Has selling on subscription been a good move for your business thus far? If you answered in the affirmative, you’re far from alone. Here in Australia and around the world, the model is enjoying rising popularity, with businesses and their customers.
The subscription market is valued at $US2 trillion globally, according to SUBTA research, and with 96 per cent of US adults holding at least one subscription, it’s not hard to see how.
As customers continue to vote with their wallets, the benefits to businesses are compelling. When subscription selling is implemented smartly, it generates a recurring revenue stream, increased customer loyalty and higher lifetime customer value.
Here one month, gone the next
Taking that loyalty for granted can, however, be a fatal mistake. While some subscriptions tend to fall into the set and forget category – think utilities, mobile phone plans and office software – others are all too easy for consumers to cancel or allow to lapse.
Many people under-estimate their annual subscription spend – 46 per cent of them by over $200, according to a survey of US adults by West Monroe – and it’s not uncommon for individuals to carry on paying for services they don’t use or have forgotten about, for months and even years on end.
But in today’s challenging economic times, that’s a luxury hard pressed consumers can no longer afford. Hence, a growing number of Australians are running the red pen through their subscription services in a bid to balance their household budgets and stretch their finite funds further.
That can spell bad news for businesses whose offerings are likely to be deemed non-essential – from purveyors of coffee, wine, meal kits and beauty boxes to streaming services whose monthly menus don’t feature a sufficient volume of unmissable movies and shows.
Sellers of stickier subscription services aren’t immune from this trend either. Consumers are constantly being adjured to shop around for savings on energy, insurance and telecoms and all signs suggest more people are doing so than ever before.
Let’s stick together
Against this backdrop, subscription businesses need to be on their game. That means staying laser focused on making their offerings as compelling as possible, providing superlative service and engaging with customers regularly and in relevant ways.
The object in doing so? In a nutshell, it’s to ensure said customers continue to see value in retaining the relationship.
For some businesses, running daily deals may be the best way to engage. Others will do better choosing a couple of key moments in the month – shortly before and after the monthly payment date, for example – to reach out to customers with tips, advice or a tailored promotional offer.
Optimising your range and customer engagement model is no straightforward exercise and it can be all too easy to get it wrong. Frequent modification of your terms, conditions and pricing model, for example, can be disconcerting for customers, and an excess of messages and offers irritating and off-putting.
Tools to make the task easy
Getting it right is significantly easier with the right tools, namely subscription management technology that enables you to monetise, scale, market and manage your subscription offerings quickly and cost effectively.
Ideally, you’ll opt for technology that lets you establish seamless data flow across all divisions of your business, view and manage customers’ information via a single hub, and deliver personalised interactions that drive engagement and results.
And if your platform incorporates sophisticated data analytics functionality, your marketing and business development teams will be able to use it to understand your customers’ purchasing patterns and behaviours in granular detail. Armed with those insights, they’ll be better able to maximise sales and customer value over the long term.
Select a platform with a low or no-code design and flexible integration capabilities and it could be deployed in your enterprise in as little as three months.
Keeping the customer satisfied in 2025 and beyond
At a time when millions of Australians around the country are pulling in their belts, subscription businesses of all stripes are having to work harder than ever to capture and retain market share.
With an AI-driven subscription management platform in your tech stack, keeping the customer satisfied is an easier proposition. If staying in the black is a priority for your business in 2025, it’s an investment that’s likely to serve you extremely well.
David Joss is CEO of Prvidr.