Subscriptions take the onus off customers to remember to make multiple daily purchases. They build trust and long-term relationships. At Subme.pro, we are seeing dynamic growth in this segment, which no longer only covers content – as it was until recently – but also services and products. Many companies have not yet discovered the benefits of being in the subscription market.

So it is high time to see that there is only profit to be gained by offering recurring purchases.

1.  PREDICTABLE REVENUE

Securing and maintaining liquidity in a company is the basis for success in the medium and long term. In many industries, financial stability can be built by basing sales on the subscription model. It enables the implementation of product fees and access to services on a continuous, regular and predictable basis.

2. BETTER CUSTOMER RELATIONS

Subscriptions are the purchasing method of choice primarily for Loyal Users. They practically become brand ambassadors. They are happy to stay in touch with the brand. Often without any encouragement, they promote it on their social media, support it with whisper marketing. Of course, the company must not let them down. It is imperative to remember to maintain consistent high quality at every stage, from building the offer through communication, sales, distribution and after-sales service.

3. IMPROVE RELATIONS WITH SUPPLIERS

The company’s implementation of a subscription sales system also allows for a strategic shift in the area of SRM (Supplier Relationship Management), which involves generating additional benefits for both parties. Among these, one can point to: supply chain risk management, increased innovation and competence development in the areas of strategic planning. This will result in greater certainty on the part of suppliers, increased confidence in the company and, consequently, a stronger image in the B2B area.

4. LOWER CUSTOMER RETENTION COSTS

As we have already mentioned, subscription purchases mainly benefit Loyal Customers. Studies show that they are able to spend 2-3 times more on purchases than other buyers. Consistent, repeat purchases and regular interaction with the company also build a long-term customer-company relationship. Buyers feel satisfied with both the availability of the offer (permanent access or periodic receipt) and the predictability of the cost (the subscription price is fixed throughout). Equally important is the fact that the cost of acquiring a new customer is up to seven times higher than retaining an existing one. By doing business on a subscription model, your company incurs this cost once.

5. CUSTOMER LIFETIME VALUE

The main reason for the success of the subscription model is the healthier-than-average CLV compared to businesses that only sell one transaction at a time. Subscription means recurring revenue for your business, which is the same as the subscriber being a regular customer by default. CLV is influenced by four factors: customer acquisition cost (CAC), average revenue per customer (ARPC), cost of goods sold (COGS) and churn rate. The first three, when operating under a subscription model, rank above average, while the churn rate is significantly lower.

Are you interested in introducing a subscription model in your business? Take advantage of a free consultation with our experts!