Business Banking

Building A Closer Customer Relationship

Subscription based business models charge customers a specified fee over the course of mutually agreed upon intervals to allow subscribers ongoing access to products, services, or platforms. Such models gained early momentum with tech vendors shifting from selling boxed software to providing cloud-based Software as a Service (SaaS). But now almost any good or service is available by subscription. From food and dining to health and fitness to entertainment, subscription services have become most people’s go-to method for accessing and consuming everyday products and services.

In fact, according to subscription management platform, Zuora, subscription businesses have grown 437% over the last nine years, six times faster than businesses in the S&P 500. And a related Harris Poll found that 78% of adults globally now have subscription services and 75% believe that “in the future people will subscribe to more services and own less physical stuff.”*

The rise in subscription services is not surprising, given the benefits the model provides to both businesses and consumers. For businesses, it offers a steady and more predictable income stream, as well as a closer and, likely, stickier client relationship. Consumers benefit from greater convenience and choice, as well as potentially better service and more responsive providers.

If you believe a subscription model may be right for your business, we offer the following thoughts on making a successful transition:

  • The subscription model is, by nature, customer centric. It is not a product sale that terminates when the buyer leaves the store, but rather an ongoing relationship that services the subscribers’ needs until the service contract ends. Thus, it’s critically important to focus on the customer experience and understand how they are using your product so you can ensure they continue to feel the need to buy it over time.
  • Choose the right subscription model for your business and customer. There are three basic subscription models: a ‘pure subscription,’ where customers pay a stable, periodic fee for unlimited access to the service; a ‘consumption model,’ where customers pay for what they consume, and a ‘hybrid model,’ which is a mix of the two. In addition, make sure that your payment options are as flexible and accessible as possible, and that secure payments can be made in a variety ways to provide options.
  • Finally, it’s important to understand that, in the subscription service model, community is everything. Marketing, then, is best focused on building relationships through social media, content marketing, and other targeted tactics that keep the customer’s experience with your service top-of-mind and satisfying.

While we’ve focused on the subscription model in the B2C space, it should be noted that it’s just as prevalent and successful in B2B marketing. As you consider whether moving to a subscription model is right for your business, remember that we’re here to help you succeed in mapping out your strategy and getting the resources you need to realize it.

* Subscription Business Revenue Grows 437% Over Nearly a Decade as Consumers Buying Preferences Shift from Ownership to Usership, Businesswire, March 3, 2021.

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