Feasting on the likes of Netflix can take odd toll Disney+ has just gone on sale, and with it comes a whole raft of original programming over which to salivate. We’re making subscription part of our daily life, from streaming services to food delivery, and from gym memberships to cloud software. The concept is pretty straightforward: Instead of customers paying for something once, businesses charge them a recurring fee. That gives the company steady cash and the customer sustained value. But is this model ready for your industry? Let’s explore.
What Is a Subscription Model?
A subscription model is a business system in which customers pay a set amount on a regular basis (like once a month, once every three or six months or annually) for gain access to certain products or services. This fosters brand and customer bond for the long run.
Some common examples are:
- Netflix for entertainment
- Amazon Prime for Shopping and Delivery
- Spotify for music
- Adobe Creative Cloud for software
- Apps for milk and grocery delivery on daily basis
Why Subscription Models Are Growing
Subscription is not just a trend. For many industries, it’s a smart business decision. Here’s why:
1. Predictable Revenue
Businesses don’t rely only on big single sales anymore. Subscriptions deliver a reliable stream of revenue each month.
2. Customer Loyalty
The customers that sign on, stay longer. This creates loyalty and lowers the cost of acquiring new buyers.
3. Better Customer Insights
With regular use, companies get a better idea of what their customers like. This enables them to improve services and tailor offers.
4. Convenience for Customers
Subscriptions can relieve the consumer from re-litigating purchase decisions. They have no fear that they will be unable to get products or miss services.
5. Scalability
Subscription concepts are easy to adapt after an initial setup in other countries or for further customer segments.
Industries Already Benefiting
A few industries have already productized recurring revenue into their fundamental strategy:
- Entertainment: NETFLIX, HOTSTAR and Spotify drinkers OTT players (Netflix hotstar kind of one thing the future would be same).
- E-commerce: Amazon Prime, Flipkart Plus
- Food & Beverages: Zomato Gold, Swiggy One, daily milk or tiffin etc.
- Fitness: Cult. Fit, Gold’s Gym memberships
- Applications: Office 365, Adobe, and other SaaS applications
- Education: Online platforms Byju’s, Unacademy
Is Your Industry Ready?
That’s not to say every industry belongs in the subscription business. To see if yours is ready, ask these questions:
- Is your product or service repeatedly useful to your customers?
- Are you capable of adding new value every month to keep them interested?
- Will it seem like a convenient – and affordable – option to your customers?
- Can your product be upgraded or bundled?
For example, it may be difficult for a clothing retailer to sell basic wear on a subscription, but you might have success with curated fashion boxes. Likewise, a neighborhood eatery might offer a subscription for its once-a-week meal plan instead of one-off orders.
Challenges to Consider
The prospect of having a subscription model sounds great, but it’s not without its issues:
- Customer Dropouts (Churn): If people get bored or find other alternatives, they will cancel.
- High Competition: In a crowded field you have to provide something distinct.
- Up-front Costs: There’s a cost to building delivery systems, apps or billing platforms.
- Engagement Requirements: You need to deliver new content, offers or products in order to retain subscribers.
Subscription Models in India- What Next?
An emergent digital economy in India is bolstering subscriptions. UPI, and digital wallets have made recurring payments simpler. These young urban consumers want convenience, not effort, so subscriptions are perfect. Subscription models may crop up in more categories of daily life such as healthcare, personal grooming, travel and maybe even home cleaning services.
FAQs:
Q1. How do business benefit the most from subscription-based models?
The most significant is predictable revenue, which provides stability and growth possibilities.
Q2. Do consumers want subscriptions more than à la carte?
Yes. If the subscription is a convenient, lower-cost way of getting your value on an ongoing basis, customers will prefer it.
Q3. Is it possible for small businesses to leverage a subscription model?
Absolutely. Subscription packages may also be developed by small bakeries, fitness instructors, tutors and local household service providers.
Q4. How does a business lower the number of customer cancellations?
Businesses can minimize churn by providing flexible plans, regular updates and strong customer support.
Q5. Is subscription the future of everything?
Not every, but most industries can benefit. So, it’s key to figure out what you need regularly and keep the value coming.
