5 Reasons to Launch a Subscription Service for Your Business
Subscription business models are nothing new. We’ve seen monthly subscriptions for everything from soap to wine and even meats, but now we’re finding service businesses offering subscriptions.
These businesses have been able to flourish.
Just take a look at Netflix, which changed the movie rental business forever. Subscribe to the streaming service and never have to pay a late fee again.
Subscriptions make a lot of sense in the service world, even if it is a digital service. If you’re on the fence about launching a subscription service, here are a few reasons subscription services make sense.
1. Subscriptions Make It Easy for Customers
Subscriptions make it easier for the customer. When a customer signs up for a subscription, they know that they won’t need to pick up the phone or order a product in the future. The company will take care of all of the work for you, and the product will arrive at the door every month.
It saves time, money and energy when using a subscription model.
2. Recurring Income
Service-based businesses are moving to subscription models because it allows these services to flourish. When business is slow, it makes sense to have a subscription service to rely on. Imagine a heating and cooling company that goes through seasonal ebbs and flows.
When business is slow, recurring income can make up for this lull in income.
Plumbing companies are offering their own “clubs” or services for this very reason. The Healthy Home Club is an example of this. The club takes the process of regular pipe and sewer line care away from the consumer, making it easier while enjoying monthly recurring income.
3. Customer Loyalty Increases
Customer loyalty is hard to gain, but subscriptions can help. There are psychological impacts of meeting customer expectations, and when you’re able to meet these expectations month after month, it increases loyalty.
The key is to: consistently meet and exceed expectations.
You have the customer subscribed already, so now it’s on you to gather feedback, improve your service and create a loyal customer in the process.
4. Acquistion Costs Can Increase
Acquistion costs should always be at the forefront of a marketing team. If a service sells for $20 and the acquisition is $12, this leaves very little room for overhead. You may be making sales, but these are costly sales.
With a subscription model, the costs are absorbed quickly.
- $12 initial acquisition
- $8 for the first month
- $20 for the remaining months
You may even spend $15 to acquire a customer, but when they pay month after month, it is a cost that is well worth the expense.
5. Opportunity to Improve Service
Monthly or quarterly services allow you to work on your service, improving it over time based on the feedback of loyal customers. It’s an opportunity to improve your customer service. Build strong relationships, ask for monthly feedback and see your service grow as a result.
If you make it a point to build relationships with your customers, you’ll find that they can help you improve your product or service in ways that you never thought of before.