The Benefits Of Subscription-Based Business
The concept of the subscription economy may not be widely known yet, but when we talk about monthly subscription services like Spotify or Netflix, many people can immediately relate.
"Subscription Economy: It's Better Business!"
As previously mentioned, monthly subscription services are a prime example of the subscription economy. Two key elements from this definition stand out: "monthly" and "services." Subscription economy wouldn't exist without recurring charges imposed on customers at regular intervals. Additionally, the billing is primarily focused on the service itself, rather than the product.
In subscription business, customer experience is the lifeblood of businesses. For a customer to willingly pay for a service on a monthly basis, they must feel that the service provides value worth paying for. A monthly subscription service can be easily cancelled at any time, even on a whim. To succeed in the subscription economy, companies must deliver an excellent customer experience. Every euro earned from recurring monthly charges comes from a satisfied customer. So, when we ask what the subscription economy is, the answer is simple: it's better business!
"Simply More Profitable Business!"
A subscription-based service business (i.e., subscription economy) revolving around outstanding customer experiences brings numerous advantages to companies. These advantages include improved predictability of business operations, higher investor valuation, increased customer retention and greater customer lifetime value. These benefits are just a few examples of why subscription economy businesses thrive.
Combining the benefits of enhanced customer retention and increased customer lifetime value with steadily growing revenue streams, we can say that the subscription economy is simply more profitable than traditional product-based business models!
"Value and Benefits, Not Just Features."
We have highlighted the superior advantages of the subscription economy. However, why do not all businesses adopt subscription-based models, selling services with monthly charges? Why do many still rely on one-time product sales? The answer: subscription economy is not a silver bullet!
Take a moment to reflect on why you personally pay a monthly fee for certain services. You will likely realize that you derive clear value from these services, be it prestige, emotional connection, or utility. Conversely, you may have also cancelled a subscription-based service at some point. Was it because you felt no benefit or value from the service? We assert that it probably was!
Traditionally, when selling individual products, the focus is on technical features. Just visit an appliance store and observe how they sell washing machines or televisions. Sales brochures and website highlights primarily discuss technical specifications, not value or benefits. In the subscription economy, features hold little significance. Only value and benefits matter, and it is the responsibility of marketing and sales to effectively communicate this to customers.
In conclusion, remember this
Subscription economy is a business model that offers various ways to achieve better and more profitable business outcomes. Subscription economy significantly differs from traditional product-based business models, which necessitates an understanding of its dynamics.
To highlight, the subscription economy is not a silver bullet, but its potential is enormous!Contact us