The subscription economy is a fast-growing one with projections indicating that it will cross a market value of $1.5 trillion by 2025. This trend is quickly gaining traction as consumers are increasingly shifting to this subscription-based purchasing model. The interesting fact is that its growth is not just limited to digital content but even extends to other sectors like software, automotive and even fast foods.
However, in order for these businesses to grow it needs to satisfy the changing needs of the customers. Recurring revenue is the game changer here, providing businesses with a stable income and enhanced financial forecasting capabilities. Also, these models, require you to pay for your usage periodically in small portions rather than the old approach of paying in big, huge one-time chunks. There’s much more to the success of these subscription models than just the above factors.
What makes them so popular and sought after? What are the factors that contribute to its scalability, growth, and sustained success? In this blog, we will explore the factors necessary to achieve sustainable growth in the subscription economy.
Customers and clients are the lifeblood of any business or organization. They give businesses the much sought-after revenue. So, a customer-centric approach is a sure-shot way to success for any business including for subscription management. While hyper-focusing or hyper-targeting may seem excessive, it actually does more good than harm by making customers feel valued. A personalized hyper-targeting approach to meet individual customers’ needs and expectations can easily scale any subscription management business. According to a survey conducted by Salesforce, 80% of customers surveyed say that customer experience is as important as the company’s products.
Some of the customer-centric approaches adopted by subscription management businesses are the follows:-
This refers to the creation and offering of subscription options that cater to the diverse and evolving needs of the customers. They are designed keeping the customer and their unique needs in mind.
This is the process of integrating new customers into the subscription platform in a smooth, intuitive, and user-friendly manner.
This is an approach to providing billing that is clear, accurate, and easily understandable. This way, customers are fully aware of all the associated costs and any confusion regarding hidden fees can be easily eliminated.
Customer journey mapping
This is the visual representation of the steps and interactions that a customer goes through while using the company’s products or services.
These are strategies devised to keep existing customers stay with the business for a long time.
A subscription management business can have merchants from diverse backgrounds, each with a varied clientele having different billing requirements. And for such a business to scale, it should be able to accommodate the billing requirements of this multicultural and multifunctional customer base. Some of the flexible billing processes adopted by leading subscription management businesses are the following:-
This is an automated payment system where customers are charged in a recurring or regular manner for a subscription service. This can occur at periodic intervals, such as monthly or annually.
Here, customers are charged a single, non-recurring fee for a product or service.
In this payment system, customers are charged a proportional amount based on the exact period that they use a service, rather than a full billing cycle. This is often used when customers upgrade, downgrade, or cancel their subscription mid-cycle.
This is a pricing strategy where a product or service is offered at multiple levels or tiers, each with its own set of features and corresponding price points. This allows customers to choose a plan that best fits their needs and budget.
This is a pricing model where customers are charged based on their actual usage of a service or product, rather than a fixed fee.
This is a billing system that allows businesses to invoice and accept payments in multiple currencies.
Flexibility in payment methods is essential to cater to diverse customer needs and preferences. This means supporting local payment methods as well as those specific to different countries too leading to an increase in conversion rates.
Subscriptions are the backbone of any subscription management business. They sell subscriptions to merchants, who in turn offer them to customers to subscribe to their products.
For any subscription management business to scale, it should be able to provide a diverse range of subscriptions to meet the needs of various businesses and their products.
A few of the most popular subscription models adopted by subscription management businesses are the flat-rate system, freemium model, usage-based pricing model, and tiered subscription model. To better understand these models let’s explore some of the brands that successfully use these systems.
National Geographic provides its readers or subscribers with high-quality content focused on nature, science, history, and culture. They use the flat-rate system to sell their subscriptions which means subscribers pay a regular fee for either annual or multi-year subscriptions. This way subscribers get access to a set number of issues which is delivered to their doorstep or accessible via digital platforms. This keeps their readers or subscribers very much aware of the costs incurred.
Canva is a graphic design tool that uses the freemium model to offer a robust set of graphic design tools and templates for free to their users. They monetize their services through their premium subscription model, Canva Pro, which offers additional features. This way, they attract a wide user base who are later converted to paying users. These users are then provided with advanced design capabilities and business features.
