The three words every business leader wants to hear: Predictable recurring revenue:
There is a global rush to productise and turn irregular purchases into a stable monthly revenue stream – welcome to the subscription economy.
In almost every business vertical across almost every country, subscription offers are being built and refined.
The business’s financial advantage is that you have captured the cost to acquire a buyer in the first month or first purchase. Since then, the business margin has had no further C.T.A. (acquisition cost).
E-commerce stores have been in the subscription trend for some time.
Why?
- They increase buyer retention – once you have acquired buyers keeping them for longer accelerates their and your business’s lifetime value (L.T.V.). Subscription management is ensuring the ongoing value to the buyer remains high.
- Increases your buyer experience – Nothing gets more attention and engagement like a new package of goodies. It beats an email every time.
- Increases the opportunity to cross-sell and upsell to another product or range. The best time to introduce this was when they unwrapped their latest new package – typically, conversions are higher than average.
- Easier revenue forecasting – you know how much revenue you will make for next month. Now the focus is on lifting from the base subscription income.
If you are considering how to productise your offers, the starting point is buyer value – it must have – real value.
If your product or services are needed yearly, you have the basis of a subscription program. It doesn’t matter if your business provides a service or sells products.
Specialist consultants in the accounting industry advise their clients to move to subscription models – the value to the accounting practises is a positive increase in cash flow, and the ability to upsell with little effort makes it all worthwhile.
Generally, subscriptions work for
- Consumable products – coffee, chocolates, meat, protein bars – anything regularly consumed will fit the subscription business model.
- Anything with a scheduled replenishment – vehicle servicing, yearly tax returns, meals – very few items do not fit into a subscription model.
- Membership subscriptions – gyms, massages, beauty treatments,
- For apparel, the latest fashion style arrives each month.
The Buyers Offers
Generally, the PITCH for subscriptions is
- A discount is often a 10% to 20% saving from the one-off price – the buyer sees this as a great value – they can’t get any other way – and they need the products monthly – so it’s a no-brainer.
- Or Benefits – including free shipping (not commonly available on these products) or early access to new products before public release. Additional mystery items from the catalogue with every order. Exclusive content, event tickets, and faster customer support.
Subscriber Retention
Typically subscription businesses allow your business to be closer to your buyers – you are in regular contact.
To ensure value and they remain a subscriber.
- Get feedback – send regular surveys – email, text, phone or surveys. Know in advance of any issues by constantly listening.
- Use the right subscription platform – all payment platforms include Stripe Payments. which holds the actual payment token for every subscriber. One of these is www.stay.ai, an example of a platform that provides professional expertise with a singular focus on lifetime value – their A.I. buyer acquisition, retention, and churn reduction tools help your revenue growth.
- Valuable content. Today there is more content generated than there are eyeballs to read it. The best way to retain your customers is to stay top of mind. VALUABLE content is how you capture their attention and engagement to win their hearts and minds.
What is your business’s approach to lifting its demand generation?
As part of your overall business model, subscription businesses can see a 5x increase in your buyer base in 1 year.
To help your business sell more and make more – here are some more tips
Regards
David
