses must bill new consumers at the time of purchase, deal with prorated accounts, usage bills, multiple billing dates, and much more.
Sometimes, creating invoices without an appropriate billing system takes a lot of time and effort, and erroneous bills can cause consumers to depart in droves. The bills should be accurate, easy to comprehend, and well-branded.
Hence, your invoicing system should efficiently manage the humongous data elements required to generate bills precisely.
● Ease of Usage
Subscribing to a service should be seamless and user-friendly for the end-users. It should allow them to use the service across multiple devices and channels, like mobile, online, or through an assisted sale. Subscriptions may be used in a variety of ways for various services.
In contrast to the one-time direct sales, B2B firms with aided sales models should develop a quotation for prospective customers, which may be a challenging procedure. Many systems are not built to handle all aspects of the subscription-based client acquisition approach, including cross-channel support and term lengths.
These complications might slow down your lead generation approach, resulting in inefficient solutions. Customer acquisition procedures for subscription organizations must be rapid, easy, and automated throughout multiple channels. You can also streamline some processes to enhance your subscription management.
You should ensure that your subscription strategy supports numerous channels and that your users’ trip through your services is as seamless as possible.
● Quick and Easy Settlements
In the world of products, payments are pretty straightforward. Customers pay with credit, cash, or, many times, and they create a credit facility on certain terms. For regular payments, neither of the mentioned methods works effectively.
The cornerstone of increasing cash collection efficiency is automation. Subscription firms must promptly collect money while boosting collections and reducing write-offs.
There’re a plethora of payment channels to evaluate and apply to, especially with international sales. It might take you a month’s time to complete the setup. After you’ve defined your market, you’ll need to figure out which collecting channels are best for you. There are possibly several that you aren’t even aware of.
● Strong Customer Relationship
When you are in this world of the subscription business, you are also in the business of customer service. It’s wonderful to provide a product people would love to sign up for, but building relationships should also be a key aspect of the growth plan. This model relies on strong consumer relationships. There will be no long-term recurring sales growth without them.
It becomes an essential component of the overall structure when a company’s client base grows. While acquiring new customers is important, the majority of consumer transactions involve modifications to current subscriptions. It includes renewals, cancellations, add-ons, terminations, upgrades, etc.
Building on existing client connections is also considerably less resource-intensive than acquiring new ones. Hence, you need to offer your consumers easy-to-use tools for managing their accounts throughout their subscription service life.
Identifying how to grow subscription income is just the beginning of a long road. Selecting the appropriate software to handle the process is one of the most important aspects of a successful sales strategy.
It takes time to maximize your subscription-business income. This can’t be adequately quantified unless you first set reasonable goals before embarking on the adventure. With strategic planning, smart tools, and a consumer-oriented approach, you can run a profitable subscription-based business.
Acquiring subscribers and generating a constant recurring income flow is easy and within your grasp, if you have the appropriate expertise, tools, and services.