One topic we’ve been thinking about lately is the subscription model, lately popularized by video streaming services like Netflix and Hulu.
There’s a lot of potential value in bundling your products and services so that customers can subscribe to a range of packages over a longer term. The main advantage is that a subscription service can lead to greater retention of customers—and their increased spending over time.
That’s not just because they’re going to buy the same thing regularly for a longer time, but also because they could end up buying more overall. For example, by bundling in extras to make packages more appealing, it can expose customers to new products and assets that they might not have otherwise tried (or even been aware that you offered), therefore getting them to diversify what they’re already buying from your company. It would make sense for them to get theirs from you, rather than elsewhere, if it can already be easily added into a package of the things they like of yours. Making a customer’s life a little easier is always going to win out—it’s right up there with need and cost when it comes to making purchasing decisions.
Your ongoing contact with them over the long term also opens regular channels of communication. Through these, you can offer deals and share news about of developments and opportunities, which could also generate additional business. Regular communication on something like a monthly or annual basis also strengthens your relationship and their loyalty to your brand.
Although a fixed monthly or annual plan (like Amazon Prime) might not suit every company’s needs, customizable subscription packages with flexible pricing models can be attractive—especially in the beginning, while tentative buyers are testing out their needs. When people buy a bundle, they do expect savings significantly lower than if they were buying as-needed. But staggered subscription options mean that longer-term, retention-oriented packages can balance out the experimental options that are more attractive to new customers.
Would a New Business Model Be Right for You?
It can be daunting to explore entirely new pricing and delivery strategies, since you don’t want to spook customers who are loyal to the way things work now—or have current customers shifting to a new model that initially means you’re making less with them than you could have relied on before. But they also don’t want to feel like only new customers are getting a great deal while their loyalty isn’t being rewarded. Plus, you definitely want to ensure worthwhile return on the manpower involved in launching an entirely new service structure. So introducing models like this can indeed introduce challenges.
At Mad 4 Marketing, we start by researching and beta testing any new business venture with your actual audience (which also informs future ads and outreach). Let us know if you’re interested in imparting these techniques in order to take a first look into the benefits of subscription sales.