Subscription commerce - what is it?
The term "subscription commerce" contains the word "subscription". This refers to the regular purchase of a service for a fee. The term "subscription" is also often used when referring to a subscription.
Put simply, your customers become subscribers when they receive your product or service at regular intervals at a contractually agreed price. Digital services, such as the use of a cloud, are among the services that are also often offered as a subscription model. Well-known examples of digital subscriptions include Spotify, Netflix and Adobe. All of these companies rely on the subscription business model.
In subscription commerce in particular, a trend has developed in recent years to offer grooming products on a subscription basis. Companies such as Dollar Shave Club, Morning Glory and Estrid, which sell all shaving utensils by subscription, are well-known in this repertoire. The constantly growing market of companies that focus on individual products despite competitors alone shows the immense potential of the subscription sales channel.
Advantages of the subscription business model
A subscription business model in online business is referred to as subscription commerce. The goods and online products that the customer wants can be purchased regularly at specific delivery times.
To ensure that you maintain an overview of your subscription business model, you should work with the experts at nexnet. Because we are very familiar with subscription billing solutions.
The 5 advantages of a subscription business model:
- Financial security for your company
- Planning security for your company's products
- Achieve higher overall profits
- Expanding the customer base
- Secure long-term customer relationships and increase trust in your brand
1. financial security for your company
Your subscriber usually pays you a fixed amount each month, sometimes annually.
This source of income is of enormous benefit to your company. This monthly (annual) guaranteed income provides you with revenue that you can use for new, future investments.
But make sure that you include possible subscription cancellations in your financial plan.
2. planning security for your company's products
If you offer a subscription model, you often know months in advance how many goods need to be ordered for your subscription, how long a delivery will take and, of course, which employees will be deployed where. This also applies to digital services.
In other words, you can plan many things precisely and optimize processes. In this way, you can save yourself and your customers a lot of stress.
3. achieve higher overall profits
Thanks to the planning security and simplified processes of a subscription, you can save costs.
For example, you know the quantity of goods you can safely sell. You can therefore keep your profits high and your losses low. You can also save costs if you order large quantities of goods but are sure that you will sell everything.
If you operate an online platform, you have another advantage. This is because you can offer a large amount of content that is only released to a limited extent depending on the subscription model. For example, if your customer has a basic subscription with you, they will only have limited access to the variety of content you provide. Often these customers are inclined to take out a higher-priced subscription to get even more. If your subscriber then takes out an extended, more expensive subscription model, you can offer your customer much more content that you have already created. Of course, you will continue to add new content, but you can access existing material without much extra effort. This will keep your customers happy and increase your sales.
4. expand the customer base
The customer generally receives a lower price for products and services if he/she buys them as a subscription.
This means that customers with a smaller budget are also inclined to take out a subscription. This opens up a much larger customer base of potential buyers.
Subscription models are attracting more and more interest, especially in the digital sector. If you market it cleverly, you can reach many buyers via numerous channels and expand your customer base.
5. secure long-term customer relationships and increase trust in your brand
As a rule, customers who take out a subscription are long-term customers. This is particularly evident in subscription commerce. Even if they have the option of canceling their subscription on a monthly basis, in most cases they will remain your customers for a longer period of time.
If your subscribers are convinced of your product or brand, they will forgive small mistakes. Unlike, for example, customers who do not have a subscription and disappear immediately if they make small mistakes.
If you build a good relationship of trust with your subscribers, this in turn ensures that they will speak positively about your product or brand. For example, they will express their satisfaction via good customer reviews or social media channels and share it with family and friends.
And if customers are satisfied with the subscription, they are also inclined to take out further subscription models with you.
Conclusion on the advantages of a subscription business model
In summary, it can be said that more and more people are inclined to take out a subscription model. You should take advantage of this for your company. Because the subscription business model offers many advantages.
But bear in mind that this requires good planning. So you need to think carefully beforehand about whether it is worthwhile for you to switch to subscription commerce. It may also be worthwhile initially offering a subscription model as an additional option for just one of your products or services.
We support you with our subscription billing solution so that you can implement your plans optimally.
