From magazines to cable television to streaming music—most consumers have used some sort of subscription-based service at one time or another. In fact, because 18 percent of customers are buying products by subscription, 15 million U.S. and European companies either operate under, or could benefit from, the use of a subscription-based business model. Canadian businesses are getting in on the trend, too—just look at the number of beauty product subscription services alone that have cropped up in recent years, including Topbox and Luxe Box.
There are several reasons this business model is increasing in popularity for companies and consumers. This e-newsletter will discuss the benefits of subscription-based services and offer tips to organizations looking to embrace this business model.
Benefits of subscription-based products and services
There are numerous advantages to buying and selling via subscription. Consumers love it because it saves time and money by eliminating the need for continuous repurchases. Businesses like it because it allows for better prediction of sales and revenue, inventory management, simplified pricing and customer retention.
There are several types of subscription-based business models; perhaps one of the following might fit well with your organization’s products or services:
- Membership or private club: Consider offering members exclusive, insider information via the Web, or access to a service or product in limited supply. This model works best with niche markets like, antique collectors, gardening enthusiasts or mountain bikers. Consider how biking enthusiasts may appreciate receiving privy information about new trails, or gardeners jumping at the chance to be offered rare seeds or plants before anyone else.
- Unlimited content: Think Netflix® or Shomi®, where a subscription provides unlimited access to movies or music. This model can also work to sell e-books, training content, webinars and more. Promote subscriptions over standalone purchases with special offers, such as three training sessions for $250, or the option to purchase unlimited access to training materials via a subscription at a similar cost.
- VIP: VIP models work well for customers who want to skip the line or the waiting list. Consider offering early sales for VIP subscribers or “sneak peeks” with guaranteed in-stock merchandise for members only. Personalized membership cards help to reinforce that VIP feeling!
- Expendables and personal services: Products requiring repurchase on a regular basis, like diapers or pet food, are a great fit for subscription services. Stickers imprinted with “Repurchase automatically with a subscription” help spread the word that customers can subscribe for automatic reorder and delivery.
Personal services can be a great fit as well, such as housekeeping, snow removal or dog grooming. Provide extra perks for those who buy the subscription—a cleaning cloth, Snowman Set or Dog Bandana shows customers you appreciate their loyal business.
Offering a product or service via subscription not only simplifies the lives of your customers, it keeps them coming back for more. Give it a try and see how this business model could work for your company. For more information on subscription-based business models, check out our Blue Paper.
Super Subscribers: Disrupting the Subscription Services Model. Rep. Lewisville, TX: Blackhawk Engagement Solutions, 2015. Print.