The subscription business model has been on the rise for years, and as we move into 2023, it’s clear that it’s here to stay. In fact, according to a recent report, the subscription economy has grown by more than 350% in the past seven years. And as more and more businesses adopt this model, the competition is becoming increasingly fierce, especially with so many subscription and billing management platforms in the market today.
To succeed in this space, companies need to be aware of the latest trends and innovations, including value-added products, flexible contracts, personalized experiences, and more. In this article, we’ll take a closer look at the subscription business trends to look for in 2023, and how subscription and billing management platforms like saaslogic are positioned perfectly to help businesses leverage these trends.
So, whether you’re a startup looking to break into the subscription space or an established company looking to optimize your subscription and billing processes, read on to discover the trends that will define the subscription economy in 2023.
The most recent statistics indicate that subscription-based business record an average of 37% churn rate. It is no wonder that most subscription-based businesses are struggling to make reasonable profits through membership offerings. But bringing down your churn can have a very significant impact on your overall earnings. According to a report by Frederick F. Reichheld and Phil Schefter of the Harvard Business School, increasing customer retention rates by 5% increases profits by 25% to 95%.
As managing subscriptions becomes a bigger part of the life of the average consumer, there is an increasing need to offer more flexible contracts that allow customers to pause their plans, change consumption volumes, or switch between plans more easily. Reports have found that customers are more willing to pay for products and services that offer greater flexibility.
Hence in 2023, we can expect businesses to focus more on creating and offering plans where customers can go a la carte on features and benefits. According to an Accenture report, companies that offer flexible payment options are found to have a higher customer satisfaction rate almost by up to 10%.
One of the key expectations of consumers today is to have access to flexible payment options that can be used to make purchases from any device, regardless of location. To remain competitive, businesses must be able to offer a variety of payment options, including crypto, and investing in better payment technology is crucial to this end. By adopting better payment technologies, businesses can ensure that they are prepared to adapt to any payment method that their customers may prefer.
Additionally, businesses that switch to better payment technologies can experience fewer failed transactions and lower cart abandonment rates, which can be a significant factor in improving their overall revenue.
Back in 2022, Forrester conducted a study that found that offering more payment options can increase conversion rates by up to 30%, and this finding is even more important now than ever before. This was especially relevant during the pandemic-induced digital revolution, which emphasized the need for businesses to be able to adapt to changing consumer behaviors and preferences. Therefore, businesses should prioritize upgrading their payment technologies in 2023 to better serve their customers and remain competitive in the marketplace.
In addition to investing in better payment technology, businesses can also benefit from implementing embedded payment solutions that can provide a seamless payment experience for their customers. One such example is saaslogic Pay, which is an embedded payment solution within our subscription management platform. This solution not only provides a better payment experience for users but also offers merchants very competitive transaction rates. By utilizing embedded payment solutions like saaslogic Pay, businesses can enhance their payment processes and improve their overall customer experience.
There is going to be more emphasis on providing personalized experiences to customers. By asking questions during onboarding and tailoring offerings to their preferences, businesses are looking to create a special connection that will lead to better retention.
Without a doubt, customer experience is going to be the main focus of businesses in 2023. A recent study by the Temkin Group found that companies that earn $1 billion annually can expect to earn, on average, an additional $700 million within 3 years of investing in customer experience. SaaS companies, in particular, can expect to increase revenue by $1 billion this way. Similarly, Gartner reported that companies that prioritize customer experience tend to generate 60% higher profits than those that don’t.
Overall, investing in customer experience just makes better sense, not just establishing yourself as a truly personal brand that attracts loyalty, but also for sustained income generation.
With the subscription market becoming increasingly crowded, it’s no surprise that in 2023, businesses will turn to specialized and niche products and services to stand out. For customers, this means more options to explore and find the perfect subscription that fits their unique needs.
Now, this does not mean you need to come up with new products or a new business model altogether. No, you can simply branch out from your existing line of products and solutions to offer something a bit more unique and personalized. A recent McKinsey survey found that 27% of companies systematically scan for opportunities to expand beyond their core business. This is a great way to keep growing as a business while attracting new customers and retaining existing ones.
This shift in consumer behavior is driven by a desire to make more informed and ethical purchasing decisions, as well as an increased awareness of the impact of consumerism on the environment. By choosing products that are both healthy and sustainable, consumers can align their values with their purchasing decisions and feel good about the impact they are making. As a result, businesses that prioritize sustainability and environmentally friendly practices are likely to attract more environmentally conscious consumers, which can lead to increased sales and customer loyalty.
In conclusion, the subscription business model is here to stay, and businesses that can adapt to the latest trends will be well-positioned for success in 2023. And ss businesses adapt to these trends in the subscription economy, they will need reliable subscription management and recurring billing platform to help them stay ahead of the curve. This is where saaslogic comes in. Ours is a cloud-based platform that provides a comprehensive solution for subscription businesses.