The subscription revolution is in full swing. The ease of online purchasing and ordering, combined with inability to leave the house or interact with people last year, gave way to a huge opportunity that marketers had never seen before. Budgeting app Trubill coined the phrase “power subscribers” to describe those with 10 or more subscriptions and found that its users participate on 17 subscription services on average. At the beginning of the pandemic, that average was up to 21 as consumers replaced in-store experiences and tested new products.
The subscription model has changed the way consumers receive everything from entertainment and news to their food, software, and workouts. And brands that can capitalize on the advantages of this new way of serving customers have an opportunity to see great success.
The Subscription Advantage
Subscriptions are a convenient and easy way for consumers to purchase products and receive services, but there are several business advantages for brands as well, including these four below.
1. Predictable and linear revenue: Once a customer subscribes, it’s much easier to predict their future revenue, and a repeatable purchasing model is often more sustainable for brands.
2. Customer data: Instead of solely gaining information at a single or occasional transaction, subscriptions provide greater opportunities for data collection and insights.
3. Opportunity to deliver new value: Offering a subscription allows you to provide additional value that consumers might not get with competitors and foster a unique relationship with the ongoing interactions.
4. Retention: As many marketers are aware, it’s much more time- and cost-effective to retain customers than it is to attract new ones and subscriptions provide a solid foundation for “stickier” customer relationships.
While this all makes subscription service very appealing, it isn’t right for every brand. Before you begin planning, evaluate if it makes sense with your business model and goals.
Knowing If and When Subscription Service is a Good Fit
If subscription service is right for your brand, your:
1. Executive leadership and teams are aligned on the goals and objectives of the model
2. Brand has a compelling value proposition or customer offering
3. Brand has a healthy financial model
4. Brand has an organizational structure to support the model
Throughout this self-evaluation, be sure to think long term. While your brand may be in a comfortable financial position today, you need to know the current financial model is sustainable, because the money doesn’t pour in overnight. Any subscription business plan should have a three-year runway with key milestones and marketers identified to reach profitability.
Capitalize on the Rise of Subscriptions
If you’re ready to continue exploring subscription service for your brand, download our ebook, Capitalizing on the rise of Subscriptions. In this ebook, we take a close look at subscription best practices and the keys to success for any brand.
Download the ebook to learn more.