How to Build a Successful Subscription Based Business Model

Since 2011, subscription businesses have shown annual growth of 200%. With the evolution of technology and changing customer shopping habits, it becomes far more convenient for a consumer to pay an annual or monthly subscription for a product they use regularly. A subscription based business model not only eliminates the common problems associated with conventional shopping but also focuses on delivering an improved customer experience.

Building a Subscription Based Business Model 

It would only be an understatement to say that the subscription based business model is here to stay and if you are planning to join the bandwagon, here are some tips that will help you.     

Product  

While the subscription-based business model is not entirely new due to the advancement of technology and sophisticated marketing strategies, this type of business is spreading across several industries. Companies are targeting a particular niche with a large following to develop a product idea. Such a product must be exciting, relevant as well as valuable. The customer must look forward to receiving that product at the end of a week, month, quarter, or year. Some of the most successful examples of subscription based business models include Spotify, Gousto, Graze, and Naty.  

Market Research  

Once you have your product, it is time to market it to your target audience. You need proper research to market your product effectively. Doing considerable research can gain customers and hold them for a more extended period.  

• Try to find out the problem you will address through your product.  
• Analyze your competition.  
• Focus on and develop the unique selling points of your product.  
• Have a comprehensive understanding of your customer.     

The market may always be competitive, but if you can offer a unique, affordable, and valuable product based on your research, you can successfully attract those dissatisfied customers from your competitors.  

Read Also: Business Ideas for Women Entrepreneurs

Pricing Strategy 

A subscription-based business model thrives on multiple pricing options. If you can provide different pricing options to suit your customers’ needs and usage, you are bound to succeed in this business model. Most subscription businesses offer two or three pricing levels. In most cases, the lowest tier is free of cost, which helps to attract new customers. If your lowest plans are chargeable, you might risk repelling customers.  

Additionally, there must be options regarding the frequency of payments. While most such businesses come with a monthly payment system, others charge you quarterly or annually. If you can implement a correct pricing strategy, you will attract loyal customers and cover the cost of all your overheads and supply chain.       

Promotional Tactics  

Due to heavy competition in the market, most subscription-based businesses offer free trials to attract customers. It is one of the oldest tricks in the book of promotional tactics. You can also surprise first-time customers with a limited offer or a gift. Such strategies can not only prompt those who are undecided but earn you long-lasting and enthusiastic followers as well.

Apart from this, to promote your business to your target audience, you can include a mix of tactics like social media, direct mail, public relations, advertising, celebrity ambassadors, etc. By testing different promotional tactics, you can identify the more successful approach.   

Payment Options  

Another essential factor for any successful subscription based business model is convenient payment options. Such models are growing because customers want to pay for products and services according to their convenience. One of the payment options must be completely automated so that customers can set it up once and then forget about it. Most of these business models operate on direct debit, where the fee is deducted from their account every month. Others might prefer credit cards or online payment. Hence if you wish to update a successful subscription-based business, then you must have the provision for multiple payment options.  

Customer Service  

Another reason subscription based business models are flourishing these days is that they go out of their way to offer customized and friendly customer service. People who enroll for such services are often the ones who have been cheated or belittled by huge corporate entities. Such people get a more personal feeling from this business model as they can easily reach out to them hassle-free. Such a type of customer service also ensures that you not only retain your clients but also acquire new ones. It can also turn your customers into advocates who might recommend your products to others. 

Read Also: The Importance of an “Internal Customer Service” Department

Flexibility  

You must be flexible if you wish to keep your customers happy. Be it pricing, payment options, or even account preferences, being flexible will extend the lifetime of your customer relationship. For example, if your customer wishes to pause their subscription because they are going on a holiday or might not have used all their products from the last batch, then you must provide them with that option. Such flexibility will retain your existing customers and attract new ones.  

Subscriber Experience   

The subscriber experience must be your top priority in this kind of business model. You must make them feel valued and keep them happy and excited. Surprise gifts, discounts, partnerships with complementary brands, and physical meetups are a few ways to enhance your subscriber experience. Try to figure out creative ways to keep your customers entertained so your business model never goes stale. It can include multiple payment options, pricing tiers, and customer service. Hence try to create an enjoyable and friendly ecosystem for your customers.  

You must investigate the tips mentioned above to take advantage of the currently flourishing subscription business models. From subscription-based pricing to multiple payment options to a top-notch subscriber experience, you must ensure that your business model follows these guidelines.