The 7 Reasons You Need A Subscription Model
You’ve got subscriptions in your life. Your friends and family have got subscriptions in their lives. The business you work in subscribes to services. If the ever-present nature of subscription models isn’t evidence enough, today we’re covering the seven reasons you need to offer them in your business.
It’s not just B2C businesses that can benefit from subscription models. Because subscriptions can fit so many different types of products or services, there’s a good chance they’ll find a place in your business. All the customer benefits of consumer subscriptions are increasingly felt in B2B, and they’re becoming a popular way for companies to differentiate themselves and boost revenues .
Now, you may already be aware of some of these benefits. But, there’s a good chance you could be missing a few key advantages.
1. Recurring Revenue
Does your business like predictable cash flow? Of course, it does! This is the single best benefit of a subscription model. Predictable, recurring revenue also has the advantage of helping to even out the peaks and troughs of your one-off sales.
2. Increased Lifetime Value (LTV)
Subscription models help to prioritize customer lifetime value. Once subscriptions generate recurring revenue, LTV rises and allows you to deepen your relationships with clients and further enhance their LTV.
3. More Selling Opportunities
If a customer is already paying you for a subscription, then they’re continually investing in what you offer, making them a warm lead for cross- and upselling other related products or services that you offer.
4. Reduce Customer Acquisition Cost (CAC)
Marketing can be expensive and time-consuming, so it’s important to develop a strategy that works. Targeted marketing is often more expensive than the cost of increasing client retention. Subscription models help to nurture customer relationships and therefore save money on CAC.
5. Boost Existing Products
Being able to improve your existing products with bolt-on subscriptions is another big benefit of recurring revenue models. If you’re in an industry where products have little differentiation other than cost, it’s very powerful to be able to push additional features and benefits on a separate pricing model.
6. Lower Customer Churn
Subscription businesses retain customers better than one-time buyers. Why? Whether you text customers about their future orders or send them blog articles on topics they’re actually interested in, subscriptions make the consumer experience more personal. This keeps customers loyal.
7. Better Financial Forecasting
With subscriptions, your organization will have a continuous source of revenue and, importantly, will have predictable revenue. This predictability can make financial forecasts much more accurate, allowing you to better plan spending on things like stock holdings, so that you can always service demand, without having your money tied up in too much product.
Want to make subscriptions a part of your business? Contact GoRecurring to make that happen.