With the tremendous success of Netflix and Amazon prime, it is already evident that the subscription-based model is a spectacular hit in the market. As per the reports, the quarterly revenue of Spotify in 2020 Q1 is $ 2 billion out of which $ 1.84 billion was generated from the Spotify Premium subscribers. That is almost 90% of the Spotify subscribers. Surprising, Isn’t it? To take full advantage of this model, more and more eCommerce business owners are shifting towards providing subscription-based services to their customers.
What is a subscription-based store?
An eCommerce store is launched based on a business model that lets the customers subscribe to the products/ services they want to buy on a repetitive basis. Most subscription businesses charge monthly or yearly depending upon the services. This model benefits both customers and the company. For customers, it provides the convenience of purchasing products automatically that they may need in the future. For the company, it helps to retain the customers instead of needing to re-engage with them every time for promoting your products.
Benefits of the Subscription-based store
- The continuous flow of cash
- Better customer engagement
- Long-term customer relationships
- Enhanced usability for customers
- Enhanced inventory management
- Reduce customer acquisition costs
- Better prediction of future sales
When customers sign-up for subscription-based services, they imply to stay with your business for an extended period. It is during this period, you get an opportunity to interact with them about your products. The subscription fees can be charged weekly, monthly, or yearly. Thus it keeps generating consistent revenue. Having predictable cash flow helps you to make better business decisions.
Through subscription-based services, You, as a business owner, can interact with the customers on a regular basis. You can take their feedback, update them with the offers or special discounts, surprise them with a reward or take their suggestions to improve the product/service. It makes them feel valued and important thus improving your relationship with the customers.
Subscription-based model’s primary objective is to retain the existing customers. It locks the customers for an extended period and helps the businesses nurture long-term customer relationships. Companies can modify their products/services according to the needs of their customers.
People always juggle multiple things. In their busy schedules, it becomes difficult to research new products to buy them. The subscription-based store helps them get the products with little or no effort thus saving the research time. Discover new products with ease and get an uninterrupted shopping experience.
With subscription-based services, you know how many customers buy your products, once you know how many items to fill, and what to fill it gets easy to manage your inventory and quickly replenish the items. You can thus utilize the saved time for attracting new customers or improving your products.
In the subscription-based model, you don’t have to engage with customers that have little to no trust in your brand. You do business with people that trust your brand and have already experienced your products/services. The only extra effort you need to put in is to retain those customers and provide them with much better experiences. It automatically cuts down the marketing costs and lets you focus on the customers and free marketing is carried out through word of mouth.
You know the number of subscribers of your business. Thus it is not much difficult to predict your business revenue. There can be a few customer cancellations. But on the whole, financial forecasting of your business becomes easier and helps you make better decisions.
Even the technology market is gradually transitioning to the subscription model. This system is bound to improve the ability of the customers and merchants to sustain and manage revenue better in the long run. Shift to the subscription-based store, serve your customers better, develop deeper customer relationships and experience higher customer loyalty.