Amazon Web Services (AWS) utilizes the usage-based pricing model to sell its extensive range of cloud computing services. Here, customers need to pay only for what they actually use. This approach enables businesses of all sizes to scale their operations efficiently and manage costs effectively, aligning expenses directly with their resource utilization.
Dropbox uses the tiered subscription model to sell its cloud storage and collaboration services, catering to individuals, teams, and enterprises. Each plan is billed monthly or annually and includes access to file syncing, sharing, and collaboration features, ensuring scalability and flexibility to meet diverse user needs.
Subscription management platforms provide merchants with a variety of ways to create subscriptions to suit their customer’s individual needs. These can be based on a range of factors like pricing, features, billing cycles, and service levels.
Backend workflows in a subscription management business are processes related to billing and invoicing, payment processing, customer management, analytics and reporting. Automating these processes can lead to streamlined operations, reduced errors, and enhanced customer experience. This can also save valuable time and resources such that more focus can be given to strategic growth initiatives.
Automation also means that businesses can now easily adapt to increasing workloads and seamlessly handle a growing customer base without the need to put in place any additional staff. This kind of efficiency can not only boost operational productivity but also position the business for sustainable growth and competitive advantage.
Having an integrated suite of comprehensive software solutions eliminates redundancy and frees up valuable time that can be then used for innovation and growth. This kind of unified and wholesome approach ensures that there is consistency in the data that is used across departments. This leads to better decision-making and improved customer experiences. With such systems in place, subscription management businesses can scale easily. They are now equipped to handle high volumes of transactions and subscriptions without any proportional increase in the number of staff or other related costs.
Giving your customers the freedom to manage their subscriptions on their own can reduce your administrative workload and improve user satisfaction. Having a customizable interface where customers are allowed to manage all affairs related to their subscriptions can give customers a sense of control and trust. This can empower customers with a sense of independence and belonging such that they continue to stay with the system. It can also woo new customers to join the platform enabling their business to scale and grow.
Privacy and security of customer data and information are great concerns for any kind of subscription management business to thrive and grow. With these in place, businesses can witness exponential growth and increased revenue. Handling customer data with care and sensitivity can result in customers swarming to the business to take it to new unreachable heights. Role-based access control, data encryption, regular audits, and data minimization are some of the other techniques that can be employed to put privacy and security into practice.
In a rush to gain new subscribers don’t forget to take care of the existing ones, who have been gathered after a lot of effort. You have invested a lot to get them onboard and hence it is not wise to ignore or sideline them in the rush to make way for new ones. Such subscription management businesses are known to survive in the long run. However, building new merchants and subscribers should not exist as a one-time activity. It should go on during the entire lifetime of the subscription management business.
The merchants and subscribers are the most valuable marketing tools that a subscription management business can ever have. They are the true fans of the business. If their needs and wants are attended to without any compromises, they can then turn out to be the true brand ambassadors of your company. They can also be one of the reasons behind the exponential growth of your company. So, allow them to talk positively about you and witness the change.
Revenue is a main criterion for any business to grow and there are many different ways to generate it. Apart from generating revenues directly through subscriptions, subscription management businesses can generate additional revenue through upselling and cross-selling.
Upselling encourages the subscriber to upgrade to a more expensive plan while cross-selling means recommending related or complementary products or services. This is in addition to the main purchase.
This way, the subscription management business can grow and stay competitive for a very long time.
Scaling a subscription management business does not stop with its creation. It’s a continuous and evolving process requiring a balance of technology, strategic innovations, and customer-centric approaches. It includes automating workflows, personalizing customer interactions, tackling churn, and securing customer data. This way, operational efficiency is enhanced and customers are given superior experiences. Embrace these strategies for any subscription management businesses to grow and easily stand out from competition.
saaslogic is an ever-evolving subscription management platform that aims to grow and adapt continuously to the changes in the ever-evolving subscription management landscape. If you are a business leveraging subscription services to grow your business, then saaslogic can be a great choice. We have the potential to be the subscription partner of choice for any growing or progressive organizations with evolving needs and business requirements. Partner with us and see your business multiply and grow exponentially.