Almost every ambitious entrepreneur is looking to incorporate a subscription model into their business plan. Regardless of the business model being B2B or B2C, subscription pricing is becoming the business model of choice.
Gyms, newspapers, magazines, and cable TV started with a monthly or annual subscription. Then entertainment converted to the business model with the fall of video rentals in place of on-demand streaming services. Today, there are numerous streaming services available to consumers. There is a subscription for everything! Luxury watches? Check. Fax service? Yep. Toilet paper, shaving blades, household items such as cheeses, chocolates, or flowers, among many others., have all converted to the subscription economy. Nearly half of all U.S. households have signed up for the Amazon Prime subscription.
Given how prevalent the subscription model has become in business, we briefly explore subscription-based Ecommerce, its benefits, and the best tools available to set up one of your own.
What is subscription-based Ecommerce?
Businesses’ latest brand and product strategy is to pivot their customer interactions from those based on transactions to those based on customer relations. Such is the effect of building loyalty and trust, increasing the customer lifetime value by offering many other products and services, with minimal marketing and go-to-market initiatives.
So, what is a subscription-based model? That is when businesses offer products or services ongoing for recurring payments for those products or services, either monthly or annually. These subscriptions can be a growing number of products. The psychology of a subscription offering is that customers always have a seamless, uninterrupted supply of whatever they need without the hassle of making a conscious effort of procuring it. To your delight, It just magically appears whenever you need it.
The benefits of subscription-based business models
There are many advantages to businesses incorporating a subscription product into their offering. Such companies have consistent streams of cash flow coming in every month, allowing enterprises to focus on growing other parts of the business quickly. A low churn or customers not dropping the subscription services is an excellent marker for solid product and customer loyalty.
The business also benefits from a higher customer lifetime value by leveraging the existing trust to loyalty to offer a flywheel of other products and services with minimal marketing spend. Finally, because of these benefits, investors tend to value subscription-based businesses a lot more as customers value the product offering and are willing to pay for it consistently.
What are the best subscription tools for eCommerce?
Once it’s clear what a subscription offering is and its numerous benefits, merchants can divert their attention to the tools they can use to implement a subscription offering.
An eCommerce platform – the platform will be the marketplace on which you can offer your services. There are merchant account providers or billing/accounting software that can manage a subscription product. Still, a platform uniquely designed for a subscription offering has tools such as CRM, KPI benchmark for comparisons, referral, and loyalty programs all designed around a sole purpose – subscriptions.
Furthermore, businesses may not want the headache of parting ways with a single one-stop-shop of tools for any reason, only to start looking for multiple offerings or a similar one-stop-shop to fill that void.
Cratejoy is one of the best eCommerce platforms for small businesses whose customers can easily curate subscription boxes or turn one-time purchases into subscriptions based on their personal preferences.
A Subscription App – Often, businesses in existing eCommerce platforms don’t want to jump to a new platform just for the subscription functionality, especially if subscriptions are only a part of the company’s overall offerings. In this case, a subscription app that can seamlessly sync with a business’s existing eCommerce platforms is a great option.
One of the best options for a subscription app is Bold Subscriptions. The app offers a customizable subscription functionality giving customers the flexibility to choose between a variety of subscriptions. With the app, customers have options such as gift subscriptions, prepaid subscriptions, and tiered and discounted plans.
It is the perfect offering for small and medium-sized businesses that may be on any one of over a dozen eCommerce platforms and is an excellent mix for price and functionality.
Billing platform for a subscription service – Subscription services are unique in charging customers on a recurring basis rather than traditional one-time transactions. Then add to the mix of possibilities as customized subscriptions that require unique curations periodically.
Chargebee is an excellent subscription billing platform that can navigate the minutiae of subscription offerings and integrate with numerous eCommerce platforms, payment gateways, and API.
Analytics for Subscription Businesses – analytics software is great for monetizing your existing client database to gauge if a subscription is right for your business. Even after deciding to proceed with an offering, ongoing analysis and monitoring can aid in the right mix and pricing of your subscription offerings.
ProfitWell offers tremendous analytics such as subscription optimization analysis, advanced financial reporting, churn minimization tools, and intelligent pricing tools.
The subscription economy is omnipresent in today’s business environment. Gone are the days of having subscription model businesses limited to gyms and newspapers. Today, you answer a set of questionnaires of your preferences and be sent a monthly subscription box of apparel on a purchase or return basis. The benefits and preferences among business owners and investors towards a subscription business are undeniable. New subscription offerings are coming to market and breakneck speeds. So it may be in business’s best prerogative to explore the option. There are tremendous tools to help companies curate, price, and execute their subscriptions offerings efficiently.