If you use cable television, home or business Wi-Fi, pay rent monthly, run a business website, or pay a monthly fee for access to an online magazine like the Telegraph, you’ve interacted with a subscription-based business.
This model of business has gained a lot of traction in many industries over the years, thanks to the many benefits it provides to companies that best understand how to utilize it.
As a matter of fact, it could be just what you need to build your brand, increase revenue, grow your customer base, and achieve success in today’s highly-competitive world of business. But, needless to reiterate, all this will largely depend on your understanding of the subscription business model, and how well you utilize it!
Thankfully, this article is here to take you through the most critical aspects, so read on.
Defining the Subscription Busines Model: What Is It?
In the simplest of terms, a subscription business model is where a business makes a profit from recurrent fees for services and products offered to the customer. These recurring fees could be charged every month, annually, quarterly, or even weekly. But as you may already know, monthly and annual subscriptions are more common, unless the client has their own unique needs or preferences.
Benefits of the Subscription Business Model
Subscription business models are so popular these days – and for several good reasons. To the business, it offers a higher level of predictability and sustainability, which are incredibly important especially when running your business on a budget.
On the other hand, customers find it more convenient and sometimes cheaper as opposed to repeatedly ordering things they’ll obviously need each week, month, or year. Also, subscriptions can be personalized to a customer’s individual needs, making it a win-win situation, both ways.
Perhaps the most convincing reasons for a business owner to adopt a subscription-based model include:
- Revenue can be predicted
- It creates an avenue to build better relationships with customers
- Businesses can spend less on customer retention
- Businesses can realize more revenue expansion opportunities
How to Apply a Subscription Business Model
To hit the nail on the head, not all businesses may have an opportunity to apply a subscription model. Similarly, not all businesses that can use this business model can apply it the same way.
This is to say that the type of business you’re running will determine whether or not (and how) you can utilize this model of business to grow your venture.
To bring the point closer to home, it pays to take a look at some of the most common types of subscription-based businesses in the modern day.
Flower Subscription Services
Do you occasionally order flowers for your home or business premises? Or perhaps you’d like to supply a certain healthcare facility with fresh blooms for several months?
Whichever the case, there’s a wide range of subscription services available to help you ensure a constant supply of blooms at a reduced price since you’ll be buying in bulk.
The Bouqs flower subscriptions specifically provide deals that can help you save as much as 30% on each order, alongside free shipping.
Entertainment Streaming and Publications
Music and Video entertainment streaming services such as Spotify, Apple, Netflix, Disney, and Amazon Prime are among the streaming companies that excel greatly on this front despite being in a highly competitive marketplace.
For a monthly fee, the client gets to enjoy a wide range of entertainment content as specified in their chosen subscription package. Online monthly publications and magazines also use a similar approach, where users pay a few bucks each month to read amazing content.
Monthly Subscription Boxes
Mostly popular amongst millennials, monthly subscription boxes are designed to deliver customized products to customers or their chosen recipients monthly or annually. The products in the box may include meals, treats, luxury items, beauty supplies, and much more depending on what is offered and what the client chooses.
In conclusion, applying a subscription-based model in your business may require a few things besides understanding the concept. You will need to determine your goals, curate products to your customers’ needs, price them right, and market them aggressively. From there, the most important thing will be to focus on developing lasting relationships with your customers